FORM 10-QSB
                       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, 1997
                                       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
 INCORPORATION OR ORGANIZATION                             IDENTIFICATION NO.)

76 SO. 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:  1,643,864  SHARES OF COMMON
STOCK, $5 PAR VALUE, OUTSTANDING ON JUNE 30, 1997

<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 Cash Flows                           4
    Notes to Consolidated Financial Statements                     5

  ITEM 2  -  Management's Discussion and Analysis of
             Financial Condition and Results of Operations         8

PART II  -  OTHER INFORMATION

  ITEM 4  -  Submission of Matters to a Vote of Security Holders  17
  ITEM 5  -  Other Information                                    17
  ITEM 6  -  Exhibits and Reports on Form 8-K                     17


SIGNATURES                                                        18

<PAGE>

                  FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                             (Dollars in Thousands)
                                  (Unaudited)
<TABLE>

                                                          June 30    Dec. 31
                                                           1997       1996
                                                       ---------    ---------

<S>                                                   <C>          <C>

ASSETS
 Cash and Due From Banks                               $  13,984    $  11,729
 Federal Funds Sold                                          --         2,200
                                                       ---------    ---------
  Total Cash and Cash Equivalents                         13,984       13,929
 Interest-Bearing Deposits With Banks                         93          285
 Investment Securities                                    18,265       20,999
  (Market Value:  June 30, 1997 - $18,380;
   Dec. 31, 1996 - $21,124)
 Securities Available-for-Sale at Fair Value              66,494       56,779
 Mortgage Loans Held-for-Sale                                379          721
 Total Loans, Net of Unearned Discount                   233,151      220,117
  LESS:  Allowance for Possible Loan Losse                (2,589)      (2,532)
                                                       ---------    ---------
   Net Loans                                             230,562      217,585
 Premises and Equipment                                    7,609        7,030
 Accrued Interest Income                                   2,204        2,020
 Other Real Estate Owned                                     513          595
 Other Assets                                              3,259        2,409
                                                       ---------    ---------
  TOTAL ASSETS                                         $ 343,362    $ 322,352
                                                       =========    =========

LIABILITIES
 Deposits
  Non-Interest Bearing Deposits                        $  33,127    $  31,450
  Interest-Bearing Deposits                              250,127      236,218
                                                       ---------    ---------
   Total Deposits                                        283,254      267,668
 Securities Sold Under Agreements to Repurchase            6,866        3,795
 Short-Term Borrowing                                      1,085           --
 Long-Term Debt                                           18,432       18,512
 Accrued Interest Payable                                  3,262        3,205
 Other Liabilities                                         2,324        2,367
                                                       ---------    ---------
  TOTAL LIABILITIES                                      315,223      295,547
                                                       ---------    ---------

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                          8,219        7,803
   Issued - 1,643,864 shares at June 30, 1997
   and 1,560,634 shares at Dec. 31, 1996
  Additional Paid in Capital                              10,776        9,212
  Retained Earnings                                        9,069        9,975
  Less Treasury Stock at Cost:  0 shares in 1997
   and 861 in 1996                                            --          (20)
  Employee Stock Ownership Plan Debt                        (432)        (512)
  Net Unrealized Gain (Loss) on Securities
   Available-for-Sale                                        507          347
                                                       ---------    ---------

TOTAL SHAREHOLDERS' EQUITY                                28,139       26,805
                                                       ---------    ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $ 343,362    $ 322,352
                                                       =========    =========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

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

                                      Three Months Ended     Six Months Ended
                                       June 30,  June 30,   June 30,  June 30,
                                        1997      1996        1997      1996
                                    --------- ---------   --------- ---------
<S>                                  <C>       <C>         <C>       <C>
INTEREST INCOME:
 Interest and Fees on Loans           $ 4,953   $ 4,318     $ 9,671   $ 8,631
 Investment Securities Income
  Taxable                               1,157     1,177       2,261     2,287
  Tax-Exempt                              190       140         380       263
 Interest on Other Investments
  Deposits With Banks                      12        17          29        48
  Federal Funds Sold                       --        --           1         2
                                    --------- ---------   --------- ---------
   Total Interest Income                6,312     5,652      12,342    11,231
INTEREST EXPENSE:
 Interest on Deposits                   2,273     2,208       4,486     4,385
 Interest on Repurchase Agreements         57        47          91        76
 Interest on Short-Term Borrowing          59        48          94       156
 Interest on Long-Term Debt               289        27         564        57
                                    --------- ---------   --------- ---------
   Total Interest Expense               2,678     2,330       5,235     4,674
                                    --------- ---------   --------- ---------
NET INTEREST INCOME:                    3,634     3,322       7,107     6,557
 Provision (credit) for Possible 
    Loan Losses                           187       305         300       410
                                    --------- ---------   --------- ---------
  Net Interest Income After Provision
   For Possible Loan Losses             3,447     3,017       6,807     6,147
                                    --------- ---------   --------- ---------
OTHER INCOME:
 Trust Income                             192       174         379       348
 Service Charges on Deposit Accounts      258       267         551       511
 Investment Securities Gains 
  (Losses), Net                            94       146         234       272
 Gains (Losses) on the Sale of 
   Mortgage Loans                          50        (1)         49         5
 Other Operating Income                   260       169         402       300
                                    --------- ---------   --------- ---------
  Total Other Income                      854       755       1,615     1,436
                                    --------- ---------   --------- ---------
OTHER EXPENSES:
 Salaries and Employee Benefits         1,473     1,387       2,954     2,801
 Net Occupancy and Equipment Expense      574       531       1,106     1,076
 Other Operating Expenses               1,122       884       2,263     1,879
                                    --------- ---------   --------- ---------
  Total Other Expenses                  3,169     2,802       6,323     5,756
                                    --------- ---------   --------- ---------
Income  Before Income Taxes             1,132       970       2,099     1,827
Provision for Income Taxes (Credit)       320       280         583       522
                                    --------- ---------   --------- ---------
NET INCOME                              $ 812    $  690      $1,516    $1,305
                                    ========= =========   ========= =========
 Net Income  Per Share                  $0.50    $ 0.43      $ 0.94    $ 0.82
                                    ========= =========   ========= =========
 Average Shares Outstanding         1,624,852 1,600,325   1,622,732 1,597,809
</TABLE>

See accompanying notes to interim financial statements.

<PAGE>

                           FIRST COLONIAL GROUP, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (Dollars in Thousands)
                                  (Unaudited)
<TABLE>
                                                    Six Months Ended
                                                 June 30, 1997   June 30, 1996
                                                 -------------   -------------
<S>                                               <C>             <C>    
OPERATING ACTIVITIES 
Net Income                                         $  1,516        $  1,305
Adjustments to Reconcile
Net Income to Net Cash
 Provided by (Used In) Activities:
  Provision for Possible Loan Losses                    300             410
  Depreciation and Amortization                         417             360
  Amortization of Security Discounts                    (32)            (78)
  Amortization of Security Premiums                      66              84
  Amortization of Deferred Fees on Loans                (17)             49
  Investment Securities Gains, Net                     (234)           (272)
  Gain on Sale of Mortgage Loans                        (49)             (5)
  Mortgage Loans Originated for Sale                 (7,587)         (8,241)
  Mortgage Loan Sales                                 7,929           2,040
 Changes in Assets and Liabilities:
  Net Increase in Accrued Interest Income              (184)           (207)
  Increase (Decrease) in Accrued
   Interest Payable                                      57            (431)
  Net Increase in Other Assets                         (859)           (824)
  Net Decrease in Other Liabilities                    (126)           (118)
                                                   --------        --------
Net Cash Provided by (Used In)
Operating Activities                                  1,197          (5,928)
                                                   --------        --------
INVESTING ACTIVITIES
Proceeds from Maturities of Securities
 Available-for-Sale                                   3,436           8,334
Proceeds from Maturities of Securities
 Held-to-Maturity                                     3,623           4,417
Proceeds from Sales of Securities
 Available-for-Sale                                   6,692          10,295
Purchase of Securities Available-for-Sale           (17,521)        (21,930)
Purchase of Securities Held-to-Maturity              (2,768)         (4,164)
Net Decrease in Interest Bearing
 Deposits With Banks                                    192             623
Net Increase in Loans                               (13,675)         (8,775)
Purchase of Premises and Equipment, Net                (987)           (466)
Proceeds from Sale of Other Real Estate Owned           546             289
                                                   --------        --------
Net Cash Used In Investing Activities               (20,462)        (11,377)
                                                   --------        --------
FINANCING ACTIVITIES
Net Increase in Interest and Non-Interest
 Bearing Demand Deposits and Savings Accounts         4,826           5,940
Net Increase in Certificates of Deposits             10,760           2,286
Proceeds from sale of Treasury Stock                     20             --
Net Increase in Short-Term Borrowing                  1,085           6,905
Net Increase (Decrease) in Repurchase Agreements      3,071          (1,236)
Proceeds from Issuance of Stock                         116             123
Cash Dividends                                         (554)           (491)
Cash in Lieu of Fractional Shares                        (4)             (3)
                                                   --------        --------
Net Cash Provided by Financing Activities            19,320          13,524
                                                   --------        --------
Increase (Decrease) in Cash and Cash Equivalents         55          (3,781)
Cash and Cash Equivalents, January 1                 13,929          15,549
                                                   --------        --------
Cash and Cash Equivalents, June 30                 $ 13,984        $ 11,768
                                                   ========        ========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                           FIRST COLONIAL GROUP, INC.

               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, 1996.

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, 1997 are not necessarily
indicative  of results  to be  expected  for the full year or any other  interim
period.

NOTE B  -  CASH DIVIDENDS

On May 23, 1997 the Company paid its 1997 second quarter dividend on its common
stock of $.17 per share to shareholders of record on May 8, 1997.

NOTE C  -  STOCK DIVIDEND

On June 19, 1997 the Company paid a 5% stock dividend to  shareholders of record
on May 30, 1997.  Fractional shares were paid in cash based on the closing price
of $23.875 per share on the record date.  Earnings per share and average  shares
outstanding have been restated to reflect the 5% stock dividend.

NOTE D  -  NEW ACCOUNTING PRONOUNCEMENT

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting  Standards  No.  128,  Earnings  Per Share,  which is  effective  for
financial  statements  issued after December 15, 1997. Early adoption of the new
standard is not permitted. The new standard eliminates primary and fully diluted
earnings per share and requires  presentation of basic and diluted  earnings per
share together with disclosure of how the per share amounts were computed. Basic
earnings  per  share  excludes  dilution  and is  computed  by  dividing  income
available  to  common  shareholders  by  the   weighted-average   common  shares
outstanding  for the period.  Diluted  earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised and  converted  into common stock or resulted in the issuance of
common stock that then shared the  earnings of the entity.  The pro forma effect
of adopting  the new  standard  would be basic  earnings  per share of $0.50 and
$0.43 and  diluted  earnings  per share of $0.50 and $0.43 for the three  months
ended June 30, 1997 and 1996.

<PAGE>

NOTE E - IMPAIRED LOANS

As provided by  Statement  of  Financial  Accounting  Standards  (SFAS) No. 114,
"Acounting for Creditors for Impairment of a Loan",  as amended by SFAS No. 118,
"Accounting  by Creditors  for  Impairment  of a Loan - Income  Recognition  and
Disclosures",  the Company  measures  impairment  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
loans' observable market price, or the fair value of the collecteral if the loan
is collateral dependent. The Company measures impairment based on the fair value
of the collateral when it determines that foreclosure is probable.

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  in such loans and no
income is  recognized  until all recorded  amounts of interest and principal are
recovered in full.

The  recorded  investment  in these  loans and the  valuation  for credit  loses
related to loan  impairment  are as  follows:

                                                    At June 30,
                                                 1997         1996
                                               ---------    -----------
  Principal amount of impaired loans           $ 377,000    $ 1,690,000
  Accrued interest                                   ---            --- 
  Deferred loan costs                              7,000          4,000
                                               ---------    -----------
                                                 384,000      1,694,000
  Less  valuation  allowance                     105,000        285,000
                                               ---------    -----------
                                               $ 279,000    $ 1,409,000
                                               =========    ===========


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, is as follows:

                                                 1997            1996
                                              ----------    ----------
Valuation allowance at January 1,              $ 128,000    $  238,000
Provision for loan impairment                     17,000       175,000
Transfer from Unallocated Allowance for
 Possible Loan Losses                                ---        50,000
Direct charge-offs                               (40,000)     (187,000)
Recoveries                                           ---         9,000
                                              ----------    ----------
Valuation allowance at June 30,               $  105,000    $  285,000
                                              ==========    ==========

Total cash  collected  on impaired  loans during the six month period ended June
30, 1997 was $591,000,  of which $569,000 was credited to the principal  balance
outstanding  on such  loans and  $22,000  was  recognized  as  interest  income.
Interest  that would have been  accrued on impaired  loans  during the first six
months of 1997 was $38,000.  Interest  income on loans  recognized for the first
half of 1997 was  $4,953,000.  The  valuation  allowance  for impaired  loans of
$105,000  at June 30,  1997 and  $285,000  at June 30,  1996 is  included in the
"Allowance  for Possible  Loan Losses"  which  amounts to $2,589,000 at June 30,
1997. The provision for loan  impairment for the six month period ended June 30,
1997 and 1996 is a part of "Provision for Possible Loan Losses"  included in the
"Consolidated Statement of Income" for the same period.

<PAGE>

NOTE F  -  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 G  -  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-KSB  for the year  ended  December  31,  1996,  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 H  -  FORWARD LOOKING STATEMENTS

The  information  contained  in this  Quarterly  Report on Form  10-QSB  for the
quarterly  period ended June 30, 1997 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 and other  statements 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.  Certain  of  these  risks,  uncertainties  and  other  factors  are
discussed in this Quarterly  Report on Form 10-QSB,  or in the Company's  Annual
Report on Form 10-KSB for the year ended  December 31, 1996, a copy of which may
be obtained  from the Company  upon request and without  charge  (except for the
exhibits thereto) as described in Note G above.

<PAGE>

                  FIRST COLONIAL GROUP, INC. AND SUBSIDIARIES
                    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 periods ended June 30, 1997.

     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 asset 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, 1997,  cash, due from banks,  Federal Funds Sold and
interest-bearing  deposits  with  banks  totaled  $14,077,000,   and  securities
maturing  within one year totaled  $1,807,000.  At December 31, 1996,  cash, due
from banks,  Federal Funds Sold and interest bearing deposits with banks totaled
$14,214,000, and securities maturing within one year were $2,892,000. Securities
sold under an agreement to  repurchase  totaled  $6,866,000 at June 30, 1997 and
$3,795,000  at December 31, 1996.  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  $87,000  at June 30,  1997 and
$82,000 at December 31, 1996.  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, 1997. At December 31,
1996, Federal Funds Sold totaled $2,200,000.

     The Federal Home Loan Bank of  Pittsburgh  provides the Bank with a line of
credit in the amount of $12,895,000, subject to certain collateral requirements.
The Bank had short-term  (overnight)  borrowings against this line of $1,085,000
at June 30, 1997. The Bank had no short-term  (overnight) borrowings at December
31, 1996. The Bank had additional  borrowings from the Federal Home Bank at June
30, 1997  totaling  $18,000,000  of which  $5,000,000  is due in November  1998,
$8,000,000 is due in August 2000 and $5,000,000 is due in December 2001.

     Cash  flows  for the six  months  ended  June 30,  1997  consisted  of cash
provided by operating  activities of  $1,197,000  and cash provided by financing
activities  of  $19,320,000,  offset by cash  used in  investing  activities  of
$20,462,000 resulting in an increase in cash and cash equivalents of $55,000.

<PAGE>

     Cash provided by operating activities was the result of mortgage loan sales
of $7,929,000, net operating income of $1,516,000, depreciation and amortization
of $417,000  and a provision  for possible  loan losses of  $300,000,  partially
reduced by mortgage loans  originated  for sale of  $7,587,000,  net increase in
other assets of $859,000, net investment security gains of $234,000, an increase
in accrued  interest  income of $184,000 and a decrease in other  liabilities of
$126,000.  Cash was used in investing  activities for the purchase of securities
available-for-sale   and   held-to-maturity   of  $17,521,000   and  $2,768,000,
respectively,  net  increases  in  loans to  customers  of  $13,675,000  and the
purchase of premises and equipment of $987,000, partially offset by the proceeds
from  the  sale  of  available-for-sale   securities  of  $6,692,000,  from  the
maturities  of  held-to-maturity  securities of  $3,623,000,  from proceeds from
maturities of available-for-sale securities of $3,436,000, and proceeds from the
sale of other  real  estate  owned  of  $546,000.  Cash  provided  by  financing
activities  consisted of increases in  certificates  of deposit of  $10,760,000,
increases  in interest  and  non-interest  bearing  demand  deposits and savings
accounts of  $4,826,000,  increases in repurchase  agreements of $3,071,000  and
increases in short-term borrowings of $1,085,000,  offset in part by the payment
of cash  dividends of $554,000.  Also  affecting  financing  activities  was the
issuance of 5,116 new shares of common stock and 861  treasury  shares of common
stock  pursuant to the Dividend  Reinvestment  Plan for proceeds of $116,000 and
$20,000, respectively.

     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, 1997 was $28,139,000 as
compared to  $26,805,000  at December 31, 1996, for an increase of $1,334,000 or
4.98%.  This increase was attributable to net income for the first six months of
1997 of  $1,516,000,  proceeds  of the  sale of  common  stock  pursuant  to the
Dividend  Reinvestment Plan of $116,000,  proceeds of the sale of treasury stock
in the Dividend  Reinvestment Plan of $20,000 and a reduction of $80,000 of debt
related to the Company's  Employee Stock Ownership Plan less the payment of cash
dividends of $554,000, the payment of cash in lieu of fractional shares from the
stock  dividend  of  $4,000  and an  increase  of  $160,000  in the value of the
securities available-for-sale (see discussion on "Investment Securities").

     On June 19, 1997 the Company paid a 5% stock  dividend to  shareholders  of
record on May 30, 1997. Fractional shares were paid in cash based on the closing
price of $23.875 per share on the record date.

     The Company  maintains a Dividend  Reinvestment  and Stock  Purchase  Plan.
During the first six months of 1997, 5,116 shares of common stock were purchased
from authorized and unissued shares at an average price of $22.685 per share.

     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
1  capital  of at  least  4% and  total  capital,  Tier 1 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, 1997, 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           Adequacy           Action
(Dollars in Thousands)
 At June 30, 1997            Amount   Ratio     Amount   Ratio   Amount  Ratio
<S>                       <C>      <C>       <C>       <C>    <C>      <C>

Total Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $29,905  15.03%    $15,916   8.00%     N/A
  Bank                      $26,513  13.36%    $15,595   8.00%  $19,494  10.00%

Tier 1 Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $27,417  13.78%    $ 7,958   4.00%     N/A
  Bank                      $23,231  11.70%    $ 7,798   4.00%  $11,696   6.00%

Tier 1 Capital
(To Average Assets,
 Leverage)
  Company, (Consolidated)   $27,417   8.17%    $13,243   4.00%     N/A
    Bank                    $23,231   6.98%    $13,120   4.00%  $16,400   5.00%
</TABLE>

<TABLE>
                                                                  To Be Well
                                                                 Capitalized
                                                 Required        Under Prompt
                                                For Capital       Corrective
                                Actual           Purposes         Provisions
(Dollars in Thousands)
 At December 31, 1996        Amount   Ratio     Amount   Ratio   Amount  Ratio
<S>                       <C>       <C>      <C>       <C>    <C>      <C>

Total Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $28,596   15.20%   $15,046   8.00%     N/A 
  Bank                      $25,591   13.59%   $15,065   8.00%  $18,831  10.00%

Tier 1 Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $26,243   13.95%   $ 7,522   4.00      N/A
  Bank                      $22,435   11.91%   $ 7,532   4.00%  $11,299   6.00%

Tier 1 Capital
(To Average Assets,
 Leverage)
  Company, (Consolidated)   $26,243   8.35%    $12,578   4.00%     N/A
  Bank                      $22,435   7.20%    $12,456   4.00%  $15,570   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, 1997 were  $343,362,000,
representing  an increase of 6.52% over total assets of $322,352,000 at December
31,  1996.  Deposits  increased  by  $15,586,000  or 5.8% from  $267,668,000  on
December 31, 1996 to  $283,254,000  on June 30, 1997. This increase was a result
of growth of $10,759,000 in certificates  of deposit,  $2,476,000 in savings and
club  accounts,  $1,699,000 in  non-interest  checking  deposits,  $1,118,000 in
interest-bearing  checking accounts,  offset in part by a decline of $466,000 in
money market deposits. Loans outstanding at June 30, 1997 were $233,151,000,  as
compared  to  $220,117,000  at  December  31,  1996.  This  is  an  increase  of
$13,034,000 or 5.92%. The growth in loans was comprised primarily of an increase
of  $8,797,000  or 10.16% in  residential  real estate loans and a $4,542,000 or
7.77% increase in consumer loans, offset in part by a $285,000 or 0.38% decrease
in commercial  loans.  During the first half of 1997,  $7,929,000 of residential
real estate loans were sold.  The amount of these sold loans  originated  in the
first half of 1997 was $2,890,000 with the remaining $5,039,000 being originated
in 1996. The bank  continues to service all of these loans.  As of June 30, 1997
there were $379,000 of mortgage loans identified as  held-for-sale.  The loan to
deposit ratio was 82.3% at June 30, 1997 and 82.2% at December 31, 1996.

     Premises and equipment increased by $579,000 to $7,609,000 at June 30, 1997
from  $7,030,000 at December 31, 1996. This increase was primarily the result of
the purchase of furniture and equipment.

     The Company had  long-term  debt totaling  $18,432,000  at June 30, 1997 as
compared to $18,512,000 at December 31, 1996.  Included in this total,  the Bank
had  outstanding  borrowings of  $18,000,000  from the Federal Home Loan Bank of
Pittsburgh at March 31, 1997 and December 31, 1996.  Of this amount,  $5,000,000
matures in November  1998,  $8,000,000  matures in August 2000 and the remaining
$5,000,000  matures in December 2001. The interest rates  associated  with these
loans are 5.96% fixed,  5.89% fixed and 5.86% variable (changes  quarterly based
on the three  month  LIBOR  plus 8 basis  points),  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.

     At June 30, 1997 the Bank had total short-term  borrowings from the Federal
Home  Loan  Bank  of  Pittsburgh  of  $1,085,000  against  a line of  credit  of
$12,895,000. The Company had no short-term borrowings at December 31, 1996.

<PAGE>

     Results of  Operations  The net income for the three  month  ended June 30,
1997 was  $812,000,  a $122,000  or 17.68%  increase  compared  to net income of
$690,000  for the same period in 1996.  The  earnings  improvement  is primarily
attributable to an increase in net interest income. During the second quarter of
1997,  net interest  income  increased  $312,000 or 9.4% as compared to June 30,
1996.  Also  affecting  earnings was a $118,000  decrease in the  provision  for
possible loan losses,  a $151,000  increase in total other income,  exclusive of
net security  gains of $94,000,  an increase in total other expenses of $367,000
and an increase in Federal income taxes of $40,000.

     The net income for the six months  ended June 30,  1997 was  $1,516,000,  a
$211,000  increase  from net income of  $1,305,000  for the same period in 1996.
This increase is primarily attributable to an increase in net interest income of
$550,000,  a reduction in the provision for possible loan losses of $110,000,  a
$217,000 increase in other income,  exclusive of net security gains of $234,000,
partially  offset by  increases in other  expenses  and Federal  income taxes of
$567,000 and $61,000, respectively.

     Per share  earnings  for the three  months ended June 30 were $.50 and $.43
for 1997 and 1996,  respectively.  Average shares  outstanding during this three
month period were  1,624,852 in 1997 and  1,600,325 in 1996.  The net income per
share was $.94 for the first six  months of 1997 as  compared  to  earnings  per
share of $.82 for the same time period in 1996.  Average shares outstanding were
1,622,732  for the first  six  months  of 1997 and  1,597,809  for the first six
months of 1996.  Per share  earnings and average  shares  outstanding  have been
restated to reflect the 5% stock dividend paid on June 19, 1997.

     Net  Interest  Income Net  interest  income is the  difference  between the
interest earned on loans,  other  investments and other interest  earning assets
and the interest paid on deposits and other interest  bearing  liabilities.  The
net interest  income  amounted to $3,634,000 for the three months ended June 30,
1997,  as compared to  $3,322,000  for the three months ended June 30, 1996,  an
increase of $312,000 or 9.4%. During the three month period ended June 30, 1997,
interest income increased  $660,000 or 11.7% and interest  expense  increased by
$348,000  or 14.9% over the same time period of 1996.  The  increase in interest
expense was due in part to growth in certificates of deposit.

     For the six month period ended June 30, 1997, net interest income increased
$550,000 or 8.4% to $7,107,000  over the same period in 1996 of  $6,557,000.  In
this six month  period,  interest  income  increased by  $1,111,000  or 9.9% and
interest expense increased  $561,000 or 12.0% as compared to 1996. This increase
in net interest income during the six month time period is due to an increase on
interest rates earned on loans and  investments  as a result of higher  interest
rates.  The increase in interest  expense for the six month period was primarily
due to an increase  in  certificates  of deposit  balances  and higher  interest
rates.  Interest earnings assets,  including loans were $318,382,000 at June 30,
1997 as compared to  $289,519,000  at June 30, 1996. This represents an increase
of $28,863,000 or 10.0%.

<PAGE>

     Other  Income and Other  Expenses  Other  income for the three months ended
June 30,  1997  including  service  charges,  trust  fees,  gains on the sale of
mortgage loans and other miscellaneous income, but exclusive of securities gains
or losses,  was  $760,000 as  compared to $609,000  for the same period in 1996.
This was an increase of $151,000 or 24.8% In the three month  period  ended June
30, 1997 service  charges were  $258,000 a $9,000 or 3.4% decrease over the 1996
amount of  $267,000.  The revenues  from the Trust  Department  operations  were
$192,000  for the three  months  ended June 30, 1997 as compared to $174,000 for
the three  months ended June 30,  1996,  an increase of $18,000 or 10.3%.  There
were  $50,000 in gains on the sale of mortgage  loans for the three month period
ending  June 30,  1997 and losses of $1,000 for the same  period in 1996.  Other
miscellaneous  income for the three  months  ended June 30, 1997 was $260,000 as
compared  to  $169,000  for the same  period in 1996,  an increase of $91,000 or
53.8%.

     Total other income,  including  service  charges,  trust fees, gains on the
sale of  mortgage  loans  and  other  miscellaneous  income,  but  exclusive  of
securities  gains or losses,  increased by 18.6% or $217,000 to $1,381,000  from
$1,164,000  for the six months  ended June 30, 1997 over the same time period in
1996.  Service  charges  amounted to $551,000  for the six months ended June 30,
1997 compared to $511,000 for the six months ended June 30, 1996, an increase of
$40,000 or 7.8%. The revenue from the Trust  Department  operations was $379,000
for the six months ended June 30, 1997,  representing a $31,000 or 8.9% increase
over the $348,000  for the six months ended June 30, 1996.  The gain on the sale
of  mortgage  loans  amounted  to  $49,000  for the first six  months of 1997 as
compared  to $5,000  for the same  period in 1996,  an  increase  of  $44,000 or
880.0%.  Other  income for the six months  ended June 30,  1997 was  $402,000 as
compared  to  $300,000  for the same  period  in 1996.  This is an  increase  of
$102,000 or 34.0%.

     Included in gains on the sale of  mortgage  loans is $98,000 as a result of
the  capitalization  of  mortgage  servicing  rights  (an  intangible  asset) in
accordance with Financial  Accounting  Standards  Board's Statement of Financial
Accounting  Standards (FASB) No. 125,  Accounting for Transfers and Servicing of
Financial  Assets  and  Extinguishment  of  Liabilities.   Additionally  related
amortization of $1,000 is included in Other Operating Expenses.

     Total  other  expenses  for the three  month  period  ended  June 30,  1997
increased by $367,000 or 13.1% to $3,169,000  over the total other  expenses for
the same time  period in 1996 of  $2,802,000.  Included  in this  increase  is a
$86,000 or 6.2% increase in salary and benefit expenses which were $1,473,000 as
compared  to  $1,387,000  in 1996.  These  increases  are  primarily  due to the
additional staff as a result of the opening of the new East Stroudsburg Wal-Mart
branch in January  1997,  and general  salary  increases  of  approximately  4%.
Occupancy and equipment  expenses were $574,000 for the three month period ended
June 30, 1997 and  $531,000  for the three month  period  ended June 30, 1996 an
increase of $43,000 or 8.1%.  Most of this increase was due to increases in rent
and maintenance expenses related to the new branch. Other operating expenses for
the three  month  period  ended June 30,  1997 were  $1,122,000  an  increase of
$238,000  or 26.9% over the  $884,000 in other  expenses  for the same period in
1996.

     Other  expenses  for the six  months  ended  June  30,  1997  increased  by
$567,000or  9.9%, to  $6,323,000  from  $5,756,000  for the same period in 1996.
Salaries and employee benefits were $2,954,000 for the six months ended June 30,
1997  as  compared  to  $2,801,000  for the  six  months  ended  June  30,  1996
representing an increase of $153,000 or 5.5%.  These increases are primarily due
to the addition of the East Stroudsburg Wal-Mart branch. Occupancy and equipment
expenses were  $1,106,000  for the six months ended June 30, 1997 and $1,076,000
for the six months ended June 30, 1996, an increase of $30,000 or 2.8%.  Most of
this increase is also due to the new branch.  Other  operating  expenses for the
six months ended June 30, 1997 were  2,263,000 in relation to $1,879,000 for the
six months ended June 30, 1996, an increase of $384,000 or 20.4%.

<PAGE>

     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, 1997 and December 31, 1996.

     Available-for-sale  securities  are  carried  at fair  value  with  the net
unrealized  gains or losses  reported in equity.  The Company had $66,494,000 in
available-for-sale  securities  at June 30, 1997 with a net  unrealized  gain of
$507,000.  At  December  31,  1996  available-for-sale  securities  amounted  to
$56,779,000 with a net unrealized gain of $347,000.

     During the three month period ended June 30, 1997, $4,136,000 of securities
available-for-sale  were sold for a net gain of $94,000.  For the same period in
1996,  $2,698,000 of  available-for-sale  securities were sold for a net gain of
$146,000.  For the six months of 1997, net securities gains amounted to $234,000
on the sale of  $6,692,000  of  available-for-sale  securities  as  compared  to
securities  gains of $272,000 on the sale of $10,295,000  of  available-for-sale
securities for the same period in 1996.

     Held-to-maturity  securities  are  carried  at cost.  The  held-to-maturity
securities  totaled  $18,265,000  at June 30,  1997.  At  December  31, 1996 the
held-to-maturity securities totaled $20,999,000.  The Company has the intent and
ability to hold the held-to-maturity  securities until maturity. The Company, at
June 30, 1997 and December 31, 1996, did not hold any  securities  identified as
derivatives.  At June 30,  1997 and  December  31,  1996  the  Company  did hold
$1,000,000  and  $1,000,000  par value,  respectively,  in various U. S.  Agency
Step-up or Multi Step-up securities.

Allowance  and  Provision  for Possible  Loan Losses

     The  provision  for loan losses for the three month  period  ended June 30,
1997 was  $187,000  compared  to  $305,000  for the  same  period  in 1996.  The
provision  for loan  losses  for the first six  months of 1997 was  $300,000  as
compared to $410,000 for the first six months of 1996.

     Net loan losses were  $107,000 for the three month  period  ending June 30,
1996. Net loan losses for the same period in 1996 were  $198,000.  For the first
six months of 1997, net loan losses were $243,000 as compared to $359,000 during
the first six months of 1996.

<PAGE>

     The allowance for possible loan losses at June 30, 1997 totaled  $2,589,000
an increase of $57,000  over the  December  31, 1996 amount of  $2,532,000.  The
allowance for possible loan losses as a percentage of total loans outstanding at
June 30,  1997 was 1.11%.  This  compares  to 1.15% at  December  31,  1996.  As
provided by SFAS No. 114, as amended by SFAS No. 118,  $105,000 of the allowance
for possible  loan losses is  allocated to impaired  loans at June 30, 1996 (see
Note E "Impaired Loans").

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 periods indicated.

Non-Performing Loans
                                                 June 30,   December 31,
                                                   1997         1996
 Non-accrual loans on a cash basis             $  668,000    $1,440,000
 Non-accrual loans as a percentage
  of total loans                                     .29%          .65%
 Accruing loans past due 90 days or more       $1,161,000    $  986,000
 Accruing loans past due 90 days or more
  as a percentage of total loans                     .50%          .45%
Other Real Estate Owned from
 Foreclosed Property                           $  513,000    $  595,000

     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 No.
15  "Accounting  for Debtors and Creditors for Troubled Debt  Restructuring"  at
June 30, 1997. .

<PAGE>

PART II  -  OTHER INFORMATION

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

     On May 1, 1997 the Company held its annual meeting of shareholders.  At the
annual  meeting,  the  shareholders  elected  Daniel B.  Mulholland,  Charles J.
Peischl and John J.  Schlamp as Class 1 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.

                                        Votes
                                                   Withheld
                                   For             Authority
Daniel B. Mulholland             768,288             2,308
Charles J. Peischl               769,168             1,486
John J. Schlamp                  769,168             1,486

     The other directors whose terms of office as a director continued after the
meeting are S. Eric Beattie,  Robert Bergren,  Paul A. Lentz,  Gordon B. Mowrer,
Robert C. Nagel, Richard Stevens III and Maria Zumas Thulin.

     There were no other matters brought before the meeting.

ITEM 5.         Other Information

     In May,  the Board of Directors  accepted  with regret the decision by Paul
Lentz to retire as a member of the Company's  Board of Directors.  Paul has been
an  outstanding  member of the Board Team since  1971.  During his tenure on the
Board,  Paul has served as an active member of the Audit  Committee,  Directors'
Loan & Discount Committee,  Investment Committee,  Strategic Planning Committee,
ESOP Investment Committee and the Trust Committee.

ITEM 6. Exhibits and Reports on Form 8-K
    (a) Exhibits
        11.1 Statement Re: Computation of Per Share Earnings

        27.1 Financial Data Schedule

    (b) Reports on Form 8-K
          No reports on Form 8-K 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 14, 1997              BY: /S/  S. ERIC BEATTIE
                                             S. ERIC BEATTIE
                                             PRESIDENT
                                             (PRINCIPAL EXECUTIVE OFFICER)


DATE:      August 14, 1997              BY: /S/  REID L. HEEREN
                                             REID L. HEEREN
                                             VICE PRESIDENT
                                             (PRINCIPAL FINANCIAL AND
                                             ACCOUNTING OFFICER)