FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                      ------------------------------------
(Mark One)

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

                  For the quarterly period ended June 30, 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 No. 0-11526
             -----------------------------------------------------

                           FIRST COLONIAL GROUP, INC.
-------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

     PENNSYLVANIA                                      23-2228154
--------------------------                 ------------------------------------
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

  76 S. MAIN ST., NAZARETH, PA                          18064
-------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE                (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 610-746-7300


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 THE NUMBER OF SHARES  OUTSTANDING  OF EACH OF THE  ISSUER'S  CLASSES OF
COMMON  STOCK AS OF THE  LATEST  PRACTICABLE  DATE:  1,950,912  SHARES OF COMMON
STOCK, $5 PAR VALUE, OUTSTANDING ON JUNE 30, 2000.


<PAGE>


                   FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES

                                      INDEX
PART I - FINANCIAL INFORMATION                                       PAGE NO.

     ITEM 1  -  Financial Statements

      Consolidated Balance Sheet                                         2
      Consolidated Statement of Income                                   3
      Consolidated Statement of Comprehensive Income                     4
      Consolidated Statement of Cash Flows                               5
      Notes to Consolidated Financial Statements                         6

     ITEM 2  -  Management's Discussion and Analysis of
                Financial Condition and Results of Operations           13

     ITEM 3  -  Quantitative and Qualitative Discussion About           28
                Market Risk

PART II  -  OTHER INFORMATION

     ITEM 4  -  Submission of Matters to a Vote of Security Holders     32
     ITEM 5  -  Other Information                                       32
     ITEM 6  -  Exhibits and Reports on Form 8-K                        32


SIGNATURES                                                              33


<PAGE>

             FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS
                       (Dollars in Thousands)
                             (Unaudited)
<TABLE>
                                                      June 30      Dec. 31
                                                        2000         1999
                                                      --------      -------
<S>                                                  <C>           <C>

ASSETS
  Cash and Due From Banks                             $ 16,328      $ 14,272
  Federal Funds Sold                                        -          2,000
                                                      --------      --------
    Total Cash and Cash Equivalents                     16,328        16,272
  Interest-Bearing Deposits With Banks                     351         5,589
  Investment Securities Held-to-Maturity
    (Fair Value: June 30, 2000 $18,707
     Dec. 31, 1999 - $19,123)                           19,291        19,887
  Securities Available-for-Sale at Fair Value          144,983       132,356
  Mortgage Loans Held-for-Sale                             634            -
  Total Loans, Net of Unearned Discount                214,622       202,258
  LESS:  Allowance for Possible Loan Losses             (2,426)       (2,437)
                                                      --------       -------
  Net Loans                                            212,196       199,821
  Premises and Equipment, Net                            7,054         7,116
  Accrued Interest Income                                3,980         3,045
  Other Real Estate Owned                                  489           571
  Other Assets                                           7,184         7,232
                                                       -------       -------
    TOTAL ASSETS                                     $ 412,490     $ 391,889
                                                     ---------     ---------
LIABILITIES
  Deposits
    Non-Interest Bearing Deposits                       45,908        41,813
    Interest-Bearing Deposits                          290,126       282,667
                                                     ---------     ---------
      Total Deposits                                   336,034       324,480
  Securities Sold Under Agreements to Repurchase         7,050         1,730
  Short-Term Borrowings                                  3,445            -
  Long-Term Debt                                        30,000        30,000
  Accrued Interest Payable                               3,720         4,208
  Other Liabilities                                      3,001         3,228
                                                     ---------     ---------
    TOTAL LIABILITIES                                  383,250       363,646

SHAREHOLDERS' EQUITY
  Preferred Stock, Par Value $5.00 a share
    Authorized - 500,000 shares, none issued                -             -
  Common Stock, Par Value $5.00 a share
    Authorized - 10,000,000 shares
    Issued  -  1,950,912 shares at June 30, 2000
    and 1,848,437 shares at Dec. 31, 1999                9,755         9,242
  Additional Paid in Capital                            16,858        15,674
  Retained Earnings                                      8,155         8,968
  Employee Stock Ownership Plan Debt                    (1,320)       (1,320)
  Accumulated Other Comprehensive Loss                  (4,208)       (4,321)
                                                     ---------      --------

Total Shareholders' Equity                              29,240        28,243
                                                     ---------      --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $ 412,490     $ 391,889
                                                     ---------     ---------
</TABLE>

See accompanying notes to interim consolidated financial statements.

<PAGE>

                  FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>

                                          Three Months Ended   Six Months Ended
                                          June 30,  June 30,  June 30, June 30,
                                            2000      1999      2000     1999
                                       ----------  --------  --------  --------
<S>                                     <C>       <C>        <C>       <C>
INTEREST INCOME:
 Interest and Fees on Loans              $ 4,454   $ 4,432    $ 8,636   $ 8,828
 Investment Securities Income
  Taxable                                  2,346     1,647      4,625     2,988
  Tax-Exempt                                 367       392        730       780
 Interest on Deposits with Banks and
  Federal Funds Sold                           2        19         34       118
                                         -------   -------    -------   -------
   Total Interest Income                   7,169     6,490     14,025    12,714
                                         -------   -------    -------   -------
INTEREST EXPENSE:
 Interest on Deposits                      2,675     2,450      5,255     4,792
 Interest on Short-Term Borrowing            198        76        314       122
 Interest on Long-Term Debt                  459       279        913       559
                                         -------   -------    -------   -------
   Total Interest Expense                  3,332     2,805      6,482     5,473
                                         -------   -------    -------   -------
NET INTEREST INCOME:                       3,837     3,685      7,543     7,241
 Provision for Possible Loan Losses          125       125        125       250
                                         -------   -------    -------   -------
  Net Interest Income After Provision
   For Possible Loan Losses                3,712     3,560      7,418     6,991
                                         -------   -------    -------   -------
OTHER INCOME:
 Trust Revenue                               303       337        632       603
 Service Charges on Deposit Accounts         491       425        942       797
 Investment Securities Gains, Net            112       345        158       561
 (Loss)Gain on the Sale of Mortgage Loans     (2)       13         (1)       91
 Other Operating Income                      179       155        387       337
                                         -------   -------    -------   -------
   Total Other Income                      1,083     1,275      2,118     2,389
                                         -------   -------    -------   -------
OTHER EXPENSES:
 Salaries and Employee Benefits            1,811     1,653      3,613     3,293
 Net Occupancy and Equipment Expense         602       515      1,174     1,050
 Other Operating Expenses                  1,638     1,459      2,981     2,832
                                         -------    -------   -------   -------
   Total Other Expenses                    4,051     3,627      7,768     7,175
                                         -------   -------    -------   -------

Income Before Income Taxes                   744     1,208      1,768     2,205
Provision for Income Taxes                   125       283        353       495
                                         -------   -------    -------   -------

NET INCOME                               $   619   $   925    $ 1,415   $ 1,710
                                         =======   =======    =======   =======
 Per Share Data
   Basic Net Income                      $  0.32   $  0.50    $  0.74   $  0.91
                                         =======   =======    =======   =======
   Diluted Net Income                    $  0.32   $  0.49    $  0.74   $  0.90
                                         =======   =======    =======   =======
  Cash Dividends                         $  0.18   $  0.17    $  0.37   $  0.34
                                         =======   =======    =======   =======
</TABLE>

 See accompanying notes to interim financial statements.


<PAGE>


                   FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                             (Dollars in Thousands)
                                   (Unaudited)


<TABLE>
                                     Three Months Ended      Six Months Ended
                                    June 30,   June 30,    June 30,    June 30,
                                      2000       1999        2000        1999
                                    ------     ------       ------      ------
<S>                                <C>        <C>          <C>         <C>

Net Income                         $   619     $  925      $ 1,415      $1,710

Other Comprehensive Income (Loss),
  Net of Tax
 Unrealized gains (losses)
  on securities
   Unrealized gains (losses)
    arising in period                  134     (2,570)          55      (3,322)
   Reclassification adjustment;
    gain included in net income         27        228           58         370
                                    ------     ------       ------      ------
Other Comprehensive Income (Loss)      161     (2,342)         113      (2,952)
                                    ------     ------       ------      ------
Comprehensive Income (Loss)        $   780    $(1,417)     $ 1,528     $(1,242)
                                    ======     ======       ======      ======
</TABLE>
         Other  comprehensive  income is shown net of tax  (benefit) for the six
months  ended  June 30,  2000 and June 30,  1999 of  $58,000  and  $(1,521,000),
respectively  and the three  months  ended  June 30,  2000 and June 30,  1999 of
$83,000 and $(1,206,000) respectively.

See accompanying notes to interim consolidated financial statements.


<PAGE>


                  FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>

                                                      Six Months Ended
                                               June 30, 2000    June 30, 1999
OPERATING ACTIVITIES                                    (Unaudited)
<S>                                              <C>               <C>
Net Income                                        $1,415            $1,710
Adjustments to Reconcile Net Income to Net Cash
 Provided by Operating Activities:
  Provision for Possible Loan Losses                 125               250
  Depreciation and Amortization                      541               510
  Amortization of Security Discounts                (191)              (96)
  Amortization of Security Premiums                  121               131
  Amortization of Deferred Fees on Loans             249                65
  Gain on Sale of Other Real Estate Owned             (7)                -
  Loss from write-down of Other Real Estate Owned    184                 -
  Mortgage Loans Originated for Sale              (1,600)          (14,412)
  Mortgage Loan Sales                                966            13,534
  Loss (Gain)on Sale of Mortgage Loans                 1               (91)
  Investment Securities Gains, Net                  (152)             (561)
 Changes in Assets and Liabilities:
  Increase in Accrued Interest Income               (411)             (319)
  Decrease in Accrued Interest Payable              (488)             (299)
  Net Increase in Other Assets                      (588)             (354)
  Net Decrease in Other Liabilities                 (227)             (788)
                                                 -------           -------
Net Cash Used In Operating Activities                (64)             (720)
                                                 -------           -------
INVESTING ACTIVITIES
Proceeds from Maturities of Securities
  Available-for-Sale                               5,771             8,572
Proceeds from Maturities of Securities
  Held-to-Maturity                                   577             3,460
Proceeds from Sales of Securities
  Available-for-Sale                               3,561            13,858
Purchase of Securities Available-for-Sale        (21,546)          (43,367)
Purchase of Securities Held-to-Maturity                -            (2,415)
Net Decrease (Increase) in Interest Bearing
  Deposits With Banks                              5,238            (1,753)
Net Increase in Loans                            (12,866)           (5,940)
Purchase of Premises and Equipment, Net             (425)             (211)
Proceeds from Sale of Other Real Estate Owned         22               176
                                                 -------           -------
Net Cash Used In Investing Activities            (19,668)          (27,620)
                                                 -------           -------
FINANCING ACTIVITIES
Net Increase in Interest and Non-Interest
 Bearing Demand Deposits and Savings Accounts      7,596             7,119
Net Increase in Certificates of Deposits           3,957            19,804
Net Increase in Short-Term Borrowings              3,445                 -
Net Increase in ESOP Debt                              -            (1,000)
Net Increase in Repurchase Agreements              5,320             4,057
Proceeds from Issuance of Stock                      154               160
Cash Dividends Paid                                 (683)             (643)
Cash in Lieu of Fractional Shares                     (2)               (4)
                                                 -------           -------
Net Cash Provided by Financing Activities         19,788            29,493
                                                 -------           -------
Increase in Cash and Cash Equivalents                 56             1,153
Cash and Cash Equivalents, January 1              16,272            14,259
                                                 -------           -------
Cash and Cash Equivalents, June 30,              $16,328           $15,412
                                                 =======           =======
</TABLE>

See accompanying notes to interim consolidated financial statements.

<PAGE>

                   FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE A  -  GENERAL

The accompanying  financial statements,  footnotes and discussion should be read
in conjunction with the audited financial statements,  footnotes, and discussion
contained in the Company's Annual Report for the year ended December 31, 1999.

The financial information presented herein is unaudited; however, in the opinion
of management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the unaudited financial  information have been made.
The results for the three and six months ended June 30, 2000 are not necessarily
indicative  of results  to be  expected  for the full year or any other  interim
period.

NOTE B  -  SUBSIDIARIES

First  Colonial  Group,   Inc.  (the  "Company")  is  a  Pennsylvania   business
corporation which is registered as a bank holding company under the Bank Holding
Company Act of 1956.  The Company has two  wholly-owned  subsidiaries,  Nazareth
National  Bank and Trust  Company (the  "Bank")  founded in 1897 and First C. G.
Company, Inc. founded in 1986.

NOTE C  -  INVESTMENT CONSIDERATIONS

In analyzing  whether to make,  or to continue,  an  investment  in the Company,
investors   should   consider,   among   other   factors,   certain   investment
considerations  more  particularly  described in the Company's  Annual Report on
Form 10-K for the year ended  December 31, 1999, a copy of which can be obtained
from Reid L. Heeren,  Vice  President,  First Colonial  Group,  Inc., 76 S. Main
Street, Nazareth, PA 18064.

NOTE D  -  FORWARD LOOKING STATEMENTS

The  information  contained in this Quarterly  Report  contains  forward looking
statements (as such term is defined in the  Securities  Exchange Act of 1934 and
the regulations thereunder), including, without limitation, statements as to the
allowance  and provision for possible  loan losses,  future  interest  rates and
their effect on the Company's financial condition or results of operations,  the
classification  of  the  Company's  investment   portfolio,   statements  as  to
litigation and the amount of reserves,  the discussion in "Item 3 - Quantitative
and Qualitative Discussion About Market Risk", issues and other statements which
are  not  historical  facts  or  as  to  management's  beliefs,  expectations or

<PAGE>

opinions. Such forward looking statements are subject to risks and uncertainties
and may be affected by various  factors which may cause actual results to differ
materially  from those in the  forward  looking  statements,  including  without
limitation  the effect of economic  conditions  and related  uncertainties,  the
effect  of  interest  rates on the  Company  and the  Bank,  Federal  and  state
government regulations, competition, and results of litigation. Certain of these
risks, uncertainties and other factors are discussed in this Quarterly Report or
in the  Company's  Annual  Report on Form 10-K for the year ended  December  31,
1999, a copy of which may be obtained  from the Company upon request and without
charge (except for the exhibits thereto).

NOTE E  -  CASH DIVIDENDS

On May 19, 2000 the Company paid its 2000 second quarter  dividend on its common
stock of $.19 per share to shareholders of record on May 5, 2000.

NOTE F  -  STOCK DIVIDEND

On June 22, 2000 the Company paid a 5% stock dividend to  shareholders of record
on June 2, 2000.  Fractional shares were paid in cash based on the closing price
of $14.50 per share on the record date.  Net income per share and average shares
outstanding have been restated to reflect the 5% stock dividend.

NOTE G -  EARNINGS PER SHARE

The Company  calculates  earnings  per share as provided  by the  provisions  of
Statement of Financial  Accounting  Standards No. 128, "Earnings Per Share (SFAS
128)".  SFAS 128  eliminates  primary and fully  diluted  earnings per share and
requires  presentation  of basic and diluted  earnings per share in  conjunction
with the  disclosures  of the  methodology  used in computing  such earnings per
share.  Basic earnings per share  excludes  dilution and is computed by dividing
income available to common  shareholders by the  weighted-average  common shares
outstanding during the period. Diluted earnings per share takes into account the
potential  dilution that could occur if  securities or other  contracts to issue
common stock were exercised and converted  into common stock.  Basic and diluted
earnings per share were calculated as follows.

<PAGE>

For the Three Months Ended June 30,
<TABLE>
                                                         Average
                                             Income       Shares      Per Share
                                          (numerator) (denominator)     Amount
2000
<S>                                        <C>         <C>            <C>

Net Income                                  $  619

Basic Earnings Per Share
  Income Available to Common Shareholders   $  619      1,916,026      $  0.32

Effect of Dilutive Securities
  Stock Options                                             1,121
                                            ------      ---------      -------
Diluted Earnings Per Share
  Income Available to Common Shareholders
  plus Assumed Exercise of Options          $  619      1,917,147      $  0.32
                                            ------      ---------      -------
1999

Net Income                                  $  925

Basic Earnings Per Share
  Income Available to Common Shareholders   $  925      1,868,696      $  0.50

Effect of Dilutive Securities
  Stock Options                                             7,084
                                            ------      ---------      -------
Diluted Earnings Per Share
  Income Available to Common Shareholders
  plus Assumed Exercise of Options          $  925      1,875,780      $  0.49
                                            ------      ---------      -------
</TABLE>

Average common shares  outstanding in the three month period ended June 30, 2000
and 1999 did not include  51,386 and 58,636,  respectively  of average  weighted
unallocated  shares held by the ESOP. The exclusion of these unallocated  shares
held by the ESOP is due to the  Company's  adoption  of SOP 93-6.  Share and per
share  information  have been restated to reflect the 5% stock  dividend of June
2000.

<PAGE>

For the Six Months Ended June 30,
<TABLE>
                                                         Average
                                             Income       Shares      Per Share
                                          (numerator) (denominator)     Amount
2000
<S>                                        <C>         <C>            <C>

Net Income                                  $1,415

Basic Earnings Per Share
  Income Available to Common Shareholders   $1,415      1,912,381      $  0.74

Effect of Dilutive Securities
  Stock Options                                             1,121
                                            ------      ---------      -------
Diluted Earnings Per Share
  Income Available to Common Shareholders
  plus Assumed Exercise of Options          $1,415      1,913,503      $  0.74
                                            ------      ---------      -------
1999

Net Income                                  $1,710

Basic Earnings Per Share
  Income Available to Common Shareholders   $1,710      1,874,551      $  0.91

Effect of Dilutive Securities
  Stock Options                                             7,220
                                            ------      ---------      -------
Diluted Earnings Per Share
  Income Available to Common Shareholders
  plus Assumed Exercise of Options          $1,710      1,881,771      $  0.91
                                            ------      ---------      -------
</TABLE>

Average  common shares  outstanding  in the six month period ended June 30, 2000
and 1999 did not include  52,071 and 50,990,  respectively  of average  weighted
unallocated  shares held by the ESOP. The exclusion of these unallocated  shares
held by the ESOP is due to the  Company's  adoption  of SOP 93-6.  Share and per
share  information  have been restated to reflect the 5% stock  dividend of June
2000.

<PAGE>

NOTE H  -  ALLOWANCE FOR POSSIBLE LOAN LOSSES

Transactions in the allowance for possible loan losses were as follows:

<TABLE>

     Six Month Period Ended June 30,               2000               1999
    <S>                                        <C>                <C>

     Beginning Balance                          $2,437,000         $2,691,000

     Additions
       Provision for loan losses charged to
        operating expenses                         125,000            250,000
       Recoveries of loans                         106,000             39,000
                                                ----------         ----------
        Total Additions                            231,000            289,000

     Deductions
       Loans charged off                           242,000            322,000
                                                ----------         ----------

     Ending Balance                             $2,426,000         $2,658,000

</TABLE>


NOTE I  -   IMPAIRED LOANS

The Company measures impairment of a loan based on the present value of expected
future cash flows discounted at the loan's effective  interest rate, except that
as a  practical  expedient,  impairment  may  be  measured  based  on  a  loan's
observable  market  price,  or the fair value of the  collateral  if the loan is
collateral  dependent.  Regardless of the  measurement  method,  a creditor must
measure  impairment  based on the fair value of the collateral when the creditor
determines that  foreclosure is probable.  SFAS No. 118 allows  creditors to use
existing methods for recognizing interest income on impaired loans.

The Company has  identified a loan as impaired when it is probable that interest
and principal will not be collected  according to the  contractual  terms of the
loan  agreement.  The accrual of interest is  discontinued  on such loans and no
income is  recognized  until all recorded  amounts of interest and principal are
recovered in full.

Loan  impairment  is measured by estimating  the expected  future cash flows and
discounting  them at the  respective  effective  interest rate or by valuing the
underlying collateral.  The recorded investment in these loans and the valuation
for credit loses related to loan impairment are as follows:

<PAGE>

<TABLE>

           At June 30,                                 2000            1999
          <S>                                     <C>               <C>

           Principal amount of impaired loans      $  269,000        $  419,000
           Deferred loan costs                          1,000               ---
                                                     --------          --------
                                                      270,000           419,000
           Less valuation allowance                    54,000           151,000
                                                     --------          --------
                                                   $  216,000        $  268,000
</TABLE>

On January 1, 1995 a valuation for credit losses  related to impaired  loans was
established.  The activity in this  allowance  account for the six months ending
June 30, 2000 was as follows:

<TABLE>

                                                     2000               1999
<S>                                               <C>              <C>

      Valuation allowance at January 1,            $ 74,000         $303,000
      Provision for loan impairment                   1,000           28,000
      Transfer from Unallocated Allowance for
         Possible Loan Losses                       (21,000)        (112,000)
      Direct charge-offs                                ---          (68,000)
                                                   --------         --------
      Valuation allowance at June 30,              $ 54,000         $151,000

</TABLE>

Total cash  collected  on impaired  loans during the six month period ended June
30, 2000 was $136,000 of which  $106,000 was credited to the  principal  balance
outstanding  on such  loans and  $30,000  was  recognized  as  interest  income.
Interest  that would have been  accrued on impaired  loans  during the first six
months of 2000 was $18,000.  Interest  income  recognized  for the first half of
1999 was $50,000.  The valuation allowance for impaired loans of $54,000 at June
30, 2000 is included in the  "Allowance  for Possible Loan Losses" which amounts
to $2,426,000 at June 30, 2000. The provision for loan  impairment of $1,000 for
the six month  period  ended June 30,  2000 is included  in the  "Provision  for
Possible Loan Losses" as reflected on the "Consolidated Statement of Income" for
the same period.

NOTE J  -  REPORTING OF COMPREHENSIVE INCOME

On January 1, 1998, the Corporation adopted the Financial  Accounting  Standards
Board issued (SFAS) No. 130, "Reporting  Comprehensive  Income",  which requires
presenting  a  complete  set of  financial  statements  to  include  details  of
comprehensive  income that arises in the reporting period.  Comprehensive income
consist of net  income or loss for the  current  period and other  comprehensive
income - income, expenses, gains and losses that bypass the income statement and
are reported  directly in a separate  component of equity.  Other  comprehensive
income includes, for example,  foreign currency items, minimum pension liability
adjustments and unrealized  gains and losses on certain  investment  securities.
The  Corporation  has  elected  to report  comprehensive  income  on a  separate
schedule titled "Statement of Comprehensive Income".

<PAGE>

NOTE K  -  DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
           RELATED INFORMATION

In June,  1997, the Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosures About Segments of an
Enterprise and Related Information".  SFAS No. 131 established standards for the
method that public business  enterprises report selected  information  regarding
operating  segments in financial reports issued to shareholders.  The disclosure
information  required consists of a measure of segment profit and loss,  certain
revenue and expense items and segment assets based upon  specified  quantitative
thresholds,  as it is reported  internally to the chief operating decision maker
on both an interim and annual basis. The statement is effective for fiscal years
beginning   after  December  15,  1997.   Management  has  determined  that  the
Corporation consists of one segment: community banking.

NOTE L  -   ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
            ACTIVITY

In June, 1998, the Financial  Accounting Standards Board (FASB) issued Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting for Derivative
Instruments and Hedging Activity" which was effective for fiscal years beginning
after June 15, 1999. SFAS No. 133 must be adopted  prospectively and retroactive
application  is not  permitted.  SFAS No. 133 will require the Company to record
all  derivatives on the balance sheet at fair value.  Changes in derivative fair
values  will either be  recognized  in earnings as offsets to the changes in the
value  of  related  hedged  assets,  liabilities  and  firm  commitments  or for
forecasted  transactions,  deferred and  recorded as a component of  accumulated
other  comprehensive  income  (loss) in  stockholders'  equity  until the hedged
transactions occur and are recognized in earnings.  The ineffective portion of a
hedging  derivative's  change in fair value will be  immediately  recognized  in
earnings. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement No. 133".  SFAS No. 133 is now  effective  for fiscal years  beginning
after June 15,  2000.  The  Company  expects to adopt SFAS No. 133 on January 1,
2001 and does not  believe  the  effect of  adopting  SFAS No. 133 will have any
material effect on its consolidated financial position or results of operation.

NOTE M  -  COMMITMENTS AND CONTINGENCIES

The Company has reserved  $994,000  against  unsettled claims which have been or
may be asserted  against the Bank in connection  with certain  pre-need  funeral
trusts which were  allegedly  directed by funeral  directors to be invested in a
private placement annuity issued by EA International Trust. As of June 30, 2000,
nine funeral  directors whose funds were invested in this annuity commenced suit
against the Bank;  if all funeral  directors  whose funds were  invested in this
annuity  were  to  pursue  claims,   the  Bank's   maximum   exposure  would  be
approximately $4.1 million principal loss plus punitive damages, interest, costs
and attorneys fees. The Bank has been advised that it has  significant  defenses
to these claims and intends to vigorously  defend against such claims.  The Bank
has discontinued its involvement in this annuity and is pursuing indemnification
for some or all of these possible losses from its insurance carriers and from EA
International Trust.

<PAGE>

ITEM 2.

                     Management's Discussion and Analysis of

                  Financial Condition and Results of Operations

The following  financial  review and analysis is of the financial  condition and
earnings  performance of the Company and its wholly owned  subsidiaries  for the
three and six month period ended June 30, 2000.

The  information  contained in this Quarterly  Report  contains  forward looking
statements (as such term is defined in the  Securities  Exchange Act of 1934 and
the regulations thereunder), including, without limitation, statements as to the
allowance  and provision for possible  loan losses,  future  interest  rates and
their effect on the Company's financial condition or results of operations,  the
classification of the Company's investment portfolio,  the discussion in "Item 3
- Quantitative and Qualitative  Discussion About Market Risk",  statements as to
litigation  and the  amount  of  reserves,  and other  statements  which are not
historical facts or as to management's beliefs,  expectations or opinions.  Such
forward  looking  statements are subject to risks and  uncertainties  and may be
affected by various factors which may cause actual results to differ  materially
from those in the forward looking statements,  including without limitation, the
effect of economic conditions and related uncertainties,  the effect of interest
rates on the Company  and the Bank,  Federal  and state  government  regulation,
competition,  and results of litigation.  Certain of these risks,  uncertainties
and other  factors are  discussed in this  Quarterly  Report or in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, a copy of which
may be obtained from the Company upon request and without charge (except for the
exhibits thereto).

In analyzing  whether to make,  or to continue,  an  investment  in the Company,
investors   should   consider,   among   other   factors,   certain   investment
considerations  more  particularly  described in the Company's  Annual Report on
Form 10-K for the year ended  December 31, 1999, a copy of which can be obtained
from Reid L. Heeren,  Vice  President,  First Colonial  Group,  Inc., 76 S. Main
Street, Nazareth, PA 18064.

Liquidity and Capital Resources

Liquidity is a measure of the Company's  ability to raise funds to support asset
growth,  meet deposit  withdrawal and other borrowing  needs,  maintain  reserve
requirements and otherwise  operate the Company on an ongoing basis. The Company
manages its assets and liabilities to maintain liquidity and earnings stability.
Among  the  sources  of  liquidity  are  money  market  investments,  securities
available-for-sale,  funds  received  from the  repayment  of loans,  short-term
borrowings  and  borrowings  from the Federal Home Loan Bank.  At June 30, 2000,
cash,  due from banks,  Federal  funds sold and interest  bearing  deposits with
banks  totaled  $16,679,000,  and  securities  maturing  within one year totaled
$3,337,000.  At December 31, 1999, cash,  due from banks, Federal funds sold and

<PAGE>

interest  bearing  deposits  with banks,  totaled  $21,861,000,  and  securities
maturing within one year were $2,249,000.  Securities sold under an agreement to
repurchase  totaled  $7,050,000 at June 30, 2000 and  $1,730,000 at December 31,
1999. The Bank is a member of the Federal Home Loan Bank of Pittsburgh. The Bank
had interest bearing demand deposits at the Federal Home Loan Bank of Pittsburgh
in the amount of $6,000 at June 30, 2000 and  $5,548,000  at December  31, 1999.
These  deposits  are  included  in due  from  banks on the  Company's  financial
statements.  As a result of this  relationship,  the Company  places most of its
short-term  funds at the  Federal  Home Loan Bank of  Pittsburgh.  There were no
Federal  funds sold at June 30,  2000.  At December  31, 1999 there were Federal
funds sold totaling $2,000,000.

The Federal Home Loan Bank of Pittsburgh provides the Bank with a line of credit
in the amount of  $25,000,000  at June 30, 2000,  subject to certain  collateral
requirements.  The Bank had  $3,445,000  in  short-term  (overnight)  borrowings
against  this  line at June 30,  2000.  The Bank had no  short-term  (overnight)
borrowings at December 31, 1999.  The Bank had  additional  borrowings  from the
Federal  Home Loan  Bank at June 30,  2000 and at  December  31,  1999  totaling
$30,000,000  of which  $8,000,000  is due in August 2000,  $5,000,000  is due in
December  2001,  $7,000,000  is due in October  2008 and  $10,000,000  is due in
August 2004.

Cash flows for the six months ended June 30, 2000  consisted of cash provided by
financing  activities  of  $19,788,000  offset in part by cash used in investing
activities  of  $19,668,000  and cash used in  operating  activities  of $64,000
resulting in an increase in cash and cash equivalents of $56,000.

Cash used in operating  activities was the result of mortgage  loans  originated
for sale of $1,600,000,  an increase in other assets of $588,000,  a decrease in
accrued interest expense of $488,000,  an increase in accrued interest income of
$411,000,  a decrease in other  liabilities  of $227,000 and gains on investment
securities of $152,000  partially reduced by net operating income of $1,415,000,
mortgage  loan sales of $966,000,  depreciation  and  amortization  of $541,000,
amortization of deferred fees on loans of $249,000, the loss from the write-down
of other real estate owned of $184,000 and a provision  for possible loan losses
of  $125,000.  Cash  was  used  in  investing  activities  for the  purchase  of
securities  available-for-sale  of  $21,546,000  plus net  increase  in loans of
$12,866,000   reduced  in  part  by  proceeds  from   maturities  of  securities
available-for-sale    and   held-to-maturity   of   $5,771,000   and   $577,000,
respectively,   proceeds   from  sales  of  securities   available-for-sale   of
$3,561,000,  and a decrease in  interest  bearing  deposits  with other banks of
$5,238,000.  Cash  provided by financing  activities  consisted  principally  of
increases  in interest  and  non-interest  bearing  demand  deposits and savings
accounts of $7,596,000, an increase in certificates of deposit of $3,957,000, an
increase of  $5,320,000  in  repurchase  agreements,  an increase in  short-term
(overnight) borrowings of $3,445,000 and the proceeds from the issuance of stock
of $154,000 offset in part by the payment of cash dividends of $683,000 and cash
paid in lieu of fractional  shares on the 5% stock  dividend of June 2000 in the
amount of $2,000.

<PAGE>

The Company recognizes the importance of maintaining  adequate capital levels to
support  sound,  profitable  growth  and to  encourage  depositor  and  investor
confidence. Shareholders' equity at June 30, 2000 was $29,240,000 as compared to
$28,243,000 at December 31, 1999, for an increase of $997,000. This increase was
attributable to net income for the first six months of $1,415,000,  the proceeds
from the sale of common  stock  pursuant to the  Dividend  Reinvestment  Plan of
$153,000,  proceeds  from the sale of common  stock  pursuant to the exercise of
options under the Company's  Non-Employee  Director Stock Option Plan of $1,000,
and an  increase  of $113,000 in  accumulated  other  comprehensive  income (see
statement  of  Comprehensive  Income),  offset  in part by the  payment  of cash
dividends  of $683,000  and the payment of $2,000 in cash in lieu of  fractional
shares from the 5% stock dividend of June 2, 2000.

On June 22, 2000, the Company paid a 5% stock dividend to shareholders of record
on June 2, 2000.  Fractional shares were paid in cash based on the closing price
of $14.50 per share on the record date.

The Company  maintains a Dividend  Reinvestment and Stock Purchase Plan.  During
the first six months of 2000,  9,860 shares of common stock were  purchased from
authorized  and  un-issued  shares at an  average  price of $15.48 per share for
proceeds of approximately $153,000.

The Company has a Non-Employee  Director Stock Option Plan that provides for the
awarding of stock options to the Company's  non-employee  directors.  During the
first six months of 2000,  options to  purchase  2,550  shares of the  Company's
common  stock at an average  price of $16.43  per share were  granted to certain
non-employee  directors.  Options for 1,340 shares of the Company's common stock
were exercised at a price of $12.69 per share by a non-employee  director during
the first half of 2000.

The  Company  also has a Stock  Option Plan which  provide  for the  granting of
options to acquire the Company's common stock for officers and key employees. No
options were issued or exercised  under this plan during the first six months of
2000.

The Company and the Bank are subject to various regulatory capital  requirements
administered  by the Federal banking  agencies.  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  financial  statements.  Under capital adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Company  and the  Bank  must  meet  specific  capital  guidelines  that  involve
quantitative measures of the Company's and the Bank's assets,  liabilities,  and
certain  off-balance-sheet  items  as  calculated  under  regulatory  accounting
practices.  The Company's and the Bank's capital amounts and  classification are
also subject to qualitative  judgments by the regulators about components,  risk
weightings, and other factors.

<PAGE>

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Company and the Bank to maintain  minimum amounts and ratios of Tier
I  capital  of at  least  4% and  total  capital,  Tier I and  Tier  2, of 8% of
risk-adjusted  assets  and of Tier 1 capital  of at least 4% of  average  assets
(leverage  ratio).  Tier 1 capital  includes  common  shareholders'  equity  and
qualifying  perpetual  preferred  stock  together  with  related  surpluses  and
retained  earnings.  Tier 2 capital may be comprised  of limited life  preferred
stock, qualifying debt instruments,  and the allowance for possible loan losses.
Management believes,  that as of June 30, 2000, the Company and the Bank met all
capital adequacy requirements to which they were subject.

<PAGE>

Capital Ratios
<TABLE>
                                                                  To Be Well
                                                                 Capitalized
                                                 Required        Under Prompt
                                                For Capital       Corrective
                                Actual           Purposes         Provisions
(Dollars in Thousands)
 At June 30, 2000           Amount   Ratio     Amount   Ratio   Amount  Ratio
<S>                        <C>       <C>      <C>       <C>    <C>      <C>
Total Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $35,172   16.21%   $17,359   8.00%      ---    ---
  Bank                      $31,208   14.45%   $17,278   8.00%  $21,598  10.00%

Tier 1 Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $32,746   15.09%   $ 8,680   4.00%      ---    ---
  Bank                      $28,782   13.33%   $ 8,639   4.00%  $12,959   6.00%

Tier 1 Capital
(To Average Assets,
 Leverage)
  Company, (Consolidated)   $32,746   7.99%    $16,395   4.00%      ---    ---
  Bank                      $28,782   7.10%    $16,221   4.00%  $20,276   5.00%
</TABLE>

<TABLE>
                                                                 To Be Well
                                                                 Capitalized
                                                 Required        Under Prompt
                                                For Capital       Corrective
                                Actual           Adequacy           Action
(Dollars in Thousands)
 At December 31, 1999        Amount   Ratio     Amount   Ratio   Amount  Ratio
<S>                        <C>      <C>       <C>       <C>    <C>      <C>
Total Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $34,329  16.67%    $16,477   8.00%      ---    ---
  Bank                      $30,831  15.00%    $16,446   8.00%  $20,557  10.00%

Tier 1 Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $31,892  15.48%    $ 8,239   4.00%      ---    ---
  Bank                      $28,194  13.71%    $ 8,223   4.00%  $12,334   6.00%

Tier 1 Capital
(To Average Assets,
 Leverage)
  Company, (Consolidated)   $31,892   8.11%    $15,726   4.00%      ---    ---
    Bank                    $28,194   7.20%    $15,655   4.00%  $19,568   5.00%
</TABLE>

<PAGE>

The Company is not aware of any trends, events or uncertainties that will have a
material  effect on the Company's  liquidity,  capital  resources or operations,
except for higher interest rates which could cause deposit disintermediation and
an increase in interest expense and the possibility of inflationary  trends, the
results of which cannot be determined at this time. The Company is not under any
agreement  with  the  regulatory  authorities  nor is it  aware  of any  current
recommendation by regulatory authorities which, if they were implemented,  would
have  a  material  adverse  effect  on  liquidity,  capital  resources,  or  the
operations of the Company.

Assets and Liabilities

Total  assets at June 30, 2000 were  $412,490,000,  representing  an increase of
5.3% over total assets of $391,889,000 at December 31, 1999.  Deposits increased
by $11,553,000 or 3.6% from $324,480,000 on December 31, 1999 to $336,033,000 on
June 30, 2000.  Contributing  to this  increase were  increases in  non-interest
bearing checking deposits of $4,095,000,  certificates of deposit of $3,957,000,
interest-bearing  checking  deposits of $2,421,000  and savings and money market
deposits of $1,080,000.  Loans outstanding at June 30, 2000 were $214,622,000 as
compared  to  $202,258,000  at  December  31,  1999.  This  is  an  increase  of
$12,364,000  or 6.1%.  The  increase  in loans  was  primarily  the  result of a
increases  of  $6,041,000  or  6.9%  in  consumer  loans,  $5,776,000  or 10% in
residential real estate and $547,000 or 1% in commercial loans. During the first
half of 2000,  $966,000 of residential  real estate loans were sold. Most of the
loans sold were fixed rate with 30 or 15 year maturities.  These loans were sold
to reduce the Company's  interest-rate  risk and to provide liquidity for future
lending opportunities.  Most of the loans sold were originated in 2000. The Bank
continues to service all of these loans. There were $634,000 of residential real
estate loans  identified as  held-for-sale at June 30, 2000. The loan to deposit
ratio was 63.9% at June 30, 2000 and 62.3% at December 31, 1999.

Premises and equipment  decreased by $62,000 to $7,054,000 at June 30, 2000 from
$7,116,000 at December 31, 1999.

The  Company  had  long-term  debt  totaling  $30,000,000  at June 30,  2000 and
December 31, 1999 from the Federal Home Loan Bank of Pittsburgh.  Of this amount
$8,000,000  matures  in  August  2000,  $5,000,000  matures  in  December  2001,
$7,000,000 matures on 2008 and the remaining $10,000,000 matures in August 2004.
The  interest  rates  associated  with  these  loans are 6.89%  variable,  6.36%
variable  (at LIBOR plus 3 basis  points),  4.86% fixed to October 2003 at which
time the rate may be converted at the option of the lender to a variable rate of
LIBOR plus 15 basis  points,  and 6.06%  fixed to August  2001 at which time the
rate may be 3 month  LIBOR  plus 15 basis  points,  if LIBOR is 7.5% or  higher,
respectively.  The loans are secured by the Bank's  investment  and  residential
real estate loans and securities. These funds were borrowed to improve liquidity
and to fund loans.

<PAGE>

The Company's  Employee Stock  Ownership  Plan (ESOP) has two loans  outstanding
totaling  $1,320,000  at June 30, 2000 and December  31, 1999.  During the first
quarter of 1999,  the ESOP borrowed  $1,000,000  from the Company's  subsidiary,
First C. G.  Company,  payable over twenty years with interest due quarterly and
principal annually in October. The proceeds from this loan were used to purchase
37,275 shares of the Company's  common stock. In the second quarter of 1998, the
ESOP borrowed  $500,000 from First C. G. Company.  This loan is due in 2005 with
interest due quarterly and principal  annually in October.  The interest rate on
these  loans is at the  Bank's  prime  rate  (9.5% at June 30,  2000 and 8.5% at
December 31, 1999).

At June 30,  2000 the Bank had  short-term  borrowings  of  $3,445,000  from the
Federal Home Loan Bank of  Pittsburgh  against a line of credit of  $25,000,000.
The Bank had no such short-term borrowings at December 31 1999.

Results of Operations

The net income for the three months ended June 30, 2000 was $619,000, a $306,000
or 33% decrease  compared to net income of $925,000 for the same period in 1999.
The earnings  decline was attributable to an increase in total other expenses of
$424,000 primarily the result of a one-time write-down in the amount of $184,000
of a commercial property held in Other Real Estate Owned and increases in salary
and benefits of $158,000  and  occupancy  expense of $87,000,  and a decrease of
$233,000 in net  securities  gains  offset in part by  increases in net interest
income of $152,000 and other income exclusive of net securities gains of $41,000
and a $158,000 decrease in Federal income taxes.

Net income for the six months  ended June 30,  2000 was  $1,415,000  compared to
$1,710,000  for the same period in 1999.  The  earnings  decrease of $295,000 or
17.3% was  primarily  attributable  to  increases  in total  other  expenses  of
$593,000  and a decreases in net  securities  gains of $403,000 and gains on the
sale of mortgage  loans of $92,000.  These were offset in part by an increase of
$302,000 in net  interest  income,  an  increase  of  $224,000  in other  income
exclusive of net securities  gains and gains on the sale of mortgage loans,  and
decreases of $125,000 in the provision for loan losses and Federal  income taxes
of $142,000.

Basic  earnings per share for the three months ended June 30, 2000 were $0.32 as
compared  to  $0.50  for  the  corresponding  period  in  1999.  Average  shares
outstanding  during this three month period were 1,916,026 in 2000 and 1,868,696
in 1999.  Basic  earnings  per share for the six months  ended June 30, 2000 and
1999 were $0.74 and $0.91, respectively.  Average shares outstanding during this
six month period were 1,912,381 in 2000 and 1,874,551 in 1999.  Diluted earnings
per share for the three month period ended June 30, 2000 were $0.32  compared to
$0.49 for the same period in 1999.  Diluted earnings per share for the six month
period  ended June 30 were $0.74 and $0.90 in 2000 and 1999,  respectively.  Per
share earnings and average shares  outstanding have been restated to reflect the
5% stock dividend paid on June 22, 2000. (see Note F)

<PAGE>

Net Interest Income

The "Rate/Volume  Analysis" table segregates,  in detail, the major factors that
contributed  to the  changes in net  interest  income,  for the  quarter and six
months ended June 30, 2000 as compared to the same period in 1999,  into amounts
attributable  to both rate and volume  variances.  In calculating the variances,
the changes were first  segregated  into (1) changes in volume (change in volume
times the old rate),  (2) changes in rate (changes in rate times the old volume)
and (3) changes in rate/volume (changes in rate times the change in volume). The
changes in  rate/volume  have been  allocated in their entirety to the change in
rates. The interest income included in the "Rate/Volume Analysis" table has been
adjusted to a fully taxable  equivalent  amount using the Federal  statutory tax
rate of 34%. Non accruing loans have been used in the daily average  balances to
determine  changes in interest  income due to volume.  Loan fees included in the
interest income calculation are not material.

Net interest  income  amounted to $3,837,000 for the three months ended June 30,
2000 as compared to  $3,685,000  for the three months  ended March 31, 1999,  an
increase of $152,000 or 4.1%. This increase is the result of the increase in the
volume  of   interest-earning   assets   reduced   in  part  by   increases   in
interest-bearing liabilities and a lower interest spread.

For the six  months  period  ended  June  30,  2000,  net  interest  income  was
$7,543,000  compared to  $7,241,000  for the same period in 1999,  a decrease of
$302,000 or 4.2%.

The fully  taxable-equivalent  net interest  income was $7,946,000 for the first
six months of 2000,  compared to $7,661,000  for the same period in 1999, a 3.7%
or $284,000 increase.  As shown in the following  "Rate/Volume  Analysis" table,
this increase in  taxable-equivalent  net interest income was primarily due to a
$282,000  increase  related to interest rates and a $2,000  increase  related to
volume.

Total taxable-equivalent interest income grew $1,295,000 primarily the result of
the  higher  volumes  in  the  investment   security   earning  asset  category.
Taxable-equivalent  income from  investment  securities for the six month period
increased  $1,560,000  over the  first  half of 1999.  This was  comprised  of a
$1,174,000  increase  due to volume  and a $386,000  increase  due to rates as a
result of rising interest  rates.  The increase in interest earned on investment
securities was partially reduced by a $181,000  reduction in taxable  equivalent
interest  earned on loans in the first half of 2000 as  compared  to 1999.  This
decrease was  attributed to a $280,000  reduction due to a lower volume of loans
partially  offset by an  increase  of $99,000  due to rising  interest  rates on
loans. Average year-to-date earning assets increased to $371,095,000 at June 30,
2000 from $345,119,000 at June 30, 1999, a $25,976,000 or 7.5% increase.

Total  interest  expense  grew  $1,009,000  during the first six months of 2000,
compared to the same period in 1999.  This growth was  principally the result of
higher  volumes,  primarily  due to an  increase  in time  deposits,  short-term
borrowing  and  long-term  debt.  Interest  expense  attributed to time deposits
increased  $483,000  during the first six months of 2000,  compared to the first
six months of 1999.  This increase is primarily  attributable  to an increase in
volume.  The  increase in time  deposits  was used to finance the earning  asset
growth.  Interest expense for short-term borrowings and long-term debt increased
$176,000 and $354,000, respectively. These increases are primarily due to higher
level  of  borrowings.  These  borrowings  were  used to fund  the  increase  in
interest-earning  assets.  Also contributing to the increase in interest expense
were higher rates on time deposits and short and long term borrowings. Partially
offset  by lower  interest  rates  paid on  demand  deposits,  savings  and club
accounts as a result of repricing.  (see Item 3. - Quantitative  and Qualitative
Discussion About Market Risk).

<PAGE>

         The  following   table  sets  forth  a  "Rate/Volume   Analysis"  which
segregates  in detail the major factors that  contributed  to the changes in net
interest  income for the six months  ended June 30, 2000.  The  interest  income
included in the table has been  adjusted to a fully  taxable  equivalent  amount
using the Federal statutory tax rate of 34%.

                            RATE/VOLUME ANALYSIS
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
                                                      Six Months Ended
                                                        June 30, 2000
                                                       Over / (Under)
                                                        June 30, 1999
                                                       CHANGE DUE TO:

                                                TOTAL      RATE      VOLUME
<S>                                         <C>         <C>       <C>

(Fully Taxable Equivalent)
INTEREST INCOME
Interest-Bearing Balances With Banks         $   (75)   $     2    $   (77)
Federal Funds Sold                                (9)         3        (12)
Investment Securities                          1,560        386      1,174
Loans                                           (181)        99       (280)
                                             -------    -------    -------
Total Interest Income                          1,295        490        805
                                             -------    -------    -------

INTEREST EXPENSE
Demand Deposits, Savings & Clubs             $   (20)   $   (25)   $     5
Time Deposits                                    483         78        405
Federal Funds Purchased and Securities
   Sold Under Agreements to Repurchase            16         31        (15)
Short-Term Borrowings                            176         48        128
Long-Term Debt                                   354         74        280
                                             -------    -------    -------
Total Interest Expense                       $ 1,009    $   205    $   803
                                             -------    -------    -------

Net Increase in Interest Income              $   284    $   282    $     2
</TABLE>

<PAGE>

Other Income and Other Expenses

Other income for the three months ended June 30, 2000 including service charges,
trust fees,  gains or losses on the sale of mortgage  loans and other  operating
income, but exclusive of securities gains or losses, was $971,000 as compared to
$930,000  for the same  period in 1999.  This  increase  of $41,000 was due to a
$66,000 increase in service charges, offset in part by decreases in gains on the
sale of mortgage loans and Trust Division  revenues.  There was $2,000 in losses
on the sale of mortgage  loans for the three months ended June 30, 2000 compared
to a gain of $13,000  same period in 1999.  In the three month period ended June
30, 2000, service charges were $491,000, a $66,000 increase over the 1999 amount
of $425,000.  The revenues from the Trust Division  operations were $303,000 for
the three  months  ended June 30, 2000 as  compared  to  $337,000  for the three
months ended June 30, 1999, a decline of $34,000. Other operating income for the
three months ended June 30, 2000 was  $179,000,  as compared to $155,000 for the
same period in 1999.

Other income for the six months ended June 30, 2000 including  service  charges,
trust  revenues,  gains  or  losses  on the sale of  mortgage  loans  and  other
operating income, but exclusive of securities gains or losses, was $1,960,000 as
compared  to  $1,828,000  for the same  period in 1999.  This was an increase of
$132,000 or 7.2%.  In the six month period  ended June 30, 2000 service  charges
were  $942,000,  a $145,000 or 18.2%  increase over the 1999 amount of $797,000.
The  increase in service  charge  income is the result of an increase in deposit
accounts.  The revenues from the Trust Division operations were $632,000 for the
six months  ended June 30, 2000 as compared to $603,000 for the six months ended
June 30, 1999, an increase of $29,000 or 4.8%.  During the six months ended June
30, 2000,  sales of mortgage loans resulted in a loss of $1,000 as compared to a
gain of $91,000 for the same period in 1999, a decrease of $92,000.  The loss in
2000 was the result of the sale of $966,000 of residential  real estate loans in
the first half of the year (see  discussion  on Assets and  Liabilities).  Other
operating income for the six months ended June 30, 2000 was $387,000 as compared
to $337,000 for the same period in 1999, an increase of $50,000 or 14.8%.

Total other expenses for the three month period ended June 30, 2000 increased by
$424,000 or 11.7% to $4,051,000 over total other expenses for the same period in
1999 of  $3,627,000.  Included in the total other  expenses  for the three month
period ended June 30, 2000 is a $158,000 or 9.6%  increase in salary and benefit
expenses  to a total of  $1,811,000  as compared to  $1,653,000  in 1999.  These
increases were primarily due to general salary increases of approximately 4% and
the additional  staff  necessitated by the new branches in Stroudsburg and Mount
Pocono.  Occupancy  and  equipment  expenses  were $602,000 for the three months
ended June 30, 2000 and $515,000  for the three  months ended June 30, 1999,  an
increase of $87,000 or 16.9%.  The increases in occupancy and equipment  expense
is related to the costs of the new branches and other equipment expenses.  Other
operating  expenses  for the  three  month  period  ended  June  30,  2000  were
$1,638,000,  an  increase  of  $179,000  or 12.3% from the  $1,459,000  in other
expenses  for the same period in 1999.  The  increase in other  expenses was the
result of a  one-time  write-down  in the  amount of  $184,000  of a  commercial
property  held in Other Real Estate Owned (see  discussion on "Other Real Estate
Owned").

<PAGE>

Total  other  expenses  for the six months  ended  June 30,  2000  increased  by
$593,000 or 8.3%, to  $7,768,000  from  $7,175,000  for the same period in 1999.
Salaries and employee benefits were $3,612,000 for the six months ended June 30,
2000  as  compared  to  $3,293,000  for the  six  months  ended  June  30,  1999
representing an increase of $319,000 or 9.7%. These increases were primarily due
to general salary increases of approximately 4% and the new branches.  Occupancy
and equipment  expenses were  $1,174,000  for the six months ended June 30, 2000
and  $1,050,000  for the six months ended June 30, 1999, an increase of $124,000
or 11.8%. The increases in occupancy and equipment expense is related to the new
branches  and other  equipment  expense.  Other  operating  expenses for the six
months ended June 30, 2000 were $2,981,000 in relation to $2,832,000 for the six
months ended June 30, 1999,  an increase of $149,000 or 5.3%.  This  increase is
the result of the $184,000 write-down of the Other Real Estate Owned property.

Investment Securities

The Company classifies its debt and marketable securities into three categories:
trading,  available-for-sale,  and held-to-maturity as provided by the Financial
Accounting  Standards No. 115,  "Accounting for Certain  Investments in Debt and
Equity  Securities".  The Company had no trading securities at June 30, 2000 and
December 31, 1999.

Available-for-sale  securities are carried at fair value with the net unrealized
gains  or  losses   reported  in  equity.   The  Company  had   $144,983,000  in
available-for-sale  securities  at June 30, 2000 with a net  unrealized  loss of
$4,208,000.  At December  31,  1999  available-for-sale  securities  amounted to
$132,356,000 with a net unrealized loss of $4,321,000.

During  the six month  period  ended June 30,  2000,  $3,561,000  of  securities
available-for-sale  were  sold  for  a net  gain  of  $112,000  as  compared  to
$13,297,000  of  securities  available-for-sale  were  sold  for a net  gain  of
$561,000 for the same time period in 1999.

Held-to-maturity securities totaling $19,291,000 at June 30, 2000 are carried at
cost. At December 31, 1999, the held-to-maturity securities totaled $19,887,000.
The Company has the intent and ability to hold the  held-to-maturity  securities
until  maturity.  The  Company,  at June 30, 2000,  did not hold any  securities
identified as derivatives.

<PAGE>

Allowance and Provision for Possible Loan Losses

The provision is based on management's analysis of the adequacy of the allowance
for loan losses. In its evaluation,  management  considers past loan experience,
overall  characteristics of the loan portfolio,  current economic conditions and
other relevant  facators.  At present,  management  currently  believes that the
allowance is adequate to absorb known and inherent losses in the loan portfolio.
Ultimately,  however,  the adequacy of the allowance is largely  dependent  upon
economic conditions which are beyond the scope of management's control.

For the first six months of 2000,  the  provision  for loan losses was  $125,000
compared to $250,000 for the same period in 1999.  Net charge offs were $136,000
for the six months ended June 30, 2000 compared with $283,000 for the six months
ended June 30, 1999.  The ratio of the  allowance for loan losses to total loans
at June 30, 2000 was 1.13%  compared to 1.20% at December  31, 1999 and 1.22% at
June 30, 1999.  This was  primarily  the result of an increase in total loans to
$214,622,000  at June 30, 2000 over  $202,258,000  at  December  31,  1999.  The
allowance  for  possible  loan losses at June 30,  2000  totaled  $2,426,000,  a
decrease of $11,000 or 0.5% from the December 31, 1999 amount of $2,437,000  and
$232,000 or 8.73% over the June 30, 1999 balance of $2,658,000.

As  provided  by SFAS No.  114,  as  amended  by SFAS No.  118,  $54,000  of the
Allowance  for Possible  Loan Losses is allocated to impaired  loans at June 30,
2000 (See Note I "Impaired Loans").

Transactions in the allowance for loan losses are as follows:

ALLOWANCE FOR LOAN LOSSES
<TABLE>
                                                    2000           1999
<S>                                            <C>            <C>
   Balance, January 1,                          $ 2,437,000    $ 2,691,000
   Provision charged to Operating Expenses          125,000        250,000
   Loans Charged Off                                242,000        322,000
   Recoveries                                       106,000         39,000
                                                    -------         ------
   Balance, June 30                             $ 2,426,000    $ 2,658,000
</TABLE>

         The following  table sets forth an allocation of the allowance for loan
losses by loan category:
<TABLE>

          At June 30, 2000
<S>                                   <C>
          Commercial                   $  739,000
          Residential Real Estate         243,000
          Consumer                        765,000
          Unallocated                     679,000
                                          -------
             Total                     $2,426,000
</TABLE>

<PAGE>

Non-Performing Loans

The  following  discussion  relates to the  Bank's  non-performing  loans  which
consist of those on a  non-accrual  basis and accruing  loans which are past due
ninety days or more.

Accrual of interest is discontinued on a loan when  management  believes,  after
considering  economic and business  conditions and collection  effort,  that the
borrower's  financial  condition  is such that the  collection  of  interest  is
doubtful.  The Company  views  these loans as  non-accrual,  but  considers  the
principal to be  substantially  collectible  because the loans are  protected by
adequate  collateral or other  resources.  Interest on these loans is recognized
only when  received.  The  following  table shows the balance of  non-performing
loans for each of the periods indicated.

Non-performing  loans (non accruing  loans and loans past due over 90 days) were
1.27% of total loans at June 30, 2000  compared to 1.16% at June 30,  1999.  The
increase  in this  ratio  is the  result  of a  $201,000  or 7.94%  increase  in
non-performing  loans to $2,733,000 as compared to non-performing  loans at June
30, 1999. The ratio of the allowance for loan losses to non-performing loans was
88.77% at June 30, 2000  compared to 86.97% at December  31, 1999 and 104.97% at
June 30, 1999.

Non-accruing  loans at June 30, 2000 of $1,095,000  increased  from the June 30,
1999 level of $941,000.  This $154,000  increase was primarily the result of two
additional residential mortgage loans recognized as non-accrual.  At the present
time,  management is of the opinion that these loans present a minimal amount of
exposure to the Bank.

Loans past due 90 days or more and still  accruing  interest  are loans that are
generally  well secured and  expected to be restored to a current  status in the
near  future.  As of June 30,  2000,  loans  past due 90 days or more and  still
accruing  interest were $1,638,000  compared to $1,591,000 at June 30, 1999. The
$47,000  increase  in loans past due 90 days from June 30, 1999 to June 30, 2000
was the result of an increase in commercial loans past due 90 days or more.

<PAGE>

NON-PERFORMING LOANS

<TABLE>
                                            June  30,  December 31,   June  30,
                                              2000        1999          1999
<S>                                      <C>          <C>           <C>

Non-accrual loans on a cash basis         $1,095,000   $1,311,000    $  941,000
Non-accrual loans as a percentage
  of total loans                               0.51%        0.65%         0.43%
Accruing loans past due 90 days
  or more                                 $1,638,000   $1,491,000    $1,591,000
Accruing loans past due 90 days
  or more as a percentage of total
  loans                                        0.76%        0.74%         0.73%
Allowance for loan losses to
  nonperforming loans                         88.77%       86.97%       104.97%
Nonperforming assets to total loans            1.27%        1.39%         1.16%
Allowance for loan losses to total loans       1.13%        1.20%         1.22%

</TABLE>

There are no significant loans classified for regulatory  purposes that have not
been  included in the above table of  non-performing  loans.  The Company has no
significant  loans that qualify as "Troubled Debt  Restructuring"  as defined by
the Financial  Accounting  Standards Board's  Statement of Financial  Accounting
Standards  No. 15  "Accounting  for  Debtors and  Creditors  for  Troubled  Debt
Restructuring" at June 30, 2000.

OTHER REAL ESTATE OWNED

Shown in the  following  table is the amount of "Other Real Estate  Owned" as of
the end of each of the periods indicated,  recorded as an asset on the Company's
books.  Other Real Estate Owned at June 30, 2000 of $489,000  decreased from the
June 30, 1999 level of $593,000. This $104,000 decrease was primarily the result
of a  $184,000  write-down  of a  commercial  property,  offset  in  part by the
addition of other foreclosed properties.

Year 2000

The Company did not experience any material problems related to Year 2000 during
the first six months of 2000.  The Bank had all of its branch  offices  open for
business on January 1, 2000 with all systems operating  normally.  The potential
full effect,  if any, of the Year 2000 issue on the Company,  its  customers and
its business partners, including other banks, the Federal Reserve Bank and other
Federal agencies, will not be fully determined until later.  If problems related

<PAGE>

to the Year 2000 arise  within the  Company or  entities  with which the Company
conducts  business,  the  Company  revenues  and  financial  condition  could be
adversely impacted.

The Company did not incur any Year 2000 related  expenses during the quarter and
six month period ended June 30, 2000 and does not anticipate any additional Year
2000 related expenses.  No significant projects have been delayed as a result of
the Company's Year 2000 effort.

<PAGE>

ITEM 3.     Quantitative and Qualitative Discussion About Market Risk

As a financial  institution,  the Company's  primary component of market risk is
interest rate volatility.  Fluctuations in interest will ultimately  impact both
the level of income and  expense  recorded on a large  portion of the  Company's
assets and  liabilities,  and the market value of all  interest-earning  assets,
other  than those  which  possess a short  term to  maturity.  Since most of the
Company's  interest-bearing  assets and liabilities are located at the Bank, the
majority of the Company's  interest rate risk is at the Bank level. As a result,
most interest rate risk  management  procedures  are performed at the Bank level
(see discussion on "Interest Rate Sensitivity").

The Company and the Bank operate as a community banking institution primarily in
the counties of Northampton, Lehigh and Monroe, Pennsylvania. As a result of its
location  and  nature of  operations,  the  Company  is not  subject  to foreign
currency  exchange or  commodity  price risk.  The Bank makes real estate  loans
primarily  in the  counties  adjacent to its  operations  and thus is subject to
risks associated with those local  economies.  The Bank holds a concentration of
residential  real  estate  loans  (56.01% of total loans) and  commercial  loans
supported  by real estate  (20.7% of total loans) in its loan  portfolio.  These
loans are subject to  interest  and  economic  risks.  The Bank also  originates
residential real estate loans for sale in the secondary  market.  Such loans are
identified as "Mortgage Loans  Held-for-Sale" on the Company's Balance Sheet and
are subject to interest rate risk (see discussion on "Assets and  Liabilities").
The  Company  does not own any  trading  assets  and  does not have any  hedging
transactions in place such as interest rate swaps.

Interest Rate Sensitivity

The following table "Consolidated  Comparative  Statement Analysis" sets forth a
comparison of average daily balances,  interest income and interest expense on a
fully taxable  equivalent  basis and interest  rates  calculated  for each major
category of interest-earning  assets and interest-bearing  liabilities.  For the
purposes of this analysis,  the  computations in the  "Consolidated  Comparative
Statement Analysis" were prepared using the Federal statutory rate of 34%; there
were no state or local taxes on income applicable to the Company.

<PAGE>

                  FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                   CONSOLIDATED COMPARATIVE STATEMENT ANALYSIS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>

Six Months Ended, June 30,                  2000                   1999
                                             Int    Avg             Int   Avg
                                     Avg     Inc/  Yield/     Avg   Inc/ Yield/
                                     Bal     Exp    Rate      Bal   Exp   Rate
<S>                                <C>        <C>  <C>     <C>       <C> <C>

ASSETS:
INTEREST-EARNING ASSETS
Int-Bearing Deposits with Banks  $    944  $   25   5.30% $ 4,185  $ 100  4.78%
Federal Funds Sold                    275       9   6.55      785     18  4.59
Investment Securities
      Taxable                     135,348   4,625   6.83   95,769  2,988  6.24
      Non-Taxable (1)              29,732   1,105   7.43   33,049  1,182  7.15
Loans (1) (2)                     207,266   8,664   8.36  214,054  8,845  8.26
Reserve for Loan Losses             2,470      --     --    2,723     --    --
                                ---------   -----        --------  -----
Net Loans                         204,796   8,664   8.46  211,331  8,845  8.37
                                ---------   -----        --------  -----
  Total Interest-Earning Assets   371,095  14,428   7.78  345,119 13,133  7.61
Non-Interest Earning Assets        31,406      --     --   27,366     --    --
                                ---------   -----        --------  -----
  TOTAL ASSETS, INT INCOME      $ 402,501  14,428   7.17 $372,485 13,133  7.05
                                ---------   -----        --------  -----

LIABILITIES
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits
  Demand Deposits               $  52,125     260   1.00 $ 50,576    271  1.07
  Money Market Deposits            12,774     176   2.76   13,785    188  2.73
  Savings & Club Deposits          63,194     693   2.19   63,160    690  2.19
  CD's over $100,000                4,398     108   4.91    4,631     91  3.93
  All Other Time Deposits         150,493   4,018   5.34  134,744  3,552  5.27
                                ---------   -----        --------  -----
   Total Int-Bearing Deposits     282,984   5,255   3.71  266,896  4,792  3.59
Federal Funds Purchased
 and Securities Sold Under
 Agreements to Repurchase           4,928     104   4.22    5,903     88  2.98
Short-Term Borrowings               6,671     210   6.30    1,398     34  4.86
Long-Term Borrowings               30,000     913   6.09   20,000    559  5.59
                                ---------   -----        --------  -----
  Total Int-Bearing Liabilities   324,583   6,482   3.99  294,197  5,473  3.72

NON-INTEREST-BEARING LIABILITIES
Non-Interest-Bearing Deposits      42,267      --     --   40,213     --    --
Other Liabilities                   7,531      --     --    7,196     --    --
                                ---------   -----        --------  -----
   TOTAL LIABILITIES              374,381   6,482   3.46  341,606  5,473  3.20
   SHAREHOLDERS' EQUITY            28,120      --     --   30,879     --    --
                                ---------   -----        --------  -----
   TOTAL LIABILITIES AND EQUITY $ 402,501   6,482   3.22 $372,485  5,473  2.94

NET INTEREST INCOME                       $ 7,946                $ 7,662
                                            -----                  -----

    Net Interest Spread (3)                         3.79                  3.89
    Effect of Interest-Free Sources
      Used to Fund Earnings Assets                  0.49                  0.55
    Net Interest Margin (4)                         4.28%                 4.44%
                                                    ----                  ----
</TABLE>

(1) The indicated  interest income and average yields are presented on a taxable
    equivalent  basis.  The tax   equivalent   adjustments   included  above are
    $404,000  and  $419,000  for   the  six  months ended June 30, 2000 and June
    30, 1999,  respectively.  The  effective   tax  rate  used  for  the taxable
    equivalent adjustment was 34%.
(2) Loan fees of $(144,000) and $57,000  for the six  months ended June 30, 2000
    and  June 30,  1999, respectively, are included in interest income.  Average
    loan balances include  non-accruing loans and  average loans   held-for-sale
    of $1,199,000 $3,395,000 for the six months ended June 30, 2000 and June 30,
    1999, respectively.
(3) Net interest spread is the arithmetic difference between  yield on interest-
    earning assets and the rate paid on interest-bearing liabilities.
(4) Net interest margin is computed by dividing net interest income by averaging
    interest-earning assets.


<PAGE>

The net  interest  margin of 4.28% for the six month period ended June 30, 2000,
decreased  from the 4.44% net interest  margin for the first six months of 1999.
The yield on interest  earning  assets was 7.78%  during the first six months of
2000 as compared to 7.61% in 1999.  The average  interest  rate paid on interest
bearing deposits and other borrowings was 3.99% for the first six months of 2000
as compared to 3.72% in 1999.

Interest  rate  sensitivity  is a measure  of the  extent to which net  interest
income would change due to changes in the level of interest rates. The objective
of interest rate sensitivity  management is to reduce a company's  vulnerability
to future interest rate  fluctuations  and to enhance  consistent  growth of net
interest income

Rate sensitivity  arises from the difference between the volumes of assets which
are  rate-sensitive  as  compared  to  the  volumes  of  liabilities  which  are
rate-sensitive.  The mismatch of assets and liabilities in a specific time frame
is referred to as interest  sensitivity  gap.  Generally,  in an  environment of
rising interest rates, a negative gap will decrease net interest income,  and in
an  environment  of falling  interest  rates,  a negative gap will  increase net
interest income.

Assets and  liabilities  are  allocated to a specific time period based on their
scheduled  repricing date or on an historical basis. At June 30, 2000, assets of
$145,282,000  (35.22% of total  assets)  were  subject to interest  rate changes
within  one  year.  Liabilities  subject  to rate  change  within  one year were
$190,738,000. A negative one-year gap position of $45,456,000 existed as of June
30, 2000. The ratio of rate-sensitive  assets to rate-sensitive  liabilities for
the one-year time frame was 76.17%. The "Interest  Sensitivity  Analysis" in the
following table presents a sensitivity gap analysis of the Company's  assets and
liabilities at June 30, 2000.

<PAGE>

<TABLE>
-------------------------------------------------------------------------------
INTEREST SENSITIVITY ANALYSIS
(Dollars in Thousands) as of June 30, 2000
-------------------------------------------------------------------------------

                      0-90   91-180   181-365       1-5        Over
                      Days    Days      Days        Years     5 years    Total
<S>                <C>      <C>     <C>         <C>        <C>         <C>
Interest-Bearing
Deposits with Banks $   351  $    ---  $    ---   $    ---    $   ---  $    351
Inv Securities       35,687     9,196    17,671      72,484     29,236  164,274
Loans Held-for-Sale     634      ---       ---        ---         ---       634
Loans                33,832    11,096    20,487      81,113     65,668  212,196
Other Assets         16,328      ---       ---        ---       18,707   35,035
                    -------  --------  --------     -------   -------- --------
  TOTAL ASSETS      $86,832  $ 20,292  $ 38,158   $ 153,597   $113,611 $412,490
                    -------  --------  --------     -------   -------- --------
Non-Interest-Bearing
  Deposits (1)      $   ---  $   ---   $   ---    $    ---    $ 45,908 $ 45,908
Int-Bearing
 Deposits            82,744    17,402    72,097      54,433     63,449  290,125
Securities Sold
 Under Agreements
 to Repurchase        7,050      ---       ---        ---         ---     7,050
Short-Term Debt       3,445      ---       ---        ---         ---     3,445
Long-Term Debt        8,000      ---       ---      15,000       7,000   30,000
Other                   ---      ---       ---        ---        6,721    6,721
Capital                 ---      ---       ---        ---       29,241   29,241
                    -------  --------  --------    -------    -------- --------
TOTAL LIABILITIES
  AND CAPITAL      $101,239  $ 17,402  $ 72,097   $ 69,433    $152,319 $412,490
                    -------  --------  --------    -------    -------- --------
Net Interest
  Sensitivity Gap  $(14,407) $  2,890  $(33,939)  $ 84,164    $ 38,708 $   ---
Cuumulative Int
  Sensitivity Gap  $(14,407) $(11,517) $(45,456)  $(38,708)   $   ---  $   ---

Cumulative Gap
  RSA/RSL             85.77%    90.29%    76.17%    114.88%    100.0%
</TABLE>


(1) Historically, non-interest-bearing deposits reflect insignificant changes in
deposit trends and,  therefore,  the Company classifies these deposits over five
years.

<PAGE>

PART II  -  OTHER INFORMATION

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

On May 11, 2000,  the Company held its annual  meeting of  shareholders.  At the
annual meeting, the shareholders  elected S. Eric Beattie,  Christian F. Martin,
IV and John J.  Ruhle,  Jr. as Class 2  Directors  of the Company to serve for a
term of four years and until their  successors  are duly elected and  qualified.
The following is a tabulation of the vote for these directors.
<TABLE>
                                                       Votes
                                                                 Withheld
                                             For                 Authority
                                       ----------------        --------------
<S>                                      <C>                      <C>
S. Eric Beattie                           1,586,233                35,726
Christian F. Martin, IV                   1,588,597                33,362
John H. Ruhle, Jr.                        1,588,597                33,362
</TABLE>

The other  directors  whose  terms of office as a director  continued  after the
meeting are Robert J. Bergren,  Gordon B. Mowrer, Daniel B. Mulholland,  Charles
J. Peischl, Richard Stevens, III and Maria Z. Thulin.

ITEM 5.    Other Information

On April 24, 2000, the Bank entered into an agreement to acquire two supermarket
branches from  Commonwealth Bank of Valley Forge,  Pennsylvania.  These branches
are located in Giant  Supermarkets in Whitehall and Trexlertown,  Lehigh County,
Pennsylvania.  This acquisition has been approved by the regulatory  authorities
and is expected to be completed during the third quarter.

ITEM 6.    Exhibits and Reports on Form 8-K

(a)      Exhibits
         27.1 Financial Data Schedule

(b)      Reports on Form 8K

         No  reports  on  Form  8K  were  filed  for the
         quarter during which this report is filed.

<PAGE>

                                   SIGNATURES

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

                                           FIRST COLONIAL GROUP, INC.

DATE:       August 15, 2000                BY:  /S/  S. ERIC BEATTIE
       --------------------------               --------------------
                                                 S. ERIC BEATTIE
                                                 PRESIDENT
                                                (PRINCIPAL EXECUTIVE OFFICER)

DATE:       August 15, 2000                BY:  /S/  REID L. HEEREN
       -------------------------                -------------------
                                                 REID L. HEEREN
                                                 VICE PRESIDENT
                                                (PRINCIPAL FINANCIAL OFFICER)