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:  SEPTEMBER 30, 1999

                                   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:

                    15,888,852 shares common stock
                          ($5.00 par value)
                       as of November 2, 1999



              BT FINANCIAL CORPORATION AND AFFILIATES
                           FORM 10-Q
                       September 30, 1999

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

     Item 1.
     -------
           Consolidated Balance Sheet - September 30, 1999
            and December 31, 1998                                      3

           Consolidated Statement of Income
            Three and Nine Months Ended September 30, 1999 and 1998    4

           Consolidated Statement of Cash Flows
            Nine Months Ended September 30, 1999 and 1998              5

           Consolidated Statement of Comprehensive Income
            Three and Nine Months Ended September 30, 1999 and 1998    6

           Notes to Consolidated Financial Statements                  7

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

     Item 3.
     -------
          Quantitative and Qualitative Disclosures about Market Risk  23

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

     Item 1.
     -------
          Legal Proceedings                                           23

     Item 2.
     -------
          Changes in Securities and Use of Proceeds                   23

     Item 3.
     -------
          Defaults Under Senior Securities                            23

     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                          24

 Signatures                                                           25

                                2




                                ITEM 1
                                ------
                         FINANCIAL STATEMENTS
                         --------------------
               BT FINANCIAL CORPORATION AND AFFILIATES
               ---------------------------------------
                       CONSOLIDATED BALANCE SHEET
                       --------------------------
(In thousands, except shares and per share data)

                                          SEPTEMBER 30     December 31
                                                  1999            1998
                                            (UNAUDITED)
                                            --------------------------
ASSETS
Cash and cash equivalents                     $ 53,540        $ 67,823
Interest-bearing deposits with banks                89              57
Federal funds sold                              52,000          19,700

Securities available-for-sale                  370,086         316,954
Securities held-to-maturity (market values
  of $1,993 at September 30, 1999 and
  $119,697 at December 31, 1998)                 1,999         118,861
                                            --------------------------
            Total securities                   372,085         435,815
                                            --------------------------

Loans                                        1,575,762       1,355,818
       Less:  Unearned interest                 17,311          30,077
              Reserve for loan losses           15,828          13,702
                                            --------------------------
             Net loans                       1,542,623       1,312,039
                                            --------------------------

Premises and equipment                          29,971          32,177
Accrued interest receivable                     13,527          13,174
Other assets                                    42,380          35,123
                                            --------------------------
            Total assets                   $ 2,106,215     $ 1,915,908
                                            ==========================

LIABILITIES
Deposits:
    Non-interest-bearing                   $   238,663      $  234,790
    Interest-bearing                         1,357,914       1,343,360
                                            --------------------------
            Total deposits                   1,596,577       1,578,150

Federal funds purchased and securities sold
 under agreements to repurchase                 31,965          36,880
Short-term borrowings                          128,161           2,319
Accrued interest payable                         8,557           6,300
Other liabilities                                6,578           3,083
Long-term borrowings                           150,015         100,031
                                            --------------------------
            Total liabilities              $ 1,921,853     $ 1,726,763
                                            --------------------------

SHAREHOLDERS' EQUITY
Preferred stock, no par value
 2,000,000 shares authorized,
 None outstanding                                  ---             ---
Common stock, par value $5 per share,
 25,000,000 shares authorized,
 shares issued: 15,888,852 at September 30, 1999
 and 15,889,852 at December 31, 1998            79,444          79,449
Surplus                                         45,450          45,470
Retained earnings                               67,661          62,220
Treasury stock                                      --             (24)
Accumulated other comprehensive (loss) income   (8,193)          2,030
                                             -------------------------
            Total shareholders' equity         184,362         189,145
                                             -------------------------
            Total liabilities and
                 shareholders' equity      $ 2,106,215     $ 1,915,908
                                             =========================

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

                                3


                BT FINANCIAL CORPORATION AND AFFILIATES
                ---------------------------------------
                    CONSOLIDATED STATEMENT OF INCOME
                    --------------------------------
                              (Unaudited)
                              -----------
(In thousands, except shares and per share data)
                                      Three months ended     Nine months ended
                                          September 30           September 30
                                         1999       1998         1999     1998
                                     -----------------------------------------
  INTEREST INCOME
  Loans, including fees              $ 30,059   $ 27,202   $ 85,514   $ 79,456
  Investment securities:
    Taxable                             4,346      6,851     13,415     22,138
    Tax-exempt                          1,326        941      4,020      2,221
  Deposits with banks                       2          6          6         27
  Federal funds sold                      230        272        592        700
                                     -----------------------------------------
       TOTAL INTEREST INCOME           35,963     35,272    103,547    104,542
                                     -----------------------------------------
  INTEREST EXPENSE
  Deposits                             12,233     13,369     35,870     40,041
  Federal funds purchased
   and securities sold under
   agreements to repurchase               394        600      1,054      1,603
  Short-term borrowings                   896         63      1,125        952
  Long-term borrowings                  1,974      1,538      5,117      3,158
                                     -----------------------------------------
       TOTAL INTEREST EXPENSE          15,497     15,570     43,166     45,754
                                     -----------------------------------------
  NET INTEREST INCOME                  20,466     19,702     60,381     58,788
  Provision for loan losses             1,894      1,628      5,064      4,543
                                     -----------------------------------------
       Net interest income
        after provision for
        loan losses                    18,572     18,074     55,317     54,245
                                     -----------------------------------------
  OTHER INCOME
  Trust income                            982        937      3,000      2,678
  Fees for other services               2,791      2,618      7,695      7,077
  Net security gains                       --        302         90        366
  Other income                            398        248      1,397        653
                                     -----------------------------------------
       TOTAL OTHER INCOME               4,171      4,105     12,182     10,774
                                     -----------------------------------------
  OTHER EXPENSES
  Salaries and wages                    6,183      5,811     17,841     17,985
  Pension and other
   employee benefits                    1,257      1,128      3,930      3,518
  Net occupancy expense                 1,193      1,150      3,679      3,545
  Equipment expense                     1,522      1,448      4,541      4,278
  F.D.I.C. insurance                       67         68        209        221
  Amortization of intangible
   assets                                 524        524      1,571      1,571
  Reorganization expense                4,115         --      4,204         --
  Other operating expense               3,892      3,890     11,627     11,601
                                     -----------------------------------------
       TOTAL OTHER EXPENSES            18,753     14,019     47,602     42,719
                                     -----------------------------------------
  INCOME BEFORE INCOME TAXES            3,990      8,160     19,897     22,300
  Provision for income taxes            1,156      2,448      5,744      6,737
                                     -----------------------------------------
       NET INCOME                    $  2,834    $ 5,712   $ 14,153   $ 15,563
                                     =========================================

  Earnings per common share-Basic
        and Diluted                  $    .18    $   .36   $    .89   $    .98
  Weighted average common shares
       outstanding-Basic           15,888,852 15,889,254 15,888,852 15,889,651
   Weighted average common shares
       outstanding-Diluted         15,888,852 15,889,254 15,889,204 15,889,651
  Dividends paid per common
       share                         $    .20    $   .16   $    .55   $    .47


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)
                                       --------------
                                                            Nine months ended
                                                               September 30
                                                              1999       1998
                                                          --------------------

  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                              $ 14,153   $ 15,563
  Adjustments to reconcile net income to
   net cash provided by operating activities:
       Provision for loan losses                             5,064      4,543
       Provision for depreciation and
        amortization                                         3,478      3,609
       Amortization of intangible assets                     1,571      1,571
       Amortization of premium, net of
        accretion of discount on loans and
        securities                                            (218)       639
       Deferred income taxes                                  (631)      (798)
       Realized net securities gains                           (90)      (366)
       Increase in interest receivable                        (353)    (4,516)
       Increase in interest payable                          2,257      1,743
       Equity in loss of limited partnerships                  185         73
       Other assets and liabilities, net                       706     (1,756)
                                                          --------------------
             Net cash provided by operating
                 activities                                 26,122     20,305
                                                          ---------------------
  CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales of securities                         14,856     44,963
  Repayments and maturities of securities
   available-for-sale                                       35,864     54,818
  Repayments and maturities of securities
   held-to-maturity                                         79,193     95,562
  Purchase of securities available-for-sale                (75,243)  (192,905)
  Purchase of securities held-to-maturity                   (6,726)   (13,325)
  Net (increase) decrease in interest-bearing deposits
   with banks                                                  (32)       903
  Net increase in federal funds sold                       (32,300)    (5,600)
  Proceeds from sales of loans                              14,452      6,414
  Net increase in loans                                   (249,786)  (132,208)
  Purchases of premises and equipment and other             (1,272)    (2,954)
  Net increase in investment in limited partnerships           (37)    (1,044)
                                                          --------------------
            Net cash used in investing
                 activities                               (221,031)  (145,376)
                                                          --------------------
  CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in deposits                                  18,427     17,019
  Net (decrease) increase in Federal Funds purchased
   and securities sold under agreements to repurchase       (4,915)    14,337
  Net increase in short-term borrowings                    125,842        548
  Common stock cash dividends paid                          (8,712)    (7,492)
  Proceeds from long-term borrowings                        50,000    100,000
  Payment on long-term borrowings                              (16)    (2,156)
                                                          --------------------
                 Net cash provided by financing activities 180,626    122,256
                                                          --------------------
  Decrease in cash and cash equivalents                    (14,283)    (2,815)
  Cash and cash equivalents at beginning
   of the year                                              67,823     59,597
                                                          --------------------
  Cash and cash equivalents at end of period              $ 53,540   $ 56,782
                                                          ====================


The accompanying notes are an integral part of the consolidated financial
 statements.
                                5



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

                                       Three months ended    Nine months ended
                                            September 30         September 30
                                            1999     1998       1999      1998
                                         ----------------   ------------------
Net income                              $ 2,834   $ 5,712   $ 14,153  $ 15,563

Other comprehensive income
 (loss), net of tax:
Unrealized holding gains (losses) on
 securities arising during period, net
 of tax of $(609), $1,652, $(5,505),
 and $1,543                              (1,131)    3,263    (10,164)    3,103
Less: Reclassification adjustment for
 gains included in net income,
 net of tax of $0, $106, $31,
 and $128                                   --        196         59       238
                                        -----------------    -----------------
Other comprehensive income (loss),
 net of tax of $(609), $1,546,
 $(5,536) and $1,415                     (1,131)    3,067    (10,223)    2,865
                                        -----------------    -----------------
Comprehensive income                    $ 1,703   $ 8,779   $  3,930  $ 18,428
                                        =================    =================

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.   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., Laurel Community Development
            Corporation, Bedford Associates of Delaware, Inc., and
            Flex Financial Consumer Discount Company (Flex).  BT
            completed  mergers with The Peoples National Bank of
            Rural Valley (Peoples) and First Philson Financial
            Corporation (Philson) on October 23, 1998, and July 14,
            1999, respectively.  Philson owned First Philson Bank,
            N.A. and Flex, a finance company subsidiary.  At the
            time of the mergers, Peoples' assets were approximately
            $37 million and Philson's assets were approximately
            $221 million.  The mergers were accounted for as
            poolings-of-interests, and accordingly, BT's
            accompanying consolidated financial statements have
            been restated retroactively to include the accounts and
            operations of Peoples and Philson for all periods
            presented prior to the merger.  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, 1998.  The results of
            operations for the nine month period ended September
            30, 1999 are not necessarily indicative of the results
            which may be expected for the full year.

       2.   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.

       3.   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 $3.3
            million at September 30, 1999, compared to $674,000 at
            December 31, 1998 and $1.0 million at September 30,
            1998.  The corresponding loan loss valuation allowance
            was $475,000, $148,000, and $609,000 for the same
            periods, respectively.  The interest revenue recognized
            on impaired loans during the nine months ended
            September 30, 1999 and 1998 was insignificant.

                                7


      4.   Earnings Per Share
           ------------------
           The following table shows the calculation of
           basic and diluted earnings per share.  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.

                                     Three months ended      Nine months ended
                                          September 30           September 30
                                       1999        1998         1999      1998
                                      ------------------   -------------------
    Basic Earnings Per Share:
         Net income (in thousands)  $ 2,834     $ 5,712    $ 14,153   $ 15,563
                                     ======      ======      ======     ======
         Weighted average number
          of common shares
          outstanding-Basic      15,888,852  15,889,254  15,888,852 15,889,651

         Basic Earnings Per
           Share                     $  .18      $  .36      $  .89     $  .98
                                     ======      ======      ======     ======
    Diluted Earnings Per Share:
         Net Income (in thousands)  $ 2,834     $ 5,712    $ 14,153   $ 15,563
                                     ======      ======      ======     ======
         Weighted average number
          of common shares
          outstanding-Basic      15,888,852  15,889,254  15,888,852 15,889,651

         Effect of dilutive
          stock options                ---          ---         352        ---
                                     -----       ------      ------     ------
         Weighted average number
          of common shares
          outstanding-Diluted    15,888,852  15,889,254  15,889,204 15,889,651
                                 ==========  ==========  ========== ==========
         Diluted Earnings
          Per Share                  $  .18      $  .36      $  .89     $  .98
                                     ======      ======      ======     ======



      5.   Recent Accounting Pronouncements
           --------------------------------

            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.  In June of 1999, the FASB
            issued SFAS No. 137, "Accounting for Derivative
            Instruments and Hedging Activities - Deferral of the
            Effective Date of SFAS No. 133," which postponed the
            adoption date of SFAS No. 133.  As such, the
            Corporation is not required to adopt SFAS No. 133 until

                               8

            fiscal year 2001.  Since BT does not currently use
            derivative financial instruments, the adoption of the
            standard would not have any material impact on BT's
            financial position or results of operations.

      6.   Recent Acquisition
           ------------------

           On July 14, 1999, BT completed a merger with First
           Philson Financial Corporation (Philson) whereby Philson was
           merged directly into BT.  In connection with the merger, each
           share of Philson Common Stock was converted into 1.667 shares
           of BT Common Stock, resulting in the issuance of 2,904,580 BT
           Common Stock shares.  The value of the transaction was
           approximately $71 million based on BT's closing market price of
           $24.50 on July 14, 1999.  Philson's assets totaled
           approximately $221 million on the merger date.  Post-merger,
           BT's assets totaled approximately $2.0 billion. This merger
           enhances BT's current lead position in market share for
           Somerset County, Pennsylvania where BT will now represent over
           one-third of the total bank and thrift deposits.  The merger
           has been accounted for as a pooling-of-interests.  Accordingly,
           BT's accompanying consolidated financial statements have been
           restated retroactively to include the accounts and operations
           of Philson for all periods prior to the merger.  Philson's
           banking subsidiary, First Philson Bank, N.A., was merged into
           Laurel Bank upon consummation of the merger of the
           corporations.  At the time of the merger, First Philson Bank,
           N.A., operated nine branches in Somerset and Fayette counties.
           In connection with the merger, two of these branches closed
           during the fourth quarter of 1999 along with one branch of
           Laurel as a result of duplicate service areas.  Philson also
           owned Flex Financial Consumer Discount Company (Flex), a
           finance company subsidiary.  Flex has two branch offices and
           will continue to operate as a non-bank subsidiary of BT.

                                 9


          Separate results of the combining entities are presented for the
          interim  periods shown below.  All significant intercompany
          transactions have been eliminated.

           (In thousands,           THREE MONTHS ENDED SEPTEMBER 30
           except share data)                   1998
                                          BT     Philson   Combined
                                          --     -------   --------
                Net Interest Income  $ 17,409    $ 2,293   $ 19,702
                Net Income              5,022        690      5,712
                Earnings per share:*
                 Basic and Diluted        .39        .40        .36


                                NINE MONTHS ENDED SEPTEMBER 30
                                 1999                         1998
                         BT    Philson   Combined       BT   Philson  Combined
                         --    -------   --------       --   -------  --------
Net Interest Income  $ 55,797  $ 4,584   $ 60,381   $ 51,979 $ 6,809  $ 58,788
Net Income             12,777    1,376     14,153     13,456   2,107    15,563
Earnings per share:*
 Basic and Diluted        --       --         .89       1.04    1.21       .98

          *The combined earnings per share amounts are based
           on the sum of the weighted average shares outstanding, as
           reported by BT, and the weighted average shares outstanding
           for Philson converted to BT shares at the exchange ratio of
           1.667.

           In connection with the Philson merger, $4.2
           million of merger costs and expenses ($3.0 million
           after-tax or $.19 per diluted share) were incurred and
           have been charged to expense in the nine month period
           ended September 30, 1999.  The merger costs and
           expenses consisted primarily of severance pay to
           furloughed employees and various legal, accounting, and
           investment banking fees associated with the
           transaction.

      7.   Litigation
           ----------

           A purported class action was instituted in the Court of
           Common Pleas of Cambria County, Pennsylvania against the former
           Johnstown Bank & Trust Company (Bank and Trust), now Laurel
           Bank, 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

                                10

           plaintiff purports to represent a class of persons who made a
           mortgage payment to the former 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 the former Bank and Trust during the relevant
           period.  The class discovery phase of the litigation was
           completed in February 1999. A class certification hearing has
           not been scheduled yet.  If the court certifies the case as a
           class action, Laurel Bank intends to pursue its affirmative
           defenses and vigorously defend the lawsuit. The impact of this
           litigation on BT cannot be fully assessed at this 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 area 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 area".  In April 1999, the Court granted
           plaintiff's partial motion for summary judgment, concluding
           that plaintiff has the exclusive right to use the word "Laurel"
           in its name within a geographic area around its offices in the
           Pittsburgh area, but the court did not define the area of
           exclusive use. While the plaintiff contends that the zone of
           exclusive use encompasses the metropolitan "Pittsburgh area",
           Laurel Bank contends that this zone is substantially smaller.
           The issue of the scope of the "Pittsburgh area" remains to be
           decided.  The impact of this litigation on BT cannot be fully
           assessed at this 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.

      8.   Stock Dividend
           --------------

           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.  All share and
           per share data in this report has been adjusted to reflect
           the stock dividend.

                                11


     9.    Stock Based Compensation Plan
           -----------------------------

            On January 4, 1999, under the 1998 Equity
            Incentive Plan (Plan), BT granted non-qualified stock
            options to certain employees and directors to purchase
            105,000 shares of BT Common Stock.  The exercise price
            of the options was $26.375 per share which equaled the
            market price of BT's Common Stock on the date of grant.
            The stock options became exercisable on January 5, 1999
            and have a maximum term of 10 years.  Additionally, on
            July 28, 1999, under the Plan, BT granted non-qualified
            stock options to certain employees to purchase 35,000
            shares of BT Common Stock.  The exercise price of the
            options was $24.125 per share which equaled the market
            price of BT's Common Stock on the date of grant.  The
            stock options became exercisable on July 29, 1999 and
            have a maximum term of 10 years.

                               12



                                   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 September 30, 1999 and December 31,
1998, and the material changes in results of operations comparing the three
and nine month periods ending September 30, 1999 with the respective
results for the comparable periods of 1998 for BT.  The following should be
read in conjunction with BT's Annual Report on Form 10-K for the year ended
December 31, 1998.

Certain statements contained in this report constitute "forward-looking"
statements with respect to BT 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 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.

BT completed mergers with The Peoples National Bank of Rural Valley
(Peoples) and First Philson Financial Corporation (Philson) on October 23,
1998, and July 14, 1999, respectively.  Philson owned First Philson Bank,
N.A. and Flex Financial Consumer Discount Company, a finance company
subsidiary.  At the time of the mergers, Peoples' assets were approximately
$37 million and Philson's assets were approximately $221 million.  The
mergers were accounted for as poolings-of-interests, and accordingly, BT's
accompanying consolidated financial statements have been restated
retroactively to include the accounts and operations of Peoples and Philson
for all periods presented prior to the merger.

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

Overview
--------

BT's primary financial objectives are to expand the growth and
profitability of the Corporation through: (1) strategic mergers and
acquisitions, (2) increases in market share growth by way of expanded sales-
focused initiatives, (3) implementation of various efficiency strategies
including the continuous refinement of BT's branch delivery system and (4)
expansion of revenue streams in fee income and trust revenue areas.
Maintaining high asset quality while managing internal and merger-related
growth remains an essential element in BT's expansion strategies.

BT's recent merger with First Philson Financial Corporation in July of 1999
increased total assets to approximately $2.0 billion and solidified BT's
current lead market position in Somerset County, Pennsylvania, where BT
will now represent over one-third of total bank and thrift deposits.
Philson's assets totaled approximately $221 million on the July 14, 1999
merger date.  Philson's banking subsidiary, First Philson Bank, N.A.,
operated nine branches in Somerset and Fayette Counties and was merged into
Laurel Bank upon consummation of the merger.  Philson also owned Flex
Financial Consumer Discount Company (Flex), which will continue to operate
as a non-bank subsidiary of BT.  Targeted synergies and efficiencies

                               13

resulting from the merger will include the elimination of redundant back-
office functions and some branch closures due to overlapping market areas.
The impact of the cost-saving measures will begin in 1999 with the full
effect expected to be realized in the year 2000.  During the fourth quarter
of 1999, two branches of the former Philson Bank, N.A. along with one
branch of Laurel were closed and consolidated into nearby locations as a
result of duplicate service areas created by the merger.  The costs
associated with the branch closings did not have a material impact on BT's
financial position or results of operations.  BT plans to generate
additional revenues in the future through the expansion of Flex's market
and by targeting Laurel Trust Company's services to Philson's customer
base.

BT's net income for the three months and nine months ended September 30,
1999 was impacted by nonrecurring costs related to the Philson merger.
These charges approximated $4.2 million on a pre-tax basis ($3.0 million
after-tax or $.19 per diluted share) for the nine-months ended September
30, 1999.  BT's net income for 1999 also reflects a one-time net after-tax
gain of $366,000 ($.02 per diluted share) realized in connection with the
second quarter 1999 sale of Laurel Bank's two Indiana, Pennsylvania branch
offices.  The offices were sold as part of BT's ongoing strategy to achieve
a more efficient branch delivery system.  Excluding the gain from the
branch sales, the Philson merger costs, and other nonrecurring items
experienced in 1999 and 1998, BT's net income for the nine months ended
September 30, 1999 increased 5.9% to $16.7 million, or $1.05 per diluted
share compared to $15.8 million, or $.99 per diluted share earned in the
same period of 1998.  For the quarter ended September 30, 1999, excluding
nonrecurring items, net income increased 3.6% to $5.7 million, or $.36 per
diluted share compared to $5.5 million, or $.35 per diluted share earned in
the third quarter of 1998 before nonrecurring items.  Key factors
responsible for the increased core earnings performance over both
comparison periods include gains in net interest income resulting from
strong loan growth and higher levels of fee-based revenue.  Including
nonrecurring income and expense items, BT's net income for the nine months
ended September 30, 1999 was $14.2 million, or $.89 per diluted share
compared to $15.6 million, or $.98 per diluted share earned in the same
period of 1998.  Net income, including nonrecurring income and expenses,
was $2.8 million, or $.18 per diluted share for the third quarter of 1999
compared to $5.7 million, or $.36 per diluted share earned in the third
quarter of 1998.  The following discussions throughout this report detail
the primary factors responsible for BT's financial results and also explain
the nonrecurring income and expense items applicable to each comparison
period.

Loans, net of unearned interest, increased to a record $1.56 billion at
September 30, 1999 compared to $1.33 billion at year-end 1998 and $1.31
billion at September 30, 1998.  The higher level in the current period
reflects strong ongoing loan demand due to competitive rates and increased
market penetration resulting from an increased focus on sales and customer
service inherent in the formation of Laurel Bank's five local regions late
in 1997.  Total deposits, also benefiting from enhanced sales and service
initiatives, rose to an all-time high of $1.60 billion in the current
period versus $1.58 billion at year-end 1998 and $1.57 billion at September
30, 1998.

Excluding security gains and the gain from the aforementioned sale of two
branches, BT's non-interest income increased 10.3% in the first nine months
of 1999 compared to the corresponding period of 1998 due primarily to
increases in trust income and service fees.  The market value of trust
assets under management was $750.7 million at September 30, 1999.  The
expansion of fee revenue remains one of BT's main areas of strategic focus.

CHANGES IN FINANCIAL POSITION

Total assets at September 30, 1999 were $2.11 billion, representing
increases of $190.3 million, or 9.9%, and $171.3 million, or 8.9%, compared

                               14

to year-end 1998 and September 30, 1998, respectively.  The increases were
primarily due to higher loan levels which were somewhat offset by decreased
investment securities.  Average total assets for the nine months ended
September 30, 1999 were $1.97 billion, representing an increase of $66.6
million or 3.5% over the nine months ended September 30, 1998.  The
increase was substantially due to higher loan levels in the current year.

Total shareholders' equity decreased $4.8 million, or 2.5%, and $3.8
million, or 2.0%, compared to year-end 1998 and September 30, 1998,
respectively, primarily resulting from a reduction in accumulated other
comprehensive income (loss) due to declines in unrealized market values on
securities available-for-sale.  The upward interest rate movement
experienced in 1999 was the main factor in the net-of-tax fair value
securities valuation declines of $10.2 million and $12.0 million compared
to year-end 1998 and September 30, 1998, respectively.

Period-end total loans outstanding, net of unearned interest, increased
$232.7 million, or 17.6%, and $250.2 million, or 19.1%, compared to year-
end 1998 and September 30, 1998, respectively.  The loan increases were
largely due to internal growth in commercial, consumer and residential
mortgage loans attributable to increased market demand and various loan
sales coupled with aggressive sales efforts focusing on loan production.
Specifically, a home equity loan promotional campaign in place during most
of 1999 featuring competitive interest rates generated substantial mortgage-
backed consumer loan growth.  Laurel Bank formed five local banking regions
late in 1997.  This regionalized marketing approach has contributed to loan
growth by placing managers closer to their customers enabling them to focus
on customer needs more effectively.  Loan growth was also impacted in the
second quarter of 1999 by Laurel Bank's purchase of approximately $21
million in residential mortgage loans from another financial institution.
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 achieved its internal loan growth targets in
1999.  Consequently, during the last quarter of 1999, BT has taken a less
aggressive stance relative to loan pricing.  Management is therefore
anticipating a slower rate of loan growth in the near future.  This
strategy will allow BT to continue the pursuit of quality loans at
increased profitability levels.

BT's nonperforming assets increased $2.8 million, or 31.9%, and $1.7
million, or 17.0%, compared to year-end 1998 and September 30, 1998,
respectively.  The increases in the current period were essentially due to
a higher level of nonaccrual commercial mortgage loans offset partially by
declines in nonaccrual commercial and consumer loans.  The increased nonaccrual
commercial mortgages were primarily due to various loans associated with
one borrower.  Nonperforming assets represented .56%, .46% and .52% of total
assets at September 30, 1999, December 31, 1998, and September 30, 1998,
respectively.

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.  The coverage ratio, defined as the reserve
for loan losses to nonperforming loans, was 1.5x at September 30, 1999 and
1998 compared to 1.8x at year-end 1998.  Management considers the level of
nonperforming assets in the evaluation of the adequacy of BT's loan loss
reserve.  The following table provides information with respect to the
components of BT's nonperforming assets and related ratios for the periods
indicated.

                               15

                                       SEPTEMBER 30   December 31 September 30
    (In thousands)                             1999          1998         1998
                                       ---------------------------------------
    Loans 90 days or more past-due         $    509       $   694      $ 1,002
    Restructured loans                          213           264          265
    Nonaccrual loans                          9,765         6,721        7,582
                                      ----------------------------------------
      Total nonperforming loans              10,487         7,679        8,849
    Other real estate owned                     471           615          576
    Repossessed assets                          778           601          605
                                      ----------------------------------------
      Total nonperforming assets           $ 11,736       $ 8,895      $10,030
                                      ========================================

    Nonperforming loans as a % of
      loans, net of unearned interest           .67%          .58%         .68%
    Reserve for loan losses to
      nonperforming loans                       1.5x          1.8x         1.5x
    Reserve for loan losses as a % of
      loans, net of unearned interest          1.02%         1.03%        1.03%


Total investment securities have declined $63.7 million, or 14.6%, and
$107.7 million, or 22.4%, compared to year-end 1998 and September 30, 1998,
respectively.  Most of the decline has been due to decreases in government
agency securities offset partially by increases in municipal securities and
other debt securities.  Additionally, the generally upward bias in interest
rates experienced throughout 1999 has resulted in gross fair value
securities valuations declines of $15.7 million and $18.3 million compared
to year-end 1998 and September 30, 1998, respectively.  BT's recent funding
strategies have generally involved utilizing the proceeds from maturing and
called securities to support recent loan growth.  Loans generally provide
higher yields than securities and sound loan expansion remains one of BT's
key growth strategies.  Two government agency securities totalling $50
million were purchased during the second quarter of 1999 in a balance sheet
leveraging strategy designed to enhance net interest income by utilizing
favorably priced wholesale funding.

Period-end total deposits increased $18.4 million, or 1.2% and $30.0
million, or 1.9%, compared to year-end 1998 and September 30, 1998,
respectively.  Current deposit totals reflect a reduction of approximately
$6.8 million due to deposits sold in connection with the sale of Laurel
Bank's two Indiana, PA branches in the second quarter of 1999.  Excluding
the impact of the sold deposits, period-end total deposits increased $25.2
million, or 1.6% and $36.8 million, or 2.4% compared to year-end 1998 and
September 30, 1998, respectively.  Non-interest-bearing demand deposits,
excluding the impact of sold deposits, increased $5.1 million, or 2.2%, and
$18.0 million, or 8.1%, compared to year-end 1998 and September 30, 1998,
respectively.  Interest-bearing deposits, excluding the impact of sold
deposits, increased $20.1 million, or 1.5% and $18.8 million, or 1.4%
compared to year-end 1998 and September 30, 1998, respectively.  The
increase in deposits is attributed to attracting new accounts through BT's
sales focus and cross-selling into its existing customer base.  BT's
primary deposit gathering strategy emphasizes growth in non-interest-
bearing demand deposits and other low cost deposits.  Additionally, BT has
recently targeted growth in longer-term certificates of deposit by offering
more aggressive rates for selected extended maturities.  This strategy
allows BT to provide funding for asset growth at rates lower than current
wholesale credit sources.  Jumbo certificates of deposit, particularly
public funds, have also been marketed at competitive rates which recently
have been lower than comparable wholesale funding costs.

                                16

BT's short-term borrowings increased $120.9 million and $103.7 million
compared to year-end 1998 and September 30, 1998, respectively.  These
borrowings are comprised of federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings.  Federal Home
Loan Bank (FHLB) short-term borrowings totalled $125.2 million at September
30, 1999.  The increase in short-term borrowings resulted primarily from
funding requirements associated with BT's recent loan growth and is
reflective of management's strategy of increased utilization of alternative
nondeposit funding sources as a means to supplement internal deposit growth.
At September 30, 1999, long-term borrowings with the FHLB amounted to
$150.0 million.  During the second quarter of 1999, BT borrowed $50 million
in long-term borrowings from the FHLB to match-fund selected government
agency securities purchases as part of a balance sheet leveraging strategy.
The remaining $100 million in long-term borrowings were incurred during
1998 to support loan growth and securities purchases.  The borrowings are
secured primarily by Laurel Bank's residential mortgage loans.  The long-
term borrowings, scheduled to mature in the year 2008 or 2009, have
interest rates ranging from 4.99% to 5.29% at September 30, 1999.

RESULTS OF OPERATIONS

A 2-for-1 stock split effected in the form of a stock dividend was declared
on March 25, 1998 to shareholders of record at April 8, 1998.  The stock
dividend was distributed on May 1, 1998.  All per share data in the
following discussions reflects the stock dividend.

Third Quarter 1999 vs. Third Quarter 1998

BT's third quarter 1999 earnings were impacted by nonrecurring pre-tax
costs of $4.1 million ($2.9 million after-tax or $.18 per diluted share)
related to the Philson merger.  BT also recognized nonrecurring after-tax
gains from the sale of securities of $196,000 during the third quarter of
1998.  Excluding both of these nonrecurring items, BT's net income for the
third quarter of 1999 increased $199,000, or 3.6%, to $5.7 million compared
to $5.5 million earned in the same period of 1998.  Diluted earnings per
share, excluding nonrecurring items, increased $.01, or 2.9%, to $.36 in
the current quarter compared to $.35 earned during the third quarter of
1998.  The increased earnings performance in the current period was driven
primarily by a higher level of net interest income attributed to strong
loan growth and solid increases in fee-based revenue.  BT's net income,
including nonrecurring items, was $2.8 million or $.18 per diluted share in
the current quarter versus $5.7 million or $.36 per diluted share earned
during the third quarter of 1998.

The annualized return on average assets for the third quarters of 1999 and
1998, excluding nonrecurring items, was 1.11% and 1.13%, respectively. The
annualized return on average shareholders' equity, excluding nonrecurring
items, was 12.30% in 1999 and 11.89% in 1998.  The return on average
tangible shareholders' equity, which excludes nonrecurring items and
intangible amortization expense from net income and intangibles from
average shareholders' equity was 15.03% and 14.78% for the third quarters
of 1999 and 1998, respectively.

Fully taxable equivalent net interest income increased $1.1 million, or
5.2%, to $21.6 million in the third quarter of 1999 compared to 1998.  The
increase was primarily due to a rise in average earning assets of $129.3
million, or 7.1% to $1.94 billion in the current quarter.  This increase
outpaced the rise in average interest bearing liabilities of $89.7 million,
or 5.9% to $1.61 billion in the current quarter.  The loan volume growth
achieved in 1999 was the main factor contributing to the higher level of
net interest income over last year's third quarter.  Average loans, net of
unearned interest, increased $241.4 million, or 18.7%, to $1.53 billion in
the third quarter of 1999 compared to 1998 while average securities fell
$110.1 million, or 22.1% to $388.6 million in the current period.  The net

                               17

interest margin eased 8 basis points in 1999 to 4.41% due primarily to
lower yields earned on loans and securities.  BT's net interest margin in
1999 and 1998 has been impacted by balance sheet leveraging through the
utilization of wholesale funding from the FHLB used to support higher
earning asset levels.  The leveraging position enables BT to enhance net
interest income while sacrificing some net interest spread differential.
While the current period net interest margin has been higher than peer
levels, BT is anticipating some net interest margin compression during the
remainder of 1999 due to the expected repricing characteristics of its
asset/liability mix.

The provision for loan losses increased $266,000, or 16.3%, in the third
quarter of 1999 compared to the same period of 1998 due to management's
assessment of the provision necessary to maintain an adequate reserve based
upon the current size and quality of the loan portfolio.  Growth in the
loan portfolio was a primary factor for the increased provision in the
current quarter.  Net charge-offs were $1.4 million in the third quarters
of 1999 and 1998.  Net charge-offs represented .36% of average loans, net
of unearned interest, on an annualized basis for the third quarter of 1999
compared to .42% for the same quarter last year.

Total other income, excluding securities gain, increased $368,000, or 9.7%,
in the third quarter of 1999 compared to 1998.  The growth in total other
income was mainly driven by increases in fee-based revenue.  Trust income
increased $45,000, or 4.8%, due to higher fees earned associated with
custodian and escrow administration and employee benefit plans.  Service
fees grew $173,000 or 6.6%, primarily resulting from higher levels of
deposit account fees, increased ATM/debit card revenue, and a rise in loan
insurance commissions.  The other income component of total other income
increased by $150,000, or 60.5%, in the current quarter due mainly to a
rise in gains earned from increased sales of student loans.  Security gains
were $0 and $302,000 in the third quarters of 1999 and 1998, respectively.
Total other income, including security gains, increased $66,000, or 1.6% in
the current quarter compared to the third quarter of 1998.

Total other expenses in the current quarter include $4.1 million in
nonrecurring merger-related costs incurred in connection with the Philson
merger.  Excluding these one-time costs, total other expenses rose
$619,000, or 4.4%, in the third quarter of 1999 compared to 1998.
Personnel expenses, comprising salaries and benefits, were up $501,000 or
7.2% in the current period due primarily to merit increases and a higher
level of incentive payments.  Nominal increases of 3.7% and 5.1% were
experienced in net occupancy and equipment expense, respectively.  As a
result of duplicate service areas created by the Philson merger, BT closed
three branch offices in the fourth quarter of 1999.  The costs associated
with the branch closings did not have a material impact on BT's financial
position or results of operations.  Cost savings from the closed branches
should be fully realized in fiscal year 2000.  BT's efficiency ratio,
exclusive of nonrecurring items, improved to 57% in the third quarter of
1999 compared to 58% in the same period of 1998.  The efficiency ratio
measures the ability to generate revenue in relation to expenditures.  The
lower ratio in 1999 indicates improvement in BT's strategic goal of
improving efficiency by utilizing its resources more effectively to produce
revenue.

BT's effective tax rate was 29.0% for the third quarter of 1999 compared to
30.0% for the same period of 1998.  The lower rate in 1999 reflects a
higher level of tax-exempt interest income related to securities and loans.

                                18

Nine Months Ended September 30, 1999 vs. Nine Months Ended September 30, 1998

BT's consolidated net income has been impacted in the first nine months of
1999 by nonrecurring pre-tax costs of $4.2 million ($3.0 million after-tax
or $.19 per diluted share) related to the Philson merger and a one-time pre-
tax net gain of $563,000 ($366,000 after-tax or $.02 per diluted share)
realized in connection with the sale of Laurel Bank's two Indiana, PA
branch offices.  During the first nine months of 1998, BT's earnings
reflected special charges associated with the retirement of several senior
officers of BT and certain costs incurred in connection with two legal
settlements along with other legal fees related to various lawsuits.  The
total charges approximated $445,000 on an after-tax basis and reduced
earnings per diluted share by $.03 in 1998.  Additionally, BT's
nonrecurring after-tax gains from the sale of securities were $59,000 in
the first nine months of 1999 compared to $238,000 during the same period
of 1998.  Excluding these nonrecurring income and expense items, BT's net
income for the nine months ended September 30, 1999 increased 5.9% to $16.7
million, or $1.05 per diluted share compared to $15.8 million, or $.99 per
diluted share earned in the same period of 1998.  The key factors in the
core year-over-year earnings improvement were higher levels of net interest
income fueled by strong loan growth and increases in fee-based revenue.
Including the nonrecurring income and expense items mentioned earlier, BT
earned $14.2 million or $.89 per diluted share in the nine months ended
September 30, 1999 compared to $15.6 million or $.98 per diluted share
earned in the same period of 1998.

For the first nine months of 1999, excluding nonrecurring items, the
annualized return on average assets was 1.13% compared to 1.11% in 1998.
The annualized return on average shareholders' equity for the first nine
months of 1999 and 1998, excluding nonrecurring items, was 11.88% and
11.67%, respectively.  The return on average tangible shareholders' equity,
which excludes intangible amortization expense and nonrecurring items from
net income and intangibles from average shareholders' equity, was 14.57%
for the first nine months of 1999 compared to 14.64% in 1998.

Fully taxable equivalent net interest income increased $2.9 million, or
4.7%, to $63.6 million in the first nine months of 1999 compared to $60.8
million in 1998.  The increase was primarily due to a $78.6 million, or
4.4%, rise in average earning assets in 1999 and an improved net interest
margin.  The average earning asset increase outpaced a $37.3 million, or
2.5% rise in average interest-bearing liabilities.  The year-over-year
increase in average loans was $191.4 million, or 15.3%, while average
securities declined $111.7 million, or 22.0%.  The net interest margin
improved 2 basis points in 1999 to 4.59% due to increased loan volumes and
lower rates paid on interest-bearing liabilities.

The provision for loan losses increased $521,000 in the first nine months
of 1999, compared to the same period of 1998 due to management's assessment
of the provision necessary to maintain an adequate reserve based upon the
current size and quality of the loan portfolio.  Growth in the loan
portfolio was a primary factor for the increased provision.  Net charge-
offs were approximately $2.9 million in 1999 compared to $3.6 million in
1998.  The lower level in the current year is mainly resulting from a lower
level of commercial loan charge-offs and an increased level of residential
mortgage loan recoveries.  Net charge-offs, as a percentage of average
loans, net of unearned discount, were .27% on an annualized basis for the
nine months ended September 30, 1999 compared to .39% for the same period
in the prior year.

Total other income in the first nine months of 1999 was impacted by a
nonrecurring gain of $609,000 realized from the sale of Laurel Bank's two
Indiana, PA branch offices in the second quarter of 1999.  These branches
were sold as part of management's ongoing efforts to review branches to
determine their fit with BT's strategy of providing more efficient delivery

                               19

channels.  Nonrecurring security gains totaled $90 in 1999 and $366 in 1998
through September of each year.  Excluding these nonrecurring income items
in both years, total other income increased $1.1 million, or 10.3% to $11.5
million in the nine months ended September 30, 1999.  Trust income gained
$322,000 or 12.0% due mainly to higher fees earned in connection with
trust, custodian and escrow administration and revenue gains from employee
benefit accounts.  Service fees grew $618,000 or 8.7% primarily resulting
from increased ATM/debit card service revenue, a rise in loan insurance
commissions, and a higher level of deposit account fees.  The other income
component of total other income, excluding the branch sale gain, grew by
$135,000 mainly from increases in gains on student loans sold in the third
quarter of 1999.  Total other income, including nonrecurring items,
increased $1.4 million, or 13.1% in the nine months ending September 30,
1999 compared to the same period of 1998.

Total other expenses for the nine months ended September 30, 1999 include
$4.2 million in nonrecurring costs associated with the Philson merger.
Additionally, one-time expenses of $46 were incurred in connection with the
sale of Laurel Bank's two Indiana, PA branch offices.  Nonrecurring
expenses of $685,000 were realized in the period ending September 30, 1998
due to the aforementioned special charges related to the retirement of
certain BT senior officers and various legal settlements and other
litigation costs.  Excluding the nonrecurring items listed above for the
nine months ended September 30, 1999 and 1998, total other expenses
increased $1.3 million, or 3.1%, to $43.4 million in 1999.  Salaries and
benefits, excluding nonrecurring charges of $322,000 paid in 1998
associated with the retirement of certain BT senior officers, rose
$590,000, or 2.8%, reflecting the impact of merit increases and a higher
level of incentive payments.  Occupancy expense was up 3.8% due to various
increases in building costs and equipment expense increased 6.1% reflecting
higher levels of ongoing technology-based expenditures.  Other operating
expenses, excluding nonrecurring items, rose 3.1% due mainly to increased
advertising costs and a higher level of expenses associated with increased
activity at Laurel Community Development Corporation.  BT's efficiency
ratio, excluding nonrecurring items, improved to 58% in 1999 compared to
59% in 1998.  Total other expenses increased $4.9 million or 11.4% in 1999
compared to 1998 principally due to the nonrecurring Philson merger costs.

BT's effective tax rate was 28.9% for the first nine months of 1999
compared to 30.2% for the same period in 1998.  The lower rate in 1999
reflects a higher level of tax-exempt interest income related to securities
and loans.

CAPITAL ADEQUACY

At September 30, 1999, BT continued to maintain capital levels well above
the minimum regulatory levels.  BT's capital ratios as of September 30,
1999 and December 31, 1998 are presented in the following table.  The
required regulatory ratios, representing the level needed to meet
"Adequately Capitalized" status are also presented.


                                                       Regulatory
                                   9-30-99   12-31-98  Requirement
                                   -------   --------  -----------
     Tier I Risk Based Ratio         11.20%     11.96%     4.00%
     Total Capital Risk Based Ratio  12.23      12.94      8.00
     Tier I Leverage Ratio            8.47       8.78      4.00

                               20

COMMITMENTS AND CONTINGENCIES:

YEAR 2000 READINESS DISCLOSURE

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 has substantially completed or is in the
process of: (1) ongoing analysis of its information systems and vendor
supplied application systems to address any Year 2000 issues, (2)
correcting or replacing all non-compliant critical applications, (3)
testing or certifying its mission critical systems, (4) evaluating the
potential effects of Year 2000 issues on both the customers and vendors of
Laurel Bank and the Trust Company, and (5) developing Year 2000 contingency
and business resumption plans.

The ongoing process of analyzing BT's information systems involves internal
testing of computer hardware and software and the modification and/or
replacement of such systems if necessary.  BT is also assessing its
noncomputer (non-IT) systems for Year 2000 compliance.  These non-IT
systems such as ATM machines and security systems typically utilize
embedded technology, such as microcontrollers, which could contain a date
element.  BT met its goal of completing renovations of all mission critical
systems and applications by the end of 1998.  While BT is taking all
appropriate steps to assure Year 2000 compliance, it is dependent on its
information systems vendor's 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. Currently, 100% of the mission critical systems that BT and its
affiliates utilize have been certified by the respective vendor or service
provider as being Year 2000 compliant. Successful internal unit testing or
other internal certification has been performed on 100% of these systems.
The internal testing relative to these mission critical systems proved to
successfully process data on the various computer applications.  BT's
mainframe system, as well as BT's core business application software
packages, have been certified by the respective vendors and tested
internally for Year 2000 compliance.

Contingency planning efforts, specific to critical systems and
applications, are substantially completed in the event that primary
systems, although certified, are deemed inadequate for processing after the
beginning of the Year 2000.  In the event of any mission critical system
failure, the contingency plans provide for detailed interim procedures to
be followed until resumption of all affected processes is completed.  BT
has developed a liquidity plan which addresses any funding needs related to
Year 2000 issues including the adequacy of cash reserves in branch offices
and ATM's.  BT has contacted and assessed its utility service suppliers and
does not anticipate any interruption in services due to Year 2000 issues.

The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations.  Such failures could materially and adversely affect the
Corporation's results of operations, liquidity and capital resources.
Although BT believes that it will be adequately prepared for potential Year
2000 risks, the Corporation is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the
Corporation's results of operations, liquidity or capital resources, due to
the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of third-party
suppliers and customers.

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

                                21

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.  Currently, approximately
$717,000 of the estimated total cumulative cost has been expended.  The
total cost of this process is based on management's best estimates and is
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 Bank is 100% complete, and at this time BT has not
identified any potentially adverse effects of Year 2000 problems on Laurel
Bank's loan customers.  Reassessments on medium and high risk loan
customers have been or are currently being performed.  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 to Laurel Bank.  Information will continue to be
accumulated from customers of Laurel Bank to enable BT to assess the degree
to which customers' operations are susceptible to potential problems.

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
September 30, 1999 were as follows:

                   (In thousands)
                    Loan commitments                   $187,390
                    Standby letters of credit            10,690

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,
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


                              ITEM 3
                              ------
   Quantitative and Qualitative Disclosures about Market Risk
   ----------------------------------------------------------

There have been no material changes in the Corporation's market risk during
the three or nine months ended September 30, 1999.  For additional information,
refer to pages 45 and 46 in the Annual Report of BT on Form 10-K as filed
on March 31, 1999 for the fiscal year ended December 31, 1998 which is
incorporated by reference.

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


                              ITEM 1
                              ------
                         Legal Proceedings
                         -----------------

The information regarding legal proceedings can be found in this current
filing of Form 10-Q under BT and Affiliates Notes to Consolidated Financial
Statements in Footnote 7, Litigation.

                              ITEM 2
                              ------
               Changes in Securities and Use of Proceeds
               -----------------------------------------
Not applicable.

                              ITEM 3
                              ------
                  Defaults Under Senior Securities
                  --------------------------------
Not applicable.

                              ITEM 4
                              ------
             Submission of Matters to a Vote of Security Holders
             ---------------------------------------------------
Not applicable.

                              ITEM 5
                              ------
                        Other Information
                        -----------------
Not applicable.

                               23


                              ITEM 6
                              ------
                 Exhibits and Reports on Form 8-K
                 --------------------------------
(a) Exhibits
    --------

Exhibit No.     Description                       Prior Filing or Sequential
-----------     -----------                              Page Number
                                                         -----------

2.1     Agreement and Plan of Reorganization      Incorporated by reference to
        by and between BT and Philson dated       Registration Statement on
        February 23, 1999                         Form S-4 (No. 333-76295)
                                                  filed on June 2, 1999.

3.1     Articles of Incorporation of BT           Incorporated by reference to
        as amended to August 16, 1991             Registration Statement on
                                                  Form S-4 (No. 33-69112)
                                                  filed on October 15, 1993.

3.2     Amendment to Articles of Incorporation    Incorporated by reference to
        of BT dated June 4, 1997                  Registration statement on
                                                  Form S-4 (No.333-61683)
                                                  filed on September 3, 1998.

3.3     By-laws of BT as amended to               Incorporated by reference to
        September 23, 1992                        Registration Statement on
                                                  Form S-4 (No.33-69112)
                                                  filed on October 15, 1993.

27.1    Financial Data Schedule                   Filed herewith.

27.2    Restated Financial Data Schedule          Filed herewith.


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

       A Form 8-K dated as of July 14, 1999 was filed under
       Items 2 and 7 to report the finalization of the merger with First
       Philson Financial Corporation and BT's press release regarding the
       completion of the merger.

       A Form 8-K dated as of August 31, 1999 was filed under
       Item 5 to report BT's consolidated financial results for the one
       month and eight month periods ended August 31, 1999.

                                24


                                 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  November 12, 1999                /s/ John H. Anderson
        ------------------               ----------------------------
                                          John H. Anderson, Chairman
                                          and Chief Executive Officer

  Date  November 12, 1999               /s/ Mark L. Sollenberger
        ------------------               -------------------------------
                                          Mark L. Sollenberger,
                                          Executive Vice
                                          President and Chief
                                          Financial Officer

                                25