FORM 10-Q
                                
                Securities and Exchange Commission
                     Washington, D.C.  20549
                                
       [ X ]   Quarterly Report Pursuant to Section 13 or
           15(d) of the Securities Exchange Act of 1934
                                
         For the quarterly period ended:  June 30, 1998
                                
                               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.:     0-12377
                                
                                
                    BT FINANCIAL CORPORATION
     (Exact Name of Registrant as Specified in its Charter)
                                
          Pennsylvania                 25-1441348
       -----------------              ------------
   (State of Incorporation) (I.R.S. Employer Identification Number)
                                
         551 Main Street, Johnstown, Pennsylvania  15901
         -----------------------------------------------
      (Address of Principal Executive Offices)  (Zip Code)
                                
                                
                         (814) 532-3801
                         --------------
                  Registrant's Telephone Number
                                
                                
                                
     Indicate by checkmark 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:

                 12,500,872 shares common stock
                        ($5.00 par value)
                      as of August 4, 1998






            BT FINANCIAL CORPORATION AND AFFILIATES

                           FORM 10-Q

                         June 30, 1998


 Part I.  Financial Information                                  Page No.
 ------------------------------                                  --------

     Item 1.
     -------

           Consolidated Balance Sheet - June 30, 1998
            and December 31, 1997                                    3

           Consolidated Statement of Income
            Three and Six Months Ended June 30, 1998 and 1997        4

           Consolidated Statement of Cash Flows
            Six Months Ended June 30, 1998 and 1997                  5

           Consolidated Statement of Comprehensive Income
            Three and Six Months Ended June 30, 1998 and 1997        6

           Notes to Consolidated Financial Statements                7

     Item 2.
     -------

           Management's Discussion and Analysis of Financial
              Condition and Results of Operations                   15

 Part II.  Other Information
 ---------------------------

     Item 4.
     -------

          Submission of Matters to a Vote of Security Holders       23

     Item 5.
     -------

          Other Information                                         23

     Item 6.
     -------

           Exhibits and Reports on Form 8-K                         23

 Signatures                                                         24 

                                      2    



                                
                             ITEM 1
                             -------
                      FINANCIAL STATEMENTS
                      --------------------
             BT FINANCIAL CORPORATION AND AFFILIATES
             ---------------------------------------
                   CONSOLIDATED BALANCE SHEET
                   --------------------------

                                                    June 30  December 31
                                                       1998         1997
 (In thousands, except share data)               (Unaudited)
-------------------------------------------------------------------------
ASSETS
Cash and cash equivalents                       $    47,543  $    52,028
                                                  -----------------------
Money market investments:
   Interest-bearing deposits with banks                  27          424
   Federal funds sold                                 6,000           --
                                                  -----------------------
      Total money market investments                  6,027          424
                                                  -----------------------
Securities available-for-sale                       299,499      194,852
Securities held-to-maturity (market values
   of $130,941 at June 30, 1998 and
   $172,305 at December 31, 1997)                   130,176      171,081
                                                  -----------------------
      Total securities                              429,675      365,933
                                                  -----------------------

Loans                                             1,186,443    1,125,387
   Less:  Unearned interest                          41,683       58,326
          Reserve for loan losses                    10,250        9,766
                                                  -----------------------
      Net loans                                   1,134,510    1,057,295
                                                  -----------------------

Premises and equipment                               29,947       30,424
Accrued interest receivable                          15,360       10,958
Other assets                                         37,503       35,859
                                                  -----------------------
      Total assets                              $ 1,700,565  $ 1,552,921
                                                  =======================

LIABILITIES
Deposits:
   Non-interest-bearing                         $   187,211  $   177,756
   Interest-bearing                               1,169,928    1,168,620
                                                 -----------------------
      Total deposits                              1,357,139    1,346,376
Federal funds purchased and securities
   sold under agreements to repurchase               45,347       36,313
Short-term borrowings                                27,350        1,871
Accrued interest payable                              6,527        5,820
Other liabilities                                     2,053        2,497
Long-term debt                                      112,898       14,335
                                                 -----------------------
      Total liabilities                           1,551,314    1,407,212
                                                 -----------------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value
   2,000,000 shares authorized                          --           --
Common stock, par value $5 per share,
   25,000,000 shares authorized,
   shares issued: 12,500,872 at 
     June 30, 1998 and December 31, 1997             62,504       31,252
Surplus                                              45,215       76,467
Retained earnings                                    41,041       37,283
Accumulated other comprehensive income                  491          707
                                                 -----------------------
     Total shareholders' equity                     149,251      145,709
                                                 -----------------------
     Total liabilities and shareholders' equity $ 1,700,565  $ 1,552,921
                                                 =======================
The accompanying notes are an integral part of the consolidated
financial statements.


                                      3
                                
                                
             BT FINANCIAL CORPORATION AND AFFILIATES
             ---------------------------------------
                CONSOLIDATED STATEMENT OF INCOME
                --------------------------------
                           (Unaudited)
                           ----------
                              
                                      Three months ended      Six months ended
(In thousands, except shares                 June 30               June 30
 and per share data)                      1998      1997      1998        1997
--------------------------------------------------------------------------------
INTEREST INCOME
Loans, including fees                 $ 23,824  $ 22,563   $ 46,857    $ 44,397
Investment securities:
   Taxable                               6,767     5,354     12,824      10,135
   Tax-exempt                              661       111        867         241
Deposits with banks                          1         4          5           9
Federal funds sold                          84        99         98         260
                                      ------------------------------------------
      Total interest income             31,337    28,131     60,651      55,042
                                      ------------------------------------------
INTEREST EXPENSE
Deposits                                11,706    10,822     23,386      21,138
Federal funds purchased and securities
   sold under agreements to repurchase     447       710        964         977
Short-term borrowings                      608        47        872          85
Long-term debt                           1,254       290      1,620         575
                                      ------------------------------------------
      Total interest expense            14,015    11,869     26,842      22,775
                                      ------------------------------------------
NET INTEREST INCOME                     17,322    16,262     33,809      32,267
Provision for loan losses                1,665     1,045      2,895       2,090
                                      ------------------------------------------
   Net interest income after
      provision for loan losses         15,657    15,217     30,914      30,177
                                      ------------------------------------------
OTHER INCOME
Trust income                               885       783      1,741       1,529
Fees for other services                  2,096     1,909      3,982       3,715
Net security gains (losses)                 43       (74)        64          21
Other income                               224       186        399         454
                                      ------------------------------------------
      Total other income                 3,248     2,804      6,186       5,719
                                      ------------------------------------------
OTHER EXPENSES
Salaries and wages                       5,185     4,955     10,621       9,928
Pension and other employee benefits      1,046       822      2,124       1,716
Net occupancy expense                    1,063     1,068      2,200       2,131
Equipment expense                        1,262     1,119      2,493       2,204
F.D.I.C. insurance                          70        67        140         133
Amortization of intangible assets          523       467      1,047         934
Other operating expense                  3,284     3,189      6,701       6,237
                                      ------------------------------------------
      Total other expenses              12,433    11,687     25,326      23,283
                                      ------------------------------------------
INCOME BEFORE INCOME TAXES               6,472     6,334     11,774      12,613
Provision for income taxes               1,956     2,140      3,641       4,337
                                      ------------------------------------------
      NET INCOME                      $  4,516  $  4,194   $  8,133    $  8,276
                                      ==========================================

Earnings per common share-          
  Basic and Diluted                   $    .36 $     .34   $    .65   $    .66
Weighted average common shares
  outstanding-Basic                 12,500,872 12,500,872 12,500,872 12,500,872
Weighted average common shares
  outstanding-Diluted               12,502,044 12,500,872 12,500,872 12,500,872
Dividends paid per common share       $    .18 $     .15   $    .35    $   .30

Note:  All per share and average share data has been adjusted to reflect the
       10% stock dividend distributed on September 15, 1997 and the 2-for-1
       stock split effected in the form of a stock dividend distributed on
       May 1, 1998.  At December 31, 1997, BT Financial Corporation adopted 
       Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
       Per Share".  The adoption of this statement did not have any material
       impact on the earnings per share computations.

       
The accompanying notes are an integral part of the consolidated
financial statements.


                                      4
            


                   BT FINANCIAL CORPORATION AND AFFILIATES  
                   ---------------------------------------
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                     ------------------------------------
                                 (Unaudited)
                                 -----------
                                (In thousands)
                                --------------
                                                            Six months ended
                                                                 June 30
                                                            1998        1997
                                                      ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                              $  8,133     $ 8,276
Adjustments to reconcile net income to net cash
 provided by operating activities:
     Provision for loan losses                             2,895       2,090
     Provision for depreciation and amortization           2,170       1,945
     Amortization of intangible assets                     1,047         934
     Amortization of premium, net of accretion of
      discount on loans and securities                       454         (67)
     Deferred income taxes                                  (480)       (575)
     Realized securities gains                               (64)        (21)
     Increase in interest receivable                      (4,402)       (993)
     Increase in interest payable                            707         484 
     Equity in loss of limited partnerships                   31          33 
     Other assets and liabilities, net                    (2,469)     (2,089)
                                                      ----------------------- 
          Net cash provided by operating activities        8,022      10,017 
                                                      -----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities                         16,581      10,597
Repayments and maturities of securities available-for-
   sale                                                   27,648      45,018
Repayments and maturities of securities held-to-
   maturity                                               40,950       7,300
Purchase of securities available-for-sale               (148,662)     (2,505)
Purchase of securities held-to-maturity                       --     (98,918)
Net increase in money market investments                  (5,603)       (543)
Proceeds from sales of loans                               3,120       2,414
Net increase in loans                                    (83,268)    (48,307)
Purchases of premises and equipment and other             (1,693)     (1,650)
Net increase in investment in limited partnerships        (1,044)       (141)
Acquisition of branches, net of cash acquired                 --      58,819 
                                                      -----------------------
          Net cash used in investing activities         (151,971)    (27,916)
                                                      -----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits                                  10,763      15,577 
Net increase (decrease) in Federal Funds purchased and
  securities sold under agreements to repurchase           9,034      (2,097)
Net increase in short-term borrowings                     25,479         341 
Common dividends paid                                     (4,375)     (3,807)
Proceeds from long-term debt                             100,000          --
Payment on long-term debt                                 (1,437)     (1,437)
                                                      -----------------------
     Net cash provided by financing activities           139,464       8,577 
                                                      -----------------------
Decrease in cash and cash equivalents                     (4,485)     (9,322)
Cash and cash equivalents at beginning of the year        52,028      65,305 
                                                      -----------------------
Cash and cash equivalents at end of period               $47,543     $55,983 
                                                      =======================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
     Interest on deposits and other borrowings           $26,135     $22,291 
     Federal income taxes                                  3,500       5,303 

The accompanying notes are an integral part of the consolidated
financial statements.

                                      5
       



                           BT FINANCIAL CORPORTION AND AFFILIATES
                           --------------------------------------
                        CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                        ----------------------------------------------
                                        (Unaudited)
                                        -----------
                                       (In thousands)
                                       --------------

                                        Three months ended    Six months ended
                                             June 30               June 30
                                          1998       1997      1998       1997
                                       --------------------  ------------------
Net income                              $4,516     $4,194    $8,133     $8,276

Other comprehensive income, net of tax:
Unrealized holding gains (losses) on
       securities arising during period    433        701      (174)      (470)
Less: Reclassification adjustment for
       gains (losses) included in net
       income                               28        (48)       42         14
                                        -------------------  ------------------
Other comprehensive income (loss)          405        749      (216)      (484)
                                        -------------------  ------------------
Comprehensive income                    $4,921     $4,943    $7,917     $7,792
                                        ===================  ==================

  The accompanying notes are an integral part of the consolidated financial
statements.

                                      6 

                       BT FINANCIAL CORPORATION AND AFFILIATES
                       ---------------------------------------
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

                                     (Unaudited)


       1.   At the close of business, October 10, 1997,
            BT Financial Corporation adopted a single bank charter
            for its three affiliate banks.  Laurel Bank and Fayette
            Bank merged with and into Johnstown Bank and Trust
            Company.  At the same time, the corporate title of
            Johnstown Bank and Trust Company was changed to Laurel
            Bank.  Additionally, the corporate names of two other
            non-bank affiliates were changed from BT Management
            Trust Company to Laurel Trust Company and from Moxham
            Community Development Corporation to Laurel Community
            Development Corporation.

       2.   In the opinion of the management of BT
            Financial Corporation (BT or the Corporation), the
            accompanying consolidated financial statements include
            all normal recurring adjustments necessary for a fair
            presentation of the financial position and results of
            operations of BT for the periods presented.  All
            significant intercompany transactions have been
            eliminated in consolidation.  The consolidated
            financial statements of BT include the accounts of BT
            and its wholly owned affiliates, Laurel Bank (Laurel),
            Laurel Trust Company (the Trust Company), Bedford
            Associates, Inc., and Laurel Community Development
            Corporation.  Prior to BT's adoption of a single bank
            charter (see Note 1 above), the consolidated financial
            statements of BT included the banking affiliates'
            accounts of Johnstown Bank and Trust Company (Bank and
            Trust), the former Laurel Bank, and Fayette Bank
            (Fayette).  These statements should be read in
            conjunction with the financial statements and the notes
            thereto included in BT's annual report to the
            Securities and Exchange Commission on Form 10-K for the
            year ended December 31, 1997.  The results of
            operations for the six month period ended June 30, 1998
            are not necessarily indicative of the results which may
            be expected for the full year.

       3.   Tax provisions for interim financial
            statements are based on the estimated effective tax
            rates for the full fiscal year.  The estimated
            effective tax rates may differ from the statutory tax
            rate due primarily to tax-exempt interest income.

       4.   Reserve for loan losses -- The recorded
            investment in loans for which impairment has been
            recognized in accordance with Statement of Financial
            Accounting Standards (SFAS) No. 114 totaled $2.0
            million at June 30, 1998, compared to $1.9 million at
            December 31, 1997 and $2.5 million at June 30, 1997.
            The corresponding loan loss valuation allowance was
            $1.4 million, $870,000, and $1.4 million for the same
            periods, respectively.  BT did not recognize any
            interest revenue on impaired loans during the six
            months ended June 30, 1998.  In the six months ended
            June 30, 1997, BT recognized approximately $5,000 of
            interest revenue on impaired loans, all of which was
            recognized using the cash basis method of income
            recognition.

                                     7


       5.   Earnings Per Share
            ------------------

            In February of 1997, the Financial Accounting
            Standards Board (FASB) issued SFAS No. 128 "Earnings Per
            Share," which is effective for financial statements issued
            for periods ending after December 15, 1997.  Effective
            December 31, 1997, BT adopted SFAS No. 128.  The statement
            requires a change in methods used to compute earnings per
            share (EPS) and requires restatement of all prior periods.
            SFAS No. 128 replaces the presentation of "primary" EPS with
            "basic" EPS, with the principal difference being that common
            stock equivalents are not considered in computing "basic"
            EPS.  The statement also requires the replacement of current
            "fully diluted" EPS with "diluted" EPS.  "Diluted" EPS will
            be computed similarly to "fully diluted" EPS.  The adoption
            of this statement did not have any material impact on BT's
            EPS computations.

           The following table shows the calculation of
           earnings per share and the weighted average number of
           shares of dilutive potential common stock.  Share and
           per share data has been adjusted to reflect the 2-for-1
           stock split effected in the form of a stock dividend
           distributed on May 1, 1998 and the 10% stock dividend
           distributed on September 15, 1997.

                                       Three months ended     Six months ended
                                             June 30               June 30
                                         1998       1997      1998        1997
                                        -----------------   ------------------
  Basic Earnings Per Share:
    Net income (in thousands)          $4,516     $4,194    $8,133      $8,276
                                       ======     ======    ======      ======
    Weighted average number
    of common shares used
    in Basic EPS                   12,500,872 12,500,872 12,500,872 12,500,872

    Basic Earnings Per Share           $  .36     $  .34     $  .65     $  .66
                                       ======     ======     ======     ======

  Diluted Earnings Per Share:
    Net Income (in thousands)          $4,516     $4,194     $8,133     $8,276
                                       ======     ======     ======     ======
    Weighted average number
    of common shares used
    in Basic EPS                   12,500,872 12,500,872 12,500,872 12,500,872

    Effect of dilutive
    stock options                       1,172         --         --         --
                                        -----     ------     ------     ------
    Weighted average number
    of common shares and
    dilutive potential
    common stock used in
    Diluted EPS                    12,502,044 12,500,872 12,500,872 12,500,872
                                   ========== ========== ========== ==========

    Diluted Earnings Per Share         $  .36     $  .34    $   .65     $  .66
                                       ======     ======     ======     ======

                                      8


       6.   Comprehensive Income
            --------------------

            In June of 1997, the FASB issued SFAS No.
            130, "Reporting Comprehensive Income," which is
            effective for fiscal years beginning after December 15,
            1997.  BT adopted SFAS No. 130 effective January 1,
            1998.  SFAS No. 130 establishes standards for the
            reporting and the display of comprehensive income and
            its components (revenues, expenses, gains, and losses)
            in a full set of general purposes financial statements.
            SFAS No. 130 requires that all items required to be
            recognized under accounting standards as components of
            comprehensive income be reported in a financial
            statement that is displayed with the same prominence as
            other financial statements.  SFAS No. 130 requires that
            an enterprise (a) classify items of other comprehensive
            income by their nature in a financial statement and (b)
            display the accumulated balance of other comprehensive
            income separately from retained earnings and additional
            paid-in-capital in the equity section of a statement of
            financial position.

            The following table sets forth the components
            of accumulated other comprehensive income, net-of-tax:


                                         Three months ended June 30, 1998
                                         --------------------------------
                                                               Accumulated
                                            Unrealized            Other
                                          Gains (Losses)      Comprehensive
                                          On Securities          Income
                                          -------------       ------------
        (In thousands)
        Beginning balance - April 1, 1998     $   86            $   86
        Current-period change                    405               405
                                               -----             -----
        Ending balance - June 30, 1998        $  491            $  491
                                               =====             =====


                                          Six months ended June 30, 1998
                                          ------------------------------
                                                               Accumulated
                                            Unrealized            Other
                                          Gains (Losses)      Comprehensive
                                          On Securities          Income
                                          -------------       ------------
        (In thousands)
        Beginning balance - January 1, 1998  $  707             $  707
        Current-period change                  (216)              (216)
                                              -----              -----
        Ending balance - June 30, 1998       $  491              $ 491
                                              =====              =====

                                      9



            The following table sets forth the tax effect
            allocated to components of other comprehensive income:

                                             Three months ended June 30, 1998
                                             --------------------------------
                                             Pre-tax  Tax Expense  Net- of-Tax
                                             Amount    (Benefit)    Amount
                                             -------  -----------  -----------
       
           (In thousands)
           Unrealized holding gains on
            securities arising during period  $ 666      $ 233       $ 433
           Less:  Reclassification adjustment
                  for gains included in net
                  income                         43         15          28
                                               ----       ----        ----
           Other comprehensive income         $ 623      $ 218       $ 405
                                               ====       ====        ====


                                               Six months ended June 30, 1998
                                               ------------------------------
                                               Pre-tax Tax Expense  Net-of-Tax
                                               Amount   (Benefit)     Amount
                                               ------- -----------    -----
           (In thousands)
            Unrealized holding losses on
             securities arising during period  $(268)      $ (94)     $(174)
            Less:  Reclassification adjustment
                   for gains included in net
                   income                         64          22         42
                                                ----         ----      ----
            Other comprehensive loss           $(332)      $(116)     $(216)
                                                ====         ====      ====

            BT's comprehensive income is disclosed in BT's consolidated
            statement of comprehensive income.


        7.   Recent Accounting Pronouncements
             --------------------------------

            In December of 1996, the FASB issued SFAS No.
            127, "Deferral of the Effective Date of Certain
            Provisions of FASB Statement No. 125."  This statement
            defers the effective date of SAFS No. 125 by one year
            to January 1, 1998 for certain transfer transactions
            including repurchase agreements, dollar rolls,
            securities lending and similar arrangements.  SFAS No.
            127 also delays by one year the provisions of SFAS No.
            125 for recognition of collateral by secured parties in
            conjunction with secured borrowings.  BT adopted SFAS
            No. 127 on January 1, 1998, and the effect of the
            adoption did not have a material impact on the
            Corporation's financial position or results of
            operations.

            In February of 1998, the FASB issued SFAS No.
            132 "Employers' Disclosures about Pensions and Other
            Postretirement Benefits."  SFAS No. 132 revises
            employers' disclosures about pension and other
            postretirement benefit plans.  It does not change the
            measurement or recognition of those plans.  SFAS No.
            132 standardizes the disclosure requirements and
            requires additional information on changes in the
            benefit obligations and fair value of plan assets that
            will facilitate financial analysis, and eliminates
            certain disclosures from SFAS No. 87 "Employers
            Accounting for Pensions", SFAS No. 88 "Employers
            Accounting for Settlements and Curtailments of Defined

                                      10

            Benefit Pension Plans and for Termination Benefits,"
            and SFAS No. 106 "Employers Accounting for
            Postretirement Benefits Other Than Pensions."  BT will
            adopt SFAS No. 132 for fiscal year 1998 reporting.
            Since SFAS No. 132 is a disclosure based statement, it
            will not have a material impact on the Corporation's
            financial position or results of operations upon
            adoption.

            In June 1998, the FASB issued SFAS No. 133,
            "Accounting for Derivative Instruments and Hedging
            Activities."  The statement establishes accounting and
            reporting standards for derivative instruments,
            including certain derivative instruments embedded in
            other contracts, and for hedging activities.  It
            requires, among other things, that an entity recognizes
            all derivatives as either assets or liabilities in the
            statement of financial condition and measures those
            instruments at fair value.  The statement is effective
            for all fiscal quarters of fiscal years beginning after
            June 15, 1998.  Since BT does not currently use
            derivative financial instruments, the standard will not
            have any impact on BT's results of operations upon
            adoption.

       8.   Pending Acquisition
            -------------------

            On June 4, 1998, BT announced a merger agreement
            between BT, Laurel Bank, and the Peoples National Bank of
            Rural Valley (Peoples), Rural Valley, Pennsylvania, whereby
            Peoples will merge into Laurel Bank.  Peoples operates one
            branch with unaudited assets totaling approximately $40
            million.  The agreement calls for Peoples' shareholders to
            receive 11.82 shares of BT common stock for each Peoples
            share, valuing the transaction at approximately $13 million
            based on BT's recent stock price.  The transaction is expected
            to be completed during the fourth quarter of 1998 and will
            be accounted for as a pooling of interests.  The
            agreement is subject to Peoples' shareholders and
            regulatory approvals and other conditions.  Pro forma
            results of the pending acquisition would not be
            materially different from the results reported.

      9.   Litigation
           ----------

           A purported class action was instituted in the Court of
           Common Pleas of Cambria County, Pennsylvania against Bank &
           Trust and Security of America Life Insurance Company (Security)
           in November, 1996 alleging various calculation irregularities
           in connection with a residential mortgage loan to the plaintiff
           in the principal amount of approximately thirteen thousand
           dollars resulting in, among other things, overcharges on credit
           life and disability insurance coverage and other items.  The
           plaintiff purports to represent a class of persons who made a
           mortgage payment to Bank and Trust or any of its subsidiaries
           within six years before November 21, 1996 and/or had credit
           life or disability insurance coverage with Security within six
           years before November 21, 1996.  The complaint seeks
           unspecified damages.  The Corporation has filed an answer
           denying that its actions breached its agreements with
           plaintiffs.  The class potentially includes the borrowers on
           approximately 2,800 accounts, the number of residential
           mortgages held by Bank and Trust during the relevant period.
           Management intends to oppose certification of the case as a
           class action, pursue its affirmative defenses and vigorously

                                      11
                
           defend the lawsuit.  The impact of this litigation on BT cannot
           be fully assessed at this early stage of the proceedings.

           On November 19, 1997, Laurel Capital Group, Inc, and its
           wholly-owned subsidiary, Laurel Savings Bank, filed a suit in
           the United States District Court in the Western District of
           Pennsylvania claiming that Laurel Bank infringed on its common
           law trademark and servicemark rights by using the name "Laurel"
           and a related logo in an undefined market segment referred to
           as the "Pittsburgh area."  The suit seeks to enjoin Laurel from
           using its name and related logo in the "Pittsburgh area" and
           seeks unspecified damages.  Laurel Savings Bank is a thrift
           institution with five branch locations in the North Hills of
           Pittsburgh and one branch in Butler County. Pending a hearing
           on plaintiffs' motion for preliminary injunction, Laurel agreed
           to refrain from using the "Laurel" name or any related logo on
           any bank documents, advertisements, or promotional materials in
           the Pittsburgh vicinity.  While BT denies the use of the name
           "Laurel" and related logo infringes on plaintiff's trademark
           and servicemark rights and believes that its rights to the name
           "Laurel" and related logo are senior to that of the plaintiffs,
           there is a risk that Laurel might be prevented from using the
           "Laurel" name and related logo in the Pittsburgh area.  The
           impact of this litigation on BT cannot be fully assessed at
           this early stage of the proceedings.

           Due to the nature of their activities, BT and its
           subsidiaries are at all times engaged in other various legal
           proceedings which arise in the normal course of their
           businesses.  While it is difficult to predict the outcome of
           these proceedings, management believes the ultimate liability,
           if any, will not materially affect BT's consolidated financial
           position or results of operations.


     10.   Stock Dividends
           ---------------

           On March 25, 1998, BT's Board of Directors
           declared a 2-for-1 stock split effected in the form of a
           stock dividend.  The dividend was distributed on May 1,
           1998, to shareholders of record as of April 8, 1998.
           The stock dividend, representing 6,250,436 shares,
           increased common shares issued and outstanding to
           12,500,872.  Accordingly, a transfer of $31,252,180,
           representing the par value of additional shares issued,
           was made from surplus to common stock. On September 15,
           1997, a 10% stock dividend was distributed to
           shareholders of record as of August 27, 1997.  All share
           and per share data in this report has been adjusted to
           reflect the stock dividends.

      11.  Stock Based Compensation Plan
           -----------------------------

           On May 12, 1998, BT's shareholders approved
           the 1998 Equity Incentive Plan (the "1998 Plan").  Under
           the 1998 Plan, BT may grant stock options to its
           employees and directors for up to 1,200,000 shares of BT
           Common Stock.  Incentive stock options, non-qualified
           stock options and other performance-based incentive
           awards may be granted pursuant to the 1998 Plan.
           Effective May 12, 1998, BT's Board of Directors granted
           non-qualified stock options to purchase 382,000 shares
           of common stock at an exercise price of $27.75 per
           share, which equaled the market price of the stock on
           the date of grant.  The stock options became exercisable
           on May 13, 1998 and have a maximum term of 10 years.

                                     12

           Stock option transactions for the 1998 Plan
           are summarized below:
                                                                1998
                                                       ---------------------
                                                                    Weighted
                                                          Shares     Average
                                                          Under     Exercise
                                                          Option       Price

                                                       ---------------------
      Outstanding at beginning of year                       --          --
      Granted                                            382,000   $   27.75
      Exercised                                              --          --
      Forfeited                                              --          --
                                                        --------------------
      Outstanding at June 30, 1998                       382,000   $   27.75
                                                        ========

      Options exercisable at June 30, 1998               382,000

      Weighted average estimated fair value
        of options granted                                         $    7.21


      The following table summarizes information about BT's stock options
      outstanding at June 30, 1998:

                            Options Outstanding            Options Exercisable
                     -----------------------------------   -------------------
                                  Weighted
                                  Average       Weighted               Weighted
                                  Remaining      Average               Average
                        Number    Contractual   Exercise    Number     Exercise
     Exercise Price  Outstanding  Life (Years)    Price    Exercisable Price
     -------------- ------------------------------------   -------------------
      $     27.75      382,000        9.9       $ 27.75     382,000   $ 27.75


            BT applies Accounting Principles Board
            Opinion No. 25, "Accounting for Stock Issued to
            Employees" in accounting for the 1998 Plan.
            Accordingly, no compensation expense has been
            recognized for the 1998 Plan.  Had compensation cost
            for the 1998 Plan been determined based on the fair
            value at the grant date consistent with SFAS No. 123,
            "Accounting for Stock-Based Compensation", BT's net
            income and earnings per share would have been reduced
            to the pro forma amounts indicated in the table below.

              Three months ended June 30, 1998  Six months ended June 30, 1998
              --------------------------------  ------------------------------
     Net income (in thousands)
                       As reported   $   4,516           As reported   $ 8,133
                       Pro forma         2,726           Pro forma       6,343

     Basic and Diluted earnings per share
                       As reported  $     0.36           As reported   $  0.65
                       Pro forma          0.22           Pro forma        0.51


           Since all of the outstanding stock options
           became exercisable on May 13, 1998, the pro forma
           amounts above reflect the recognition of the entire
           associated compensation cost in the three months ended
           June 30, 1998.

           The fair value for the options described above
           was estimated at the date of grant using a Black-Scholes
           option pricing model.  The model was developed for use
           in estimating the fair value of traded options which

                                      13

           have different characteristics from BT's stock options.
           Additionally, the model requires the input of subjective
           assumptions which can materially affect the fair value
           estimate.  In management's opinion, the Black-Scholes
           model may not necessarily provide a reliable single
           measure of the fair value of BT's stock options.

           The fair value of stock options granted during
           1998 was estimated on the date of grant using the Black-
           Scholes option pricing model with the following weighted
           average assumptions: risk free interest rate of 5.62%,
           an average life of the options of 6 years, a stock price
           volatility factor of 23.9%, and a dividend yield of
           2.6%.

                                      14 


                                     ITEM 2
                                     ------
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                   ----------------------------------------
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------


The following is Management's Discussion and Analysis of the material
changes in financial position between June 30, 1998 and December 31, 1997,
and the material changes in results of operations comparing the three and
six month periods ending June 30, 1998 with the respective results for the
comparable period of 1997 for BT Financial Corporation.  The following
should be read in conjunction with BT's Annual Report on Form 10-K for the
year ended December 31, 1997.

Certain statements contained in this report constitute "forward-looking"
statements with respect to BT Financial Corporation and its subsidiaries.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the financial condition and
results of operations of BT Financial Corporation and its subsidiaries to
be materially different from any future financial condition or results of
operations suggested or implied by such forward-looking statements.  BT
undertakes no obligation to update any forward-looking statements made
herein.  The factors that may cause actual results to differ materially
from the forward-looking statements include: interest rates, market and
monetary fluctuations, monetary and fiscal policies, changes in laws and
regulations, inflation, general economic conditions, competition and
economic conditions in the geographic region and industries in which the
Corporation conducts its operations, introduction and acceptance of new
products and enhancements, mergers and acquisitions and their integration
into BT, and management's ability to manage these and other risks.


FINANCIAL REVIEW
----------------

1998 Highlights
---------------

On March 25, 1998, BT's Board of Directors declared a 2-for-1 stock split
in the form of a stock dividend that was distributed on May 1, 1998 to
shareholders of record as of April 8, 1998.  BT's common stock price
increased 33.2%, adjusted for the stock split, at June 30, 1998 compared to
June 30, 1997.  BT's historical stock price performance is not necessarily
indicative of future price performance.

During the first quarter of 1998, several senior officers of BT elected to
retire early.  Certain severance and legal costs associated with these
retirements were approximately $337,000 and were recorded in the first
quarter.  The retiring officers will not be replaced, and the costs
associated with the early retirements are expected to be recovered by
reduced salary and benefits expense throughout the remainder of 1998.  BT
also expensed approximately $348,000 in the first quarter of 1998 in
connection with two legal settlements, their associated costs, and other
legal fees related to various lawsuits.  The settlements and their costs
represented the majority of the expensed amount in the first quarter.  As a
result of the special charges incurred with early retirements and
litigation costs, BT's 1998 earnings per share through June were reduced by
approximately $.04, adjusted for the 2-for-1 stock split.

During the second quarter of 1998, BT announced plans to close five banking
offices.  The branches are located in Duquesne, West Lebanon, Duncansville,
Indiana (Route 286) and Somerset (Route 31), Pennsylvania.  The branches
will consolidate into nearby offices.  The branch closures are being
undertaken to increase efficiencies within the corporation by eliminating
redundant, underperforming office locations.  The closings are scheduled to
take place in the last half of 1998.  No employee terminations are
anticipated as a result of the closings with the reduction in staffing

                                      15

levels to be gained through attrition.  The costs associated with the
branch closings are not expected to have a material impact on BT's
financial position or results of operations.

Consolidated net income decreased 1.7%, to $8.1 million, or $.65 per share,
in the first six months of 1998 compared to $8.3 million, or $.66 per
share, in the same period of 1997 due to the special charges discussed
earlier.  Excluding the special charges, net income for the first six
months of 1998 would have been $8.6 million, or $.69 per share.  Increases
in net interest income and non-interest income were offset by increases in
the provision for loan losses and a higher level of other expenses.

Total assets grew to a record $1.70 billion at June 30, 1998 compared to
$1.55 billion at year-end 1997 and June 30, 1997.  The growth in the
current period resulted from targeted balance sheet leveraging in 1998
along with loan growth.

BT's organizational realignment in 1997 to a single bank charter, supported
by five marketing regions, has enhanced product delivery channels which
allow BT to focus on its customer needs more effectively.  In addition,
resources have been targeted to support the organizational changes through
expanded sales training and incentive programs.  As a result of these
measures, BT experienced internal growth in both loans and deposits in the
first six months of 1998.

CHANGES IN FINANCIAL POSITION

Total assets at June 30, 1998 increased $147.6 million compared to year-end
1997 and $147.7 million compared to June 30, 1997. These increases
represent asset growth of 9.5% over both comparison periods.  The higher
balance sheet levels over both periods resulted primarily from strong loan
growth and increases in securities levels.  Funding for the loan and
security growth was provided mainly by increased short- and long-term
borrowings.  The availability of favorably priced wholesale funding sources
has allowed BT to prudently leverage its balance sheet by increasing
earning asset levels in order to enhance income while contributing to the
management of interest rate risk.  Funding strategies are managed by BT's
Asset/Liability Committee to ensure adequate liquidity and to control
interest rate risk exposure.

Total shareholders' equity increased $3.5 million, or 2.4%, and $8.8
million, or 6.3%, compared to year-end 1997 and June 30, 1997,
respectively, primarily due to BT's net income.

Period end total loans outstanding, net of unearned interest, increased
$77.7 million, or 7.3%, and $68.7 million, or 6.4%, compared to year-end
1997 and June 30, 1997, respectively.  The loan increases were due
primarily to internal growth in both commercial and consumer loans.  Loan
expansion has been attributable to increased market demand and aggressive
sales efforts.  While recent loan growth has been substantial, BT adheres
to strict underwriting and credit guidelines in its loan review processes
to preserve a quality loan portfolio.

BT's nonperforming assets decreased $773,000, or 6.9%, compared to year-end
1997 and $993,000, or 8.7%, compared to June 30, 1997.  The decline in
nonperforming assets compared to year-end 1997 was mainly due to a lower
level of repossessed automobile inventory and a reduction in commercial
loans 90 days or more past-due.  These decreases were partially offset
primarily due to an increase in nonaccrual commercial loans.  The year-over-
year decrease in nonperforming assets was principally due to a decline of
$731,000, or 7.6%, in the level of nonperforming loans.  The ratio of
nonperforming loans to loans, net of unearned interest improved to .78% at
June 30, 1998 from .86% and .89% at year-end 1997 and June 30, 1997,
respectively.  BT recently created a Special Assets department to
concentrate on nonperforming commercial loans.

                                      16 

Management's policy is to maintain an adequate loan loss reserve to cover
inherent losses in the loan portfolio.  The evaluation process to determine
potential losses includes loan reviews, collateral adequacy assessments, an
analysis of specific conditions of the borrower and an assessment of
general economic conditions.  The BT Credit and Collection functions
continuously monitor and assess credit quality to minimize exposure to
potential future credit losses.  BT's coverage ratio (reserve for loan
losses to nonperforming loans) improved to 1.2x at June 30, 1998 compared
to 1.1x at year-end 1997 and 1.0x at June 30, 1997.  The ratio of the
reserve for loan losses to loans, net of unearned interest, was .90% at
June 30, 1998, compared to .92% at year-end 1997 and .90% at June 30, 1997.
The following table provides information with respect to the components of
BT's nonperforming assets and related ratios for the periods indicated.

                                            June 30    December 31     June 30
    (In thousands)                             1998           1997        1997
                                            ----------------------------------
    Loans 90 days or more past-due          $   465       $  1,208     $   477
    Restructured loans                          265            266         316
    Nonaccrual loans                          8,167          7,678       8,835
                                            ----------------------------------
      Total nonperforming loans               8,897          9,152       9,628
    Other real estate owned                     685            710         738
    Repossessed assets                          819          1,312       1,028
                                            ----------------------------------
      Total nonperforming assets            $10,401        $11,174     $11,394
                                            ==================================

    Nonperforming loans as a % of
      loans, net of unearned interest           .78%          .86%        .89%
    Reserve for loan losses to
      nonperforming loans                       1.2x          1.1x        1.0x
    Reserve for loan losses as a % of
      loans, net of unearned interest           .90%           .92%       .90%

Throughout the first half of 1998, BT's investment portfolio was impacted
by calls of various securities.  BT is anticipating additional calls for
the remainder of 1998.  Therefore, based on the market outlook, a strategy
was developed to invest in additional securities prior to the actual call
dates of existing securities.  More securities were purchased in 1998 as
part of a balance sheet leveraging plan that enables BT to enhance net
interest income by utilizing favorably priced wholesale funding.  As a
result, total securities increased $63.7 million, or 17.4%, compared to
year-end 1997 and $89.6 million, or 26.4%, compared to June 30, 1997.  The
higher levels were primarily due to purchases of various municipal and U.S.
federal agency securities and Federal Home Loan Bank stock.

Period end deposits increased $10.8 million, or .8%, and $8.2 million, or
 .6%, compared to year-end 1997 and June 30, 1997, respectively.  Most of
the increase over both periods was due to higher levels of non-interest
bearing accounts.

Short-term borrowings increased $25.5 million compared to year-end 1997 and
$23.0 million compared to June 30, 1997 while long-term debt increased
$98.6 million and $97.1 million over the same periods, respectively.  The
higher levels reflect increases in wholesale funding levels used by BT to
support recent loan growth and securities purchases.  The wholesale funding
has been provided by the Federal Home Loan Bank (FHLB).  In the first
quarter of 1998, the FHLB advanced a $25 million long-term borrowing to BT.
The interest rate on the borrowing at June 30, 1998 was 5.22%.  In the
second quarter of 1998, additional long-term borrowings of $25 million and
$50 million were provided by the FHLB with interest rates of 5.24% and

                                      17

5.08%, respectively.  The borrowings, all scheduled to mature in the year
2008, will be used for selected loan and investment funding and to enhance
liquidity while mitigating BT's interest rate risk exposure.  After an
initial lockout period ranging from one to three years and then quarterly
thereafter, the FHLB has the option to convert the fixed-rate advances to
adjustable rates which reset quarterly.  At June 30, 1998, BT's short-term
borrowing with the FHLB amounted to $25 million and matured in July 1998.
The interest rate on this borrowing at June 30, 1998 was 5.57%.  The short-
and long-term borrowings are collateralized by BT's residential mortgage
loan portfolio.  At the present time, BT does not anticipate additional
increases in current wholesale funding levels in its near-term outlook.

RESULTS OF OPERATIONS

A 2-for-1 stock split effected in the form of a stock dividend was
distributed on May 1, 1998, to shareholders of record at April 8, 1998.  A
ten percent stock dividend was distributed on September 15, 1997, to
shareholders of record at August 27, 1997.  All per share data in the
following discussion has been adjusted to reflect the stock dividends.


Second Quarter 1998 vs. Second Quarter 1997


In the second quarter of 1998, BT produced net income of $4.5 million, or
$.36 per share compared to $4.2 million, or $.34 per share earned in the
same period of 1997.  The earnings improvement was driven by a $1.1
million, or 6.5% increase in net interest income and a $444,000, or 15.8%,
rise in total other income.  These advances offset higher levels in the
provision for loan losses and increased total other expenses.

The annualized return on average assets for the second quarters of 1998 and
1997 was 1.07% and 1.11%, respectively.  The annualized return on average
shareholders' equity for the second quarter was 12.30% in 1998 and 12.10%
in 1997.  The return on average tangible shareholders' equity, which
excludes intangible amortization expense from net income and intangibles
from average shareholders' equity, was 16.18% and 15.89% for the second
quarters of 1998 and 1997, respectively.

Net interest income on a fully taxable equivalent basis was $17.9 million
for the second quarter of 1998 compared to $16.6 million for the same
period in 1997.  The increase of $1.3 million was due essentially to a
$179.6 million, or 12.8%, increase in average interest-earning assets in
the second quarter of 1998. The earning asset growth was mainly from
increases of $114.7 million and $65.9 million in average securities and
average loans, respectively.  Second quarter net interest margins for 1998
and 1997 were 4.54% and 4.75%, respectively.  The decline in the net
interest margin in 1998 is attributable to higher interest rates paid on
deposit accounts and the impact of balance sheet leveraging in which
wholesale funding is utilized to fund increases in interest-earning asset
levels.

The provision for loan losses increased $620,000 in the second quarter of
1998 compared to the second quarter of 1997 based on management's
assessment of the provision necessary to maintain an adequate reserve
against potential future losses based upon the current size and quality of
the loan portfolio.  Net charge-offs were $1.3 million in the second
quarter of 1998 compared to $1.1 million in 1997.  The higher level of net
charge-offs in 1998 was primarily due to a higher level of commercial
mortgage credit losses which was partially offset by a decline in
commercial loan net charge-offs.

Total other income increased $444,000, or 15.8%, in the second quarter of
1998 compared to the same period in 1997.  Trust income increased $102,000,
or 13.0%, due to increased assets under management.  Service fees grew
$187,000, or 9.8%, due to increased ATM/debit card revenue and a rise in
loan insurance commissions.  Income from securities transactions rose

                                      18

$117,000 and other income gained $38,000 in the second quarter of 1998
compared to the same period in 1997.

Total other expenses increased $746,000, or 6.4%, in the second quarter of
1998 compared to the second quarter of 1997.  Salaries and wages increased
4.6% mainly due to periodic merit increases.  Employee benefit costs rose
27.3% primarily from increased hospitalization premiums.  Equipment expense
was up 12.8% due to higher depreciation levels associated with BT's ongoing
technology investments.  Amortization of intangible assets increased 12.0%
due to three branches acquired from National City Bank of Pennsylvania
(National City) in June 1997.  Other operating expenses rose 3.0% while
BT's efficiency ratio improved to 59% in the second quarter of 1998
compared to 60% in the second quarter of 1997.

BT's effective tax rate was 30.2% for the second quarter of 1998 compared
to 33.8% in the same period of 1997 due to a higher level of tax-exempt
interest income and increased low income housing tax credits.


Six Months Ended June 30, 1998 vs. Six Months Ended June 30, 1997


In the first quarter of 1998, earnings were impacted by special charges
associated with the retirement of several senior officers of BT and certain
costs in connection with two legal settlements along with other legal fees
related to various lawsuits.  The total charges approximated $685,000 and
reduced earnings per share by approximately $.04 in 1998.  Excluding these
charges, net income for the six months ended June 30, 1998 was $8.6
million, or $.69 per share, compared to $8.3 million, or $.66 per share
earned for the same period of 1997.  The special charges reduced 1998 year-
to-date earnings to $8.1 million, or $.65 per share.

For the first six months of 1998, the annualized return on average assets
was 1.00% compared to 1.11% in 1997.  The annualized return on average
shareholders' equity for the first six months of 1998 and 1997 was 11.16%
and 12.00%, respectively.  The return on average tangible shareholders'
equity, which excludes intangible amortization expense from net income and
intangibles from average shareholders' equity, was 14.89% for the first
half of 1998 compared to 15.83% in 1997.

Fully taxable equivalent net interest income increased $1.8 million, or
5.5%, to $34.8 million in the first six months of 1998 compared to $33.0
million in 1997.  The increase was primarily due to a $151.7 million, or
11.0%, rise in average earning assets in 1998.  The earning asset increase
was due to higher levels of securities and loans in 1998.  The year-over-
year increase in average securities was $97.3 million, or 30.6%, while
average loans grew $60.6 million, or 5.8%.  The net interest margin
compressed 24 basis points in 1998 to 4.58% due to higher rates paid on
interest-bearing liabilities and the impact of BT's balance sheet
leveraging strategy.

The provision for loan losses increased $805,000 in the first six months of
1998, compared to the same period of 1997 due to management's assessment of
the provision necessary to maintain an adequate reserve against potential
future losses based upon current size and quality of the loan portfolio.
Net charge-offs were approximately $2.4 million in 1998 compared to $2.1
million in 1997.

Total other income increased $467,000, or 8.2%, in the first half of 1998
compared to 1997. Trust income gained $212,000, or 13.9%, commensurate with
a greater volume of assets under management.  Service fees grew $267,000 or
7.2%, primarily resulting from increased ATM/debit card service revenue and
a rise in loan insurance commissions.  Securities transactions income rose
$43,000 while other income declined $55,000 in the first half of 1998
compared to 1997.

                                     19

Total other expenses increased $2.0 million, or 8.8%, in the first half of
1998 compared to the same period of 1997.  Salaries and wages rose 7.0%
reflecting the impact of merit increases and special charges of
approximately $322,000 associated with the retirement of several senior
officers of BT.  These special charges will be recovered throughout 1998
due to the nonreplacement of the retired senior officers.  Full time
equivalent employees declined to 769 in 1998 from 773 in 1997.  Employee
benefit costs increased 23.8% mainly due to higher hospitalization expense
resulting from premium increases.  Occupancy expense was up 3.2% due to
three branches acquired from National City Bank of Pennsylvania in June
1997.  Equipment expense increased 13.1% reflecting higher levels of
ongoing technology-based expenditures.  Amortization of intangible assets
rose 12.1% due to the branches acquired from National City.  Other
operating expense increased 7.4% largely due to $363,000 in special charges
mentioned earlier in this discussion related to litigation and legal
settlement costs.  Excluding the special charges, BT's efficiency ratio was
60% in the first six months of 1998 and 1997.

BT's effective tax rate was 30.9% for the first half of 1998 compared to
34.4% for the same period in 1997.  The lower rate in 1998 reflects an
increased application of low income housing tax credits and a higher level
of tax-exempt interest income.

CAPITAL ADEQUACY

At June 30, 1998, BT continued to maintain capital levels well above the
minimum regulatory levels.  BT's capital ratios as of June 30, 1998 and
December 31, 1997 are presented in the table below.  The required
regulatory ratios, representing the level needed to meet "Adequately
Capitalized" status are also presented.


                                                           Regulatory
                                       6-30-98   12-31-97  Requirement
                                       -------   --------  -----------
     Tier I Risk Based Ratio            10.38%     10.83%      4.00%
     Total Capital Risk Based Ratio     11.22      11.70       8.00
     Tier I Leverage Ratio               7.55       7.94       4.00

COMMITMENTS AND CONTINGENCIES:

YEAR 2000 ISSUES

In 1996, BT created a special task force to analyze any Year 2000 issues
pertaining to BT's business and operations.  Year 2000 issues refer to
uncertainties regarding the ability of various software systems to
interpret dates correctly after the beginning of the Year 2000.  BT
utilizes and is dependent upon data processing systems and software in its
normal course of business.  BT is in the process of (1) analyzing its
information systems and vendor supplied application systems to address any
Year 2000 issues, (2) developing detailed plans for system corrections and
testing, (3) correcting or replacing all critical applications, and (4)
evaluating the potential effects of Year 2000 issues on customers of Laurel
and the Trust Company.

The ongoing process of analyzing its information systems involves internal
testing of computer hardware and software and the modification and/or
replacement of such systems if necessary.  While BT is taking all
appropriate steps to assure Year 2000 compliance, it is dependent on vendor
compliance to a large extent.  BT is requiring systems and software vendors
to represent that the services and products provided are, or will be Year
2000 compliant and are tested for such compliance.  As of August 1, 1998,
58% of the systems that have been determined would pose a risk to BT and
its affiliates have been certified by the respective vendor or service
provider as being Year 2000 compliant, and additionally, of those systems

                                      20

not yet certified, 37% have a compliance plan in place.  Successful
internal unit testing or other internal certification has been performed on
20% of these systems.  Management expects to have all or substantially all
systems and applications compliant or near completion of any necessary
remedial actions by the end of 1998. BT's mainframe system, as well as BT's
core business application software packages have been certified by the
respective vendors for Year 2000 compliance.  Contingency planning efforts,
specific to critical systems and applications, are underway in the event
that primary systems, although certified, are deemed inadequate for
processing after the beginning of the Year 2000.  BT has also contacted its
utility service suppliers and requested written assurance of their Year
2000 compliancy.  To date, most vendors have not responded.  BT's task
force will assess these vendor relationships upon determination of each
vendor's Year 2000 readiness.

BT estimates that the total cumulative cost of this process will
approximate $756,000, which includes costs associated with modifying the
systems as well as the cost of purchasing or leasing certain hardware and
software.  Purchased hardware and software will be capitalized in
accordance with normal policy.  Personnel and all other costs related to
this process are being expensed as incurred.  As of August 1, 1998,
approximately $232,000 of the estimated total cumulative cost has been
expended.  The total cost of this process and the expected completion dates
are based on management's best estimates and are believed to be reasonably
accurate.  The expenditure is not expected to be material to the
Corporation's business, operations or financial condition and should have
no material impact on the Corporation's results of operations, liquidity or
capital resources.

BT's process of evaluating potential effects of Year 2000 issues on
customers of Laurel and the Trust Company is in its early stages, and it is
therefore impossible to quantify the potential adverse effects of Year 2000
problems on Laurel's loan customers.  Risk assessments are currently being
performed on Laurel's larger commercial borrowers.  The failure of a
commercial bank customer to prepare adequately for Year 2000 compatibility
could have a significant adverse effect on such customer's operations and
profitability, in turn inhibiting its ability to repay loans in accordance
with their terms.  Until sufficient information is accumulated from
customers of Laurel to enable BT to assess the degree to which customers'
operations are susceptible to potential problems, BT will be unable to
quantify the potential losses, if any, from loans to commercial customers.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Corporation is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers.  These financial instruments consist of loan commitments and
standby letters of credit.

The Corporation's exposure to loss in the event of nonperformance by the
other party to the financial instrument for loan commitments and standby
letters of credit is represented by the contractual amount of these
instruments.  The Corporation uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments.

The face amounts of financial instruments with off-balance-sheet risk at
June 30, 1998 were as follows:

                         (In thousands)
                         Loan commitments                   $198,698
                         Standby letters of credit            12,516

Since many of the loan commitments may expire without being drawn upon, the
total commitment amount does not necessarily represent future cash
requirements or loss exposures.  The Corporation evaluates each customer's
creditworthiness on a case-by-case basis.  The amount of collateral
obtained, if deemed necessary by the Corporation upon extension of credit,

                                      21

is based on management's credit evaluation of the customer.  Standby
letters of credit are unconditional commitments issued by the Corporation
to support the financial obligations of a customer to a third party.  These
guarantees are primarily issued to support public and private borrowing
arrangements.  The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans.  The collateral
varies but may include accounts receivable, inventory and property, plant
and equipment for those commitments for which collateral is deemed
necessary.

                                      22


                                      PART II
                                      -------
                                 OTHER INFORMATION
                                 -----------------



                                     ITEM 4
                                     ------
                 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                 ---------------------------------------------------

       The Annual Meeting of BT Financial Corporation was held on Tuesday,
    May 12, 1998, at the Holiday Inn-Downtown Johnstown, 250 Market Street,
    Johnstown, Pennsylvania.  The following directors were elected:

    Name                  Votes For      Votes Withheld        Term Expires
    ----                  ---------      --------------        ------------

    John H. Anderson      4,803,545            387,938               2002
    G. Scott Baton, II    4,805,766            385,717               2002
    Edward L. Mears       4,758,362            433,121               2002
    Roger S. Nave         4,782,765            408,718               2002

    At the same meeting, the 1998 Equity Incentive Plan was approved and voted
    as follows:

    Shares voted FOR                4,442,725
    Shares voted AGAINST              250,389
    Shares ABSTAINED                  498,369

                                      ITEM 5
                                      ------
                                OTHER INFORMATION
                                -----------------

   The information contained in footnote 8 to the Consolidated Balance Sheet
   included in Part I of this report on Form 10-Q is incorporated by reference
   in response to this item.


                                      ITEM 6
                                      ------
                           EXHIBITS AND REPORTS ON FORM 8-K
                           --------------------------------

  (a)  Exhibits
       --------

       Exhibit 10.4   1998 Equity Incentive Plan

       Exhibit 27     Financial Data Schedule

  (b)  Reports on Form 8-K
       --------------------

      During the second quarter of 1998, the Registrant filed the following
      Current Report on Form 8-K:

      (1) A report was filed on April 3, 1998, pursuant to Item 5, to
       report certain severance and legal charges expensed in the first quarter
       of 1998.

                                       23
 

                                     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.


                                          BT FINANCIAL CORPORATION
                                          (Registrant)

  Date  August 14, 1998                   /s/ John H. Anderson
        ---------------                   ----------------------------
                                          John H. Anderson, Chairman
                                          and Chief Executive Officer




  Date  August 14, 1998                  /s/ Mark L. Sollenberger
        ---------------                  -------------------------------
                                         Mark L. Sollenberger,
                                         Executive Vice
                                         President, Treasurer
                                         and Assistant
                                         Secretary
                                         (Principal Financial Officer)

                                     24