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 March 31, 2000
                                       or

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

           For the transition period from ____________ to ____________

                           Commission File 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 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:  1,853,271  SHARES OF COMMON
STOCK, $5 PAR VALUE, OUTSTANDING ON MARCH 31, 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           12

     ITEM 3  -  Quantitative and Qualitative Discussion About           25
                Market Risk

PART II  -  OTHER INFORMATION

     ITEM 5  -  Other Information                                       29
     ITEM 6  -  Exhibits and Reports on Form 8-K                        29

SIGNATURES                                                              30


<PAGE>

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

ASSETS
  Cash and Due From Banks                             $ 13,968      $ 14,272
  Federal Funds Sold                                        -          2,000
                                                      --------      --------
    Total Cash and Cash Equivalents                     13,968        16,272
  Interest-Bearing Deposits With Banks                      64         5,589
  Investment Securities Held-to-Maturity
    (Fair Value: March 31, 2000 $18,959
     Dec. 31, 1999 - $19,123)                           19,563        19,887
  Securities Available-for-Sale at Fair Value          146,658       132,356
  Mortgage Loans Held-for-Sale                              -             -
  Total Loans, Net of Unearned Discount                204,664       202,258
  LESS:  Allowance for Possible Loan Losses             (2,371)       (2,437)
                                                      --------       -------
  Net Loans                                            202,293       199,821
  Premises and Equipment, Net                            7,223         7,116
  Accrued Interest Income                                2,851         3,045
  Other Real Estate Owned                                  643           571
  Other Assets                                           7,414         7,232
                                                       -------       -------
    TOTAL ASSETS                                     $ 400,677     $ 391,889
                                                     ---------     ---------
LIABILITIES
  Deposits
    Non-Interest Bearing Deposits                       40,196        41,813
    Interest-Bearing Deposits                          279,450       282,667
                                                     ---------     ---------
      Total Deposits                                   319,646       324,480
  Securities Sold Under Agreements to Repurchase         7,545         1,730
  Short-Term Debt                                        7,730            -
  Long-Term Debt                                        30,000        30,000
  Accrued Interest Payable                               3,763         4,208
  Other Liabilities                                      3,267         3,228
                                                     ---------     ---------
    TOTAL LIABILITIES                                  371,951       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  -  1,853,271 shares at March 31, 2000
    and 1,848,437 shares at Dec. 31, 1999                9,266         9,242
  Additional Paid in Capital                            15,727        15,674
  Retained Earnings                                      9,423         8,968
  Employee Stock Ownership Plan Debt                    (1,320)       (1,320)
  Accumulated Other Comprehensive Loss                  (4,370)       (4,321)
                                                     ---------      --------

Total Shareholders' Equity                              28,726        28,243
                                                     ---------      --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $ 400,677     $ 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
                                               Mar. 31,      Mar. 31,
                                                 2000          1999
<S>                                           <C>           <C>
INTEREST INCOME
    Interest and Fees on Loans                 $4,182        $4,396
    Interest on Investment Securities
      Taxable                                   2,279         1,341
      Tax-Exempt                                  363           388
    Interest on Deposits with Banks and
      Federal Funds Sold                           32            99
                                               ------        ------
        Total Interest Income                   6,856         6,224
                                               ------        ------
INTEREST EXPENSE
    Interest on Deposits                        2,580         2,342
    Interest on Short-Term Borrowings             116            46
    Interest on Long-Term Debt                    454           280
                                               ------        ------
        Total Interest Expense                  3,150         2,668
                                               ------        ------
NET INTEREST INCOME                             3,706         3,556
    Provision for Possible Loan Losses              -           125
                                               ------        ------
    Net Interest Income After Provision
        for Possible Loan Losses                3,706         3,431
                                               ------        ------
OTHER INCOME
    Trust Revenue                                 329           266
    Service Charges on Deposit Accounts           451           372
    Investment Securities Gains, Net               46           216
    Gain on Sale of Mortgage Loans                  1            78
    Other Operating Income                        208           182
                                               ------        ------

        Total Other Income                      1,035         1,114
                                               ------        ------
OTHER EXPENSES
    Salaries and Employee Benefits              1,802         1,640
    Net Occupancy and Equipment Expense           572           535
    Other Operating Expenses                    1,343         1,373
                                               ------        ------

        Total Other Expenses                    3,717         3,548
                                               ------        ------

Income Before Income Taxes                      1,024           997
Applicable Income Taxes                           228           212
                                               ------        ------

NET INCOME                                     $  796        $  785
                                               ======        ======
PER SHARE DATA
    Basic Net Income                           $ 0.44        $ 0.44
    Diluted Net Income                         $ 0.44        $ 0.44
    Cash Dividends                             $ 0.19        $ 0.18

</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
                                                    Mar. 31,     Mar. 31,
                                                     2000          1999
                                                    ------        -----
<S>                                                <C>           <C>

Net Income                                          $ 796         $ 785

Other Comprehensive Loss, Net of Tax
   Unrealized holding losses on securities
      Unrealized holding losses arising in period     (78)         (753)
      Less: Reclassification adjustment; gain
         included in net income                        30           143
                                                    -----         -----

Other Comprehensive Loss                              (48)         (610)
                                                    -----         -----

Comprehensive Income                                $ 748         $ 175
                                                    =====         =====
</TABLE>


Other  comprehensive  income is shown net of tax of $(25,000) and $(314,000) for
March 31, 2000 and March 31, 1999, 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>

                                                            Three Months Ended
OPERATING ACTIVITIES                                        March 31,  March 31,
                                                               2000       1999
                                                           --------    --------
<S>                                                           <C>        <C>

Net Income                                                     $796       $785
Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
    Provision for Possible Loan Losses                            -        125
    Depreciation and Amortization                               261        255
    Amortization of Security Discounts                          (95)       (36)
    Amortization of Security Premiums                            61         59
    Amortization of Deferred Fees on Loans                      117          1
    Gainon Sale of Other Real Estate Owned                       (7)       (13)
    Mortgage Loans Originated for Sale                          (71)   (10,266)
    Mortgage Loan Sales                                          71      9,799
    Gain on Sale of Mortgage Loans                               (1)       (78)
    Investment Securities Gains, Net                            (46)      (801)
  Changes in Assets and Liabilities:
    Increase in Accrued Interest Income                         194         82
    Increase (Decrease) in Accrued Interest Payable            (445)        27
    Increase in Other Assets                                   (174)      (617)
    Increase in Other Liabilities                                39        440
                                                            -------   --------
Net Cash (Used In) Operating Activities                         700       (238)
                                                            -------   --------
INVESTING ACTIVITIES
Proceeds from Maturities of Securities Available-for-Sale     3,249      5,090
Proceeds from Maturities of Securities Held-to-Maturity         314      2,662
Proceeds from Sales of Securities Available-for-Sale             47      8,503
Purchase of Securities Available-for-Sale                   (17,582)   (33,265)
Net Decrease (Increase) in Interest Bearing Deposits
   with Banks                                                 5,525     (3,452)
Net Increase) Decrease in Loans                              (2,675)     2,568
Purchase of Premises and Equipment, Net                        (350)        (1)
Proceeds from Sale of Other Real Estate Owned                    22        130
                                                            -------    -------
Net Cash Used In Investing Activities                       (11,450)   (17,765)
                                                            -------    -------
FINANCING ACTIVITIES
Net Increase in Interest and Non-Interest
     Bearing Demand Deposits and Savings Accounts              (265)     2,654
Net Increase (Decrease) in Certificates of Deposits          (4,569)    13,391
Net Increase in Short-Term Debt                               7,730          -
Net Increase in Repurchase Agreements                         5,815        981
Net Increase in ESOP Debt                                         -     (1,000)
Proceeds from Issuance of Stock                                  76         77
Cash Dividends Paid                                            (341)      (321)
                                                            -------     ------

Net Cash Provided by Financing Activities                     8,446     15,782
                                                            -------     ------

(Decrease)Increase in Cash and Cash Equivalents              (2,304)    (2,221)
Cash and Cash Equivalents, January 1                         16,272     14,259
                                                            -------     ------
Cash and Cash Equivalents, March 31,                        $13,968    $12,038
                                                            =======    =======

</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  months  ended  March 31,  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",   statements  or  estimates
concerning  the effect of the "Year 2000"  issues on the  Company's  systems and
software  and the  Company's  plans with regard to "Year 2000"  issues 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 regulations,  competition,  results of litigation,  and the
time,  expense and  unanticipated  problems in  addressing  the Year 2000 issue.
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).


<PAGE>


NOTE E  -  CASH DIVIDENDS

On February  18, 2000 the Company  paid its 2000 first  quarter  dividend on its
common stock of $.19 per share to shareholders of record on February 4, 2000.

NOTE F  -  STOCK DIVIDEND

On June 24, 1999 the Company paid a 5% stock dividend to  shareholders of record
on June 4, 1999.  Fractional shares were paid in cash based on the closing price
of $23.312 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  earning per share in accordance  with 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.  Prior periods
earnings per share  calculations  have been  restated to reflect the adoption of
SFAS No. 128. Basic and diluted earnings per share are calculated as follows:


<PAGE>

For the Three Months Ended March 31,
<TABLE>
                                                        Average
                                             Income       Shares      Per Share
                                          (numerator) (denominator)     Amount
2000
<S>                                        <C>         <C>            <C>

Net Income                                  $  796

Basic Earnings Per Share
  Income Available to Common Shareholders   $  796      1,794,838      $  0.44

Effect of Dilutive Securities
  Stock Options                                             2,616
                                            ------      ---------      -------
Diluted Earnings Per Share
  Income Available to Common Shareholders
  plus Assumed Exercise of Options          $  796      1,797,454      $  0.44
                                            ------      ---------      -------
1999

Net Income                                  $  785

Basic Earnings Per Share
  Income Available to Common Shareholders   $  785      1,790,857      $  0.44

Effect of Dilutive Securities
  Stock Options                                             5,689
                                            ------      ---------      -------
Diluted Earnings Per Share
  Income Available to Common Shareholders
  plus Assumed Exercise of Options          $  785      1,796,546      $  0.44
                                            ------      ---------      -------
</TABLE>


Average  common  shares  outstanding  in the three month period ending March 31,
2000 and 1999 do not include 55,677 and 43,416, 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
1999.


<PAGE>


NOTE H  -  ALLOWANCE FOR POSSIBLE LOAN LOSSES

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

<TABLE>

Three Month Period Ended March 31,                2000                1999
                                              ----------          ----------
<S>                                          <C>                 <C>

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

Additions
   Provision for loan losses charged to
     operating expenses                                -             125,000
   Recoveries of loans                            53,000              18,000
                                              ----------          ----------
      Total Additions                             53,000             143,000

Deductions
   Loans charged off                             119,000             165,000
                                              ----------          ----------

Ending Balance                                $2,371,000          $2,669,000
</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 March 31,                                   2000             1999
                                            ----------       ----------
<S>                                         <C>              <C>

Principal amount of impaired loans           $371,000         $501,000
Deferred loan costs                              ---             ---
                                            ----------       ----------
                                             $371,000          501,000
Less valuation allowance                       74,000          173,000
                                            ----------       ----------
                                             $297,000         $328,000
</TABLE>

On January 1, 1995 a valuation for credit losses  related to impaired  loans was
established. The activity in this allowance account for the quarter ending March
31, 2000 is as follows:

<TABLE>

                                                 2000                1999
                                              --------            --------
<S>                                          <C>                 <C>

Valuation allowance at January 1,             $ 74,000            $303,000
Provision for loan impairment                      ---                 ---
Transfer from Unallocated Allowance                ---             112,000
Direct charge-offs                                 ---              18,000
                                              --------            --------
Valuation allowance at March 31,              $ 74,000            $173,000
</TABLE>


Total cash collected on impaired loans during the three month period ended March
31, 2000 was  $11,000,  of which $4,000 was  credited to the  principal  balance
outstanding on such loans and $7,000 was recognized as interest income. Interest
that would have been accrued on impaired  loans during the first three months of
2000 was $10,000. The valuation allowance for impaired loans of $74,000 at March
31, 2000 is included in the  "Allowance  for Possible Loan Losses" which amounts
to $2,371,000 at March 31, 2000.  There was no provision for loan impairment for
the period ended March 31, 2000.

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
consists  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".

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.


<PAGE>


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  Activities"'  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
operations.

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
trust funds which were allegedly directed by funeral directors to be invested in
a private  placement  annuity issued by EA International  Trust. As of March 31,
2000,  nine  funeral  directors  whose funds were  invested in this annuity have
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 for
unsettled  claims  would be  approximately  $4.1  million  principal  loss  plus
punitive damages,  interest,  costs and attorney 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 month period ended March 31, 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,  statements or estimates  concerning the
effect of the "Year 2000" issues on the  Company's  systems and software and the
Company's plans with regard to "Year 2000" issues 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  with
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, results of litigation and the time, expense
and unanticipated problems in addressing the "Year 2000" issue. 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  March


<PAGE>


31, 2000, cash, due from banks, Federal funds sold and interest bearing deposits
with banks totaled $14,032,000,  and securities maturing within one year totaled
$3,479,000.  At December 31, 1999, cash, due from banks,  Federal funds sold and
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  $7,545,000 at March 31, 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 $3,000 at March 31, 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 March 31, 2000. At December 31, the Company had $2,000,000
in Federal funds sold.

       The Federal Home Loan Bank of Pittsburgh provides the Bank with a line of
credit in the  amount of  $25,000,000  at March 31,  2000,  subject  to  certain
collateral  requirements.  The Bank had  $7,730,000  in  short-term  (overnight)
borrowings  against  this line at March  31,  2000.  The Bank had no  short-term
borrowings  against the Federal Home Loan Bank line at December  31,  1999.  The
Bank had additional borrowings from the Federal Home Loan Bank at March 31, 2000
and 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 and  $7,000,000 is due in October 2003
and $10,000,000 is due in August 2004.

       Cash flows for the three  months  ended March 31, 2000  consisted of cash
used in investing  activities of $11,450,000  offset in part by cash provided by
operating  activities of $700,000 and cash  provided by financing  activities of
$8,446,000 resulting in a decrease in cash and cash equivalents of $2,304,000.

       Cash  provided  by  operating  activities  consisted  principally  of net
operating  income of $796,000,  depreciation  and  amortization of $261,000,  an
increase in accrued  interest income of $194,000,  and  amortization of deferred
fees on loans and  security  premiums of  $118,000  and  $61,000,  respectively,
partially  offset by a decrease  in accrued  interest  payable of  $445,000,  an
increase in other assets of $174,000 and  amortization of security  discounts of
$95,000.  Cash was used in investing  activities  for the purchase of securities
available-for-sale of $17,582,000, a net increase in loans of $2,675,000 and the
net purchase of premises and equipment of $350,000, partially offset by proceeds
from  maturities  of  securities   available-for-sale  and  held-to-maturity  of
$3,249,000  and  $314,000,  respectively,  proceeds  from the sale of securities
available-for-sale  of $47,000 and proceeds  from the sale of other real estated
owned of $22,000. Cash provided by financing activities consisted principally of
increases in short term  borrowings and repurchase  agreements of $7,730,000 and
$5,815,000,  respectively,  partially  offset by a decrease in  certificates  of
deposit of  $4,569,000,  decreases in interest and  non-interest  bearing demand
deposits and savings  accounts of $265,000 and the payment of cash  dividends of
$341,000.

       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 March 31, 2000 was $28,726,000 as
compared to  $28,243,000  at December 31,  1999,  for an increase of $483,000 or
1.7%. This increase was  attributable to net income for the three months of 2000
of $796,000 and proceeds from the sale of common stock  pursuant to the Dividend
Reinvestment  Plan of  $76,000  offset in part by a  decrease  of $48,000 in the
value of the  securities  available  for sale  (see  discussion  on  "Investment
Securities"), and the payment of cash dividends of $341,000.


<PAGE>


       The Company  maintains a Dividend  Reinvestment  and Stock Purchase Plan.
During  the first  three  months of 2000,  4,505  shares  of common  stock  were
purchased from  authorized and unissued shares at an average price of $16.63 per
share for proceeds of approximately $76,000.

       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.

       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  3% to 5% 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 March 31, 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 March 31, 2000           Amount   Ratio     Amount   Ratio   Amount  Ratio
<S>                        <C>       <C>      <C>       <C>    <C>      <C>
Total Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $34,793   16.71%   $16,653   8.00%      ---    ---
  Bank                      $31,173   15.01%   $16,619   8.00%  $20,774  10.00%

Tier 1 Capital
(To Risk-Weighted Assets)
  Company, (Consolidated)   $32,422   15.57%   $ 8,327   4.00%      ---    ---
  Bank                      $28,602   13.77%   $ 8,310   4.00%  $12,465   6.00%

Tier 1 Capital
(To Average Assets,
 Leverage)
  Company, (Consolidated)   $32,422   8.25%    $15,727   4.00%      ---    ---
  Bank                      $28,602   7.27%    $15,727   4.00%  $19,659   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 March  31,  2000  were  $400,677,000,  representing  an
increase  of 2.24% over total  assets of  $391,889,000  at  December  31,  1999.
Deposits  decreased by $4,834,000 or 1.5% from $324,480,000 on December 31, 1999
to $319,646,000 on March 31, 2000.  Contributing to this decrease were decreases
in certificates of deposit of $4,569,000, non-interest bearing checking deposits
of $1,617,000  and interest  bearing  checking  deposits of $563,000,  partially
offset by an increase in savings and money market deposits of $1,915,000.  Loans
outstanding at March 31, 2000 were  $204,664,000  as compared to $202,258,000 at
December 31, 1999.  This was an increase of $2,406,000 or 1.2%.  The increase in
loans  was  primarily  the  result  of an  increase  of  $1,986,000  or  3.4% in
residential real estate loans.  During the first three months of 2000, one fixed
rate  residential  real  estate  mortgage  was sold for  $71,000  with a 30 year
maturity.  Loans of this  type are sold  periodically  to reduce  the  Company's
interest-rate  risk and to provide  liquidity for future lending  opportunities.
The loan sold was originated in the first quarter of 1999. The Bank continues to
service this loan.  There were no  residential  real estate loans  identified as
held-for-sale  at March 31, 2000 and none  held-for-sale  at December  31, 1999.
Additionally,  the net  increase in loans  during the first three months of 2000
included a $68,000 or 0.12% increase in commercial loans and a $356,000 or 0.41%
increase in consumer  loans.  The loan to deposit  ratio was 64.03% at March 31,
2000 and 62.3% at December 31, 1999.

       Premises and  equipment  increased by $107,000 to $7,223,000 at March 31,
2000 from $7,116,000 at December 31, 1999.

       The Company had long-term debt totaling $30,000,000 at March 31, 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 6.17%  variable,  6.26%
variable (at LIBOR plus 3 basis  points),  4.86% fixed to December 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  2000 at which time the
rate may be 3 month  LIBOR  plus 15 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.

       The  Company's  Employee  Stock  Ownership  Plan  (ESOP)  has  two  loans
outstanding  totaling $1,320,000 at March 31, 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  35,500  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 (9.0% at March 31,
2000 and 8.5% at December 31, 1999).


<PAGE>


       At March 31, 2000, the Bank had short-term  borrowings of $7,730,000 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 March 31, 2000 was $796,000, an
$11,000 or 1.4% increase  compared to net income of $785,000 for the same period
in 1999. The earnings improvement is attributable to an increase in net interest
income of  $150,000 or 4.2%,  an  increase in total other  income of $168,000 or
20.5%,  exclusive of investment  security gains of $46,000 and gains on the sale
of mortgages of $1,000 and a decrease in the  provision for possible loan losses
of $125,000  partially  offset by an  increase in other  expenses of $169,000 or
4.8% and a $16,000 or 8% increase in Federal income taxes.

       Basic  earnings  per share for the three months ended March 31, 2000 were
$0.44 as compared to $0.44 for the corresponding  period in 1999. Average shares
outstanding  during this three month period were 1,794,838 in 2000 and 1,790,857
in 1999.  Diluted  earnings per share for the three month period ended March 31,
2000  were  $0.44  compared  to $0.44  for the same  period  in 1999.  Per share
earnings and average  shares  outstanding  have been  restated to reflect the 5%
stock dividend paid on June 24, 1999. (see Note F)

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 ended
March 31, 2000 as compared to the quarter  ended March 31,  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  $3,706,000  for the three months ended
March 31, 2000 as compared to  $3,556,000  for the three  months ended March 31,
1999,  an increase of $150,000 or 4.2%.  This  increase is the result of deposit
growth and increases in  investment  securities as compared to the first quarter
of 1999.

       Total  taxable-equivalent  interest  income  increased  $558,000  or 8.7%
primarily the result of higher rates and volumes in the  investment  securities.
Taxable  equivalent  income from  investment  securities  for the first  quarter
increased  $836,000 or 43.3% over the same period in 1999. This was comprised of
a $713,000  increase  due to volume and a  $123,000  increase  as a result of an
increase in  rate/volume.  Average  year-to-date  earning  assets  increased  to
$366,427,000  at  March  31,  2000  from  $337,108,000  at  March  31,  1999,  a
$29,319,000 or 8.7% increase.


<PAGE>


       Total interest expense  increased  $482,000 during the first three months
of 2000,  compared to the same period in 1999. This increase was principally the
result of increased  volume of deposit  accounts and  borrowed  money.  Interest
expense  attributed to time deposits  increased  $249,000 during the first three
months of 2000, compared to the first three months of 1999. The increase in time
deposit interest expense was due to a higher level of interest-bearing deposits.
Also affecting this growth in interest  expense were higher  interest rates paid
on all deposit  accounts and  borrowings  as a result of repricing due to market
conditions (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 three months ended March 31, 2000  compared to the same period in
1999.  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>
                                                     Three Months Ended
                                                       March 31, 2000
                                                       Over / (Under)
                                                       March 31, 1999
                                                       CHANGE DUE TO:

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

(Fully Taxable Equivalent)
INTEREST INCOME
Interest-Bearing Balances With Banks         $   (61)   $     3    $   (64)
Federal Funds Sold                                (5)         3         (8)
Investment Securities                            836        123        713
Loans                                           (212)       (75)      (137)
                                             -------    -------    -------
Total Interest Income                            558         54        504
                                             -------    -------    -------

INTEREST EXPENSE
Demand Deposits, Savings & Clubs             $     -    $   (10)   $    10
Time Deposits                                    238        (11)       249
Federal Funds Purchased and Securities
   Sold Under Agreements to Repurchase            (1)        10        (11)
Short-Term Borrowings                             71         13         58
Long-Term Borrowings                             174         34        140
                                             -------    -------    -------
Total Interest Expense                       $   482    $    36    $   446
                                             -------    -------    -------

Net Increase in Interest Income              $    76    $    18    $    58
</TABLE>


<PAGE>


Other Income and Other Expenses

       Other income for the three months ended March 31, 2000 including  service
charges, trust fees, and other miscellaneous income, but exclusive of securities
gains or  losses  and  gains on the sale of  mortgage  loans,  was  $988,000  as
compared  to  $820,000  for the same  period in 1999.  This was an  increase  of
$168,000  or 20.5%.  The  revenues  from the Trust  Department  operations  were
$329,000 for the three months ended March 31, 2000  compared to $266,000 for the
three months ended March 31, 1999,  an increase of $63,000 or 23.7%.  There were
$1,000 in gains on the sale of mortgage  loans for the three month  period ended
March 31, 2000 as compared to $78,000 for the same period in 1999,  a decline of
$77,000 or 98.4%.  This  decline  was the result of fewer  mortgage  loans being
originated as a result of an increase in interest rates for such loans.

       Total  other  expenses  for the three month  period  ended March 31, 2000
increased by $169,000 or 4.8% to  $3,717,000  over total other  expenses for the
same period in 1999 of  $3,548,000.  Included in this  increase is a $162,000 or
9.8% increase in salary and benefit  expenses which were  $1,802,000 as compared
to $1,640,000  in 1999.  These  increases  are  primarily due to general  salary
increases of  approximately  4% and  additional  staff  necessitated  by the new
branches in Stroudsburg and Mount Pocono.  Occupancy and equipment expenses were
$572,000  for the three  months  ended March 31, 2000 and $535,000 for the three
months  ended March 31,  1999,  an increase of $37,000 or 6.9%.  The increase in
occupancy  expense was  primarily  due to expenses  related to the new branches.
Other  operating  expenses  for the three month period ended March 31, 2000 were
$1,343,000, a decrease of $30,000 or 2.2% from the $1,373,000 in other operating
expenses for the same period in 1999.

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 March 31,
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 $146,658,000 in
available-for-sale  securities at March 31, 2000 with a net  unrealized  loss of
$4,370,000.  At December  31,  1999  available-for-sale  securities  amounted to
$132,356,000 with a net unrealized loss of $4,321,000.

       Held-to-maturity  securities  totaling  $19,563,000 at March 31, 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 March 31, 2000,  did not hold any
securities identified as derivatives.

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 factors.  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.


<PAGE>


       For the first three  months of 2000,  the  provision  for loan losses was
zero  compared  to $125,000  for the same  period in 1999.  Net charge offs were
$66,000 for the three months ended March 31, 2000 compared with $147,000 for the
three months ended March 31, 1999. The ratio of the allowance for loan losses to
total loans at March 31, 2000 was 1.16%  compared to 1.20% at December 31, 1999.
This was primarily the result of an increase in total loans to  $204,664,000  at
March 31,  2000 from  $202,258,000  at  December  31,  1999 and the  absence  of
provisions  for loan losses in the first three months of 2000. The allowance for
possible loan losses at March 31, 2000 totaled $2,371,000, a decrease of $66,000
or 2.71% from the December 31, 1999 amount of $2,437,000.

       As provided  by SFAS No. 114, as amended by SFAS No. 118,  $74,000 of the
Allowance for Possible  Loan Losses is allocated to impaired  loans at March 31,
2000 (See Note I "Impaired Loans").

       Transactions in the allowance for loan losses are as follows:

<TABLE>

Three Month Period Ended March 31,              2000               1999
                                            -------------     --------------
<S>                                         <C>               <C>
Beginning Balance                            $ 2,437,000       $ 2,691,000

Additions
   Provision for loan losses charged to
      operating expenses                               -           125,000
   Recoveries of loans                            53,000            18,000
                                             -----------       ------------
      Total Additions                             53,000           143,000

Deductions
   Loans charged off                             119,000           165,000
                                             -----------       ------------

Ending Balance                               $ 2,371,000       $ 2,669,000
</TABLE>


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

At March 31, 2000
-----------------
<S>                                 <C>
        Commercial                   $  751,000
        Residential Real Estate         288,000
        Consumer                        809,000
        Unallocated                     523,000
                                      ---------
     Total                           $2,371,000
</TABLE>


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.


<PAGE>


       Non performing loans (non accruing loans and loans past due over 90 days)
were 1.59% of total loans at March 31, 2000 compared to 1.07% at March 31, 1999.
The increase in this ratio is the result of a $1,005,000 or a 44.59% increase in
non  performing  loans to  $3,259,000  over the one year period ending March 31,
2000.  The ratio of the  allowance for loan losses to non  performing  loans was
72.75% at March 31, 2000 compared to 118.4% at March 31, 1999.

       Non accruing  loans at March 31, 2000 of $1,272,000  increased from March
31, 1999 level of $1,096,000.  This $176,000 increase results primarily from the
addition of three  residential  real estate  mortgages  offset by the receipt of
payments.  These loans are secured by  residential  real estate.  At the present
time,  management is of the opinion that these loans present a minimal amount of
loss 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 March 31, 2000, loans past due 90 days or more and still
accruing interest were $1,987,000  compared to $1,158,000 at March 31, 1999. The
$829,000  increase  in loans past due 90 days from  March 31,  1999 to March 31,
2000 was the result of increases in mortgage  and  commercial  loans past due 90
days or more of $903,000 and $36,000, respectively. This was offset in part by a
decrease in consumer loans of $110,000.


<PAGE>


<TABLE>

NON-PERFORMING LOANS
                                            March 31,  December 31,   March 31,
                                              2000        1999          1999
<S>                                      <C>          <C>           <C>

Non-accrual loans on a cash basis         $1,272,000   $1,311,000     $1,096,000
Non-accrual loans as a percentage
  of total loans                               0.62%        0.65%          0.52%
Accruing loans past due 90 days
  or more                                 $1,987,000   $1,491,000     $1,158000
Accruing loans past due 90 days
  or more as a percentage of total
  loans                                        0.97%        0.74%         0.55%
Other Real Estate Owned from
  Foreclosed Property                     $      643   $ 571,000     $  601,000
Allowance for loan losses to
  nonperforming loans                         72.75%      86.97%        118.40%
Nonperforming assets to total loans            1.59%       1.39%          1.07%
Allowance for loan losses to total loans       1.16%       1.20%          1.27%

</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 March 31, 2000.

YEAR 2000

       The  Company  has  adopted a Year 2000  policy to address the "Year 2000"
Issue  concerning  the  inability of certain  information  systems and automated
equipment to properly  recognize and process dates  containing the Year 2000 and
beyond. If not corrected,  these systems and equipment could produce  inaccurate
or unpredictable results commencing on January 1, 2000. The Company,  similar to
most financial services providers,  is particularly  vulnerable to the potential
impact  of the Year  2000  Issue due to the  nature  of  financial  information.
Potential impacts to the Company may arise from software, computer hardware, and
other  equipment  both within the  Company's  direct  control and outside of the
Company's ownership,  yet with which the Company electronically or operationally
interfaces.

       In order to  address  the Year 2000  Issue,  the  Company  developed  and
implemented  a five phase  compliance  plan  divided  into the  following  major
components:  (1) Awareness; (2) Assessment;  (3) Renovation;  (4) Validation and
Testing;  and (5)  Implementation.  The Company completed all phases of the plan
prior to year-end 1999.

       The  Company  developed  contingency  plans to address any or all systems
that, despite all testing,  still do not operate correctly in the Year 2000. The
contingency  plans  provide for manual and personal  computer  based  systems to
process  checks,  deposits  and loan  transactions.  The Company  increased  its
inventories  of the  various  required  supplies,  such as new  account and loan
forms,  deposit withdrawal forms and other pre-printed  forms,  available at the
Company's Main Office and branch offices. Alternative communications systems and
power sources were established.


<PAGE>


       Financial institution  regulators have intensively focused upon Year 2000
exposures, issuing guidance concerning the responsibilities of senior management
and directors.  Year 2000 testing and  certification is being addressed as a key
safety and soundness  issue in conjunction  with regulatory  exams.  The Federal
banking agencies have highly  prioritized Year 2000 compliance in order to avoid
major disruptions to the operations of financial  institutions and the country's
financial systems when the new century begins.

       The  Federal  banking   agencies  have  conducted  Year  2000  compliance
examinations.  The failure to  implement  an adequate  Year 2000  program can be
identified as an unsafe and unsound banking  practice.  The Company and the Bank
are subject to regulation and  supervision  by the Federal  Reserve Bank and the
Comptroller of the Currency which regularly  conducts  reviews of the safety and
soundness of the  Company's  operations,  including  the  Company's  progress in
becoming  Year  2000  compliant.   The  regulatory   agencies  have  established
examination    procedures   which   contain   three   categories   of   ratings:
"Satisfactory",  "Needs  Improvement" and  "Unsatisfactory".  Institutions  that
receive  a  Year  2000  rating  of  Unsatisfactory  may  be  subject  to  formal
enforcement action, supervisory agreements, cease and desist orders, civil money
penalties,  or the  appointment of a conservator.  In addition,  Federal banking
agencies  will be  taking  into  account  Year  2000  compliance  programs  when
reviewing  applications  and may deny an application  based on Year 2000 related
issues.  Failure by the Company to adequately prepare for Year 2000 issues could
negatively impact the Company's banking operations,  including the imposition of
restrictions upon its operations by the Comptroller of the Currency.

       The Company did not experience any material problems related to Year 2000
during the first three  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 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 ended March 31, 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 (36.3% of total loans) and  commercial  loans
supported  by real estate  (24.3% 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>

Three Months Ended, March 31,                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  $  1,763  $   24   5.45% $ 7,278  $  85  4.68%
Federal Funds Sold                    549       9   6.56    1,267     14  4.40
Investment Securities
      Taxable                      33,893   2,279   6.81   87,181  1,341  6.16
      Non-Taxable (1)              29,525     486   6.58   32,134    588  7.32
Net Loans Held for Sale                 6       -     --    2,963     26  3.52
Loans (1) (2)                     203,692   4,191   8.23  209,018  4,377  8.36
Reserve for Loan Losses            (2,501)     --     --   (2,733)    --    --
                                ---------   -----        --------  -----
Net Loans                         201,191   4,191   8.33  206,285  4,377  8.48
                                ---------   -----        --------  -----
  Total Interest-Earning Assets   366,927   6,989   7.62  337,108  6,431  7.64
Non-Interest Earning Assets        30,879      --     --   27,124     --    --
                                ---------   -----        --------  -----
  TOTAL ASSETS, INT INCOME      $ 397,806   6,989   7.03 $364,232  6,431  7.08
                                ---------   -----        --------  -----

LIABILITIES
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits
  Demand Deposits               $  52,170     127   0.97 $ 49,448    132  1.08
  Money Market Deposits            12,957      91   2.81   13,620     92  2.72
  Savings & Club Deposits          62,165     342   2.20   61,998    336  2.16
  CD's over $100,000                4,733      50   4.23    4,295     41  3.80
  All Other Time Deposits         149,558   1,970   5.27  131,073  1,741  5.32
                                ---------   -----        --------  -----
   Total Int-Bearing Deposits     281,583   2,580   3.66  260,434  2,342  3.60
Federal Funds Purchased
 and Securities Sold Under
 Agreements to Repurchase           4,211      41   3.89    5,695     42  2.96
Short-Term Borrowings               4,992      75   6.01      321      4  5.00
Long-Term Borrowings               30,000     454   6.05   20,000    280  5.60
                                ---------   -----        --------  -----
  Total Int-Bearing Liabilities   320,786   3,150   3.93  286,450  2,668  3.72

NON-INTEREST-BEARING LIABILITIES
Non-Interest-Bearing Deposits      41,151      --     --   38,990     --    --
Other Liabilities                   7,722      --     --    7,660     --    --
                                ---------   -----        --------  -----
   TOTAL LIABILITIES              369,959   3,150   3.41  333,100  2,668  3.20
   SHAREHOLDERS' EQUITY            27,847      --     --   31,132     --    --
                                ---------   -----        --------  -----
   TOTAL LIABILITIES AND EQUITY $ 397,806   3,150   3.17 $364,232  2,668  2.92

NET INTEREST INCOME                       $ 3,839                $ 3,763
                                            -----                  -----

    Net Interest Spread                             3.69                  3.92
    Effect of Interest-Free Sources
      Used to Fund Earnings Assets                  0.50                  0.56
    Net Interest Margin                             4.19%                 4.48%
                                                    ----                  ----
</TABLE>


<PAGE>


       The net  interest  margin of 4.19% for the three month period ended March
31,  2000,  decreased  from the 4.48% net  interest  margin for the first  three
months of 1999. The yield on interest  earning assets was 7.62% during the first
three  months of 2000 as compared to 7.64% in 1999.  The average  interest  rate
paid on interest  bearing  deposits and other borrowings was 3.93% for the first
three 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 March 31, 2000,
assets of  $154,816,000  (38.6% of total  assets) were subject to interest  rate
changes within one year. Liabilities subject to rate change within one year were
$165,864,000.  A negative  one-year  gap position of  $11,048,000  existed as of
March 31, 2000. The ratio of rate-sensitive assets to rate-sensitive liabilities
for the one-year time frame was 93.3%.  The "Interest  Sensitivity  Analysis" in
the following table presents a sensitivity gap analysis of the Company's  assets
and liabilities at March 31, 2000.


<PAGE>

<TABLE>
-------------------------------------------------------------------------------
INTEREST SENSITIVITY ANALYSIS
(Dollars in Thousands) as of March 31, 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 $    64  $   ---  $    ---   $    ---   $    ---    $    64
Inv Securities       32,333   12,232    15,322     66,566     39,768    166,221
Loans                47,677   10,745    22,475     62,751     58,645    202,293
Other Assets         13,968      ---       ---        ---     18,131     32,099
                    ------- --------  --------    -------   --------   --------
  TOTAL ASSETS      $94,042  $22,977  $ 37,797   $129,317   $116,544   $400,677
                    ------- --------  --------    -------   --------   --------
Non-Interest-Bearing
  Deposits (1)      $   ---  $   ---  $    ---    $   ---   $ 40,196   $ 40,196
Int-Bearing
 Deposits            73,989   19,265    44,335     65,014     76,847    279,450
Securities Sold
 Under Agreements
 to Repurchase        7,545      ---       ---        ---        ---      7,545
Short-TermDebt        7,730      ---       ---        ---        ---      7,730
Long-Term Debt        5,000    8,000       ---     17,000        ---     30,000
Other                   ---      ---       ---        ---      7,030      7,030
Capital                 ---      ---       ---        ---     28,726     28,726
                    ------- --------  --------    -------   --------   --------
TOTAL LIABILITIES
  AND CAPITAL      $ 94,264  $27,265  $ 44,335    $82,014   $152,799   $400,677
                    ------- --------  --------    -------   --------   --------
Net Interest
  Sensitivity Gap  $   (222) $(4,288) $ (6,538)   $47,303   $(36,255)  $    ---

Cumulative Int
  Sensitivity Gap  $   (222) $(4,510) $(11,048)   $36,255   $    ---   $    ---

Cumulative Gap
  RSA/RSL             99.76%   96.29%    93.34%    114.63%    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 5.         Other Information

                None

ITEM 6.         Exhibits and Reports on Form 8-K

                (a)   Exhibits
                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:    May 15, 2000                        BY: /S/  S. ERIC BEATTIE
       ---------------------                     --------------------
                                                  S. ERIC BEATTIE
                                                  PRESIDENT
                                                 (PRINCIPAL EXECUTIVE OFFICER)


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