<PAGE>
 
         ------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)

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

     For the quarterly period ended June 30, 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 number: 0-27064


                           FIRST COMMONWEALTH, INC.
            (Exact name of registrant as specified in its charter)

           Delaware                                      75-2154228

(State or other jurisdiction of             (IRS employer identification number)
incorporation or organization)


             444 North Wells Street, Suite 600, Chicago, IL 60610
                   (Address of principal executive offices)

                                (312) 644-1800
             (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant has (1) 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.

Common Stock, par value $.001 per share, outstanding as of July 31, 1998:
3,646,000 shares

         ------------------------------------------------------------

<PAGE>
 
                           First Commonwealth, Inc.
                                   Form 10-Q
                      For the quarter ended June 30, 1998

                                     INDEX

                         PART I. FINANCIAL INFORMATION
                         -----------------------------

                                                                            Page
                                                                            ----
Item 1.   Financial Statements

          Consolidated Balance Sheets as of June 30, 1998
           and December 31, 1997............................................  3

          Consolidated Statements of Income for the three and
           six months ended June 30, 1998 and 1997..........................  5

          Consolidated Statements of Cash Flows for the six
           months ended June 30, 1998 and 1997..............................  6

          Reconciliations of Net Income to Net Cash Provided by
           Operating Activities for the six months ended June 30,
           1998 and 1997....................................................  7

          Notes to Consolidated Financial Statements........................  8

Item 2.   Management's Discussion and Analysis of Financial
           Condition and Results of Operations.............................. 10

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

Item 4.   Submission of Matters to a Vote of Security Holders............... 13

Item 6.   Exhibits and Reports on Form 8-K.................................. 13

SIGNATURES.................................................................. 14

                  SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

          Certain statements included or incorporated by reference in this Form
10-Q under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Form 10-Q constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things,
increased competition in the markets in which the Company operates; changes in
regulation affecting the Company; changes in the utilization of services;
changes in arrangements relating to payments to providers; the level of the
Company's indemnity enrollment and the related indemnity risk of indemnity
plans; the ability to integrate and successfully operate acquired businesses and
the risks associated with such businesses; the possible need for, and ability to
obtain if needed, financing on acceptable terms to finance the Company's growth
strategy; the ability of the Company to operate within the limitations imposed
by any such financing arrangements; and other factors referenced or incorporated
by reference in this Form 10-Q.

                                       2
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
                         -----------------------------

<TABLE>
<CAPTION>

Item 1.   Financial Statements

First Commonwealth, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------
(Dollars in Thousands)

ASSETS                                                    June 30, 1998   December 31, 1997
------                                                    -------------   -----------------
                                                            (Unaudited)
<S>                                                       <C>             <C>
 CURRENT ASSETS:

  Cash and cash equivalents                                     $10,234             $ 9,047

  Investments-Short Term                                          2,055                   0

  Accounts receivable, net of allowances
  of $365 at June 30, 1998 and $334 at
  December 31, 1997                                               3,309               3,444

  Other receivables                                                 308                 163

  Deposit under reinsurance agreement                               661                 752

  Prepaid expenses                                                2,194               2,289

  Prepaid income taxes                                                1                   0

  Deferred tax asset                                                992                 859
                                                                -------             -------

   Total current assets                                          19,754              16,554
                                                                -------             -------

 PROPERTY AND EQUIPMENT, at cost                                  4,366               4,030

  Less - Accumulated depreciation                                (2,664)             (2,320)
                                                                -------             -------

   Property and equipment, net                                    1,702               1,710
                                                                -------             -------

 OTHER ASSETS:

  Restricted cash equivalents and government securities
  on deposit, at cost which approximates market                   3,352               3,264

  Deposits and other                                                 72                 104

  Intangible assets, net                                         10,132              10,264
                                                                -------             -------

   Total other assets                                            13,556              13,632
                                                                -------             -------

   TOTAL ASSETS                                                 $35,012             $31,896
                                                                =======             =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>
 
First Commonwealth, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS - continued                           
----------------------------------------------------------------
(Dollars in Thousands)
 
LIABILITIES AND STOCKHOLDERS' EQUITY            June 30, 1998  December 31, 1997
                                                -------------  -----------------
                                                  (Unaudited)
CURRENT LIABILITIES:
<S>                                             <C>            <C>
 Accounts payable - trade                              $  144             $   88

 Accounts payable - dental service providers              826                395

 Claims liability                                       1,554              1,604

 Accrued payroll and related costs                        658                485

 Other accrued expenses                                   591                356

 Deferred subscriber revenue                            4,960              4,445

 Payable under reinsurance agreement                      661                752

 Income taxes payable                                       0                200

 Other current liabilities                                  0                  0
                                                       ------             ------

   Total current liabilities                            9,394              8,325


DEFERRED TAX LIABILITY - long-term                        417                248
                                                       ------             ------

   Total liabilities                                    9,811              8,573
                                                       ------             ------


STOCKHOLDERS' EQUITY:

 Preferred stock ($.001 par value; 1,000,000
   shares authorized, none issued)                          0                  0

 Common stock ($.001 par value; 15,000,000 shares
   authorized, 3,641,250 shares at June 30, 1998
   and 3,636,951 shares at December 31, 1997 issued
   and outstanding)                                         4                  4

 Capital in excess of par value                        13,265             13,252

 Less 625 shares of common stock at June 30, 1998
   and 495 shares of common stock at December 31,
   1997 held in treasury, at cost                         (14)               (14)

 Retained earnings                                     11,946             10,081
                                                      -------            -------

   Total stockholders' equity                          25,201             23,323
                                                      -------            -------

   Total liabilities and stockholders' equity         $35,012            $31,896
                                                      =======            =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>
 
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
(Dollars in Thousands, except per share data)(Unaudited)

<TABLE>
<CAPTION>
                                                     For the three months ended:              For the six months ended:
                                                 ----------------------------------       ----------------------------------
                                                 June 30, 1998        June 30, 1997       June 30, 1998        June 30, 1997
                                                 -------------        -------------       -------------        -------------
<S>                                              <C>                  <C>                 <C>                  <C>
SUBSCRIBER REVENUE
  Managed Care                                      $11,913              $10,777              $23,599              $21,306
  Indemnity/PPO                                       3,776                2,851                7,425                5,583
  Fee Income                                            272                  228                  552                  430
                                                    -------              -------              -------              -------
     Total Subscriber Revenue                        15,961               13,856               31,576               27,319
                                                    -------              -------              -------              -------
BENEFIT COVERAGE EXPENSES
  Managed Care                                        7,447                6,757               14,784               13,374
  Indemnity/PPO                                       3,222                2,366                6,335                4,511
  Fee Income                                             --                   --                   --                   --
                                                    -------              -------              -------              -------
     Total Benefit Coverage Expenses                 10,669                9,123               21,119               17,885
                                                    -------              -------              -------              -------
GROSS MARGIN
  Managed Care                                        4,466                4,020                8,815                7,932
  Indemnity/PPO                                         554                  485                1,090                1,072
  Fee Income                                            272                  228                  552                  430
                                                    -------              -------              -------              -------
     Total Gross Margin                               5,292                4,733               10,457                9,434
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE                                3,876                3,491                7,648                7,009
                                                    -------              -------              -------              -------
  Operating income                                    1,416                1,242                2,809                2,425
INTEREST INCOME, net                                    184                  111                  328                  218
                                                    -------              -------              -------              -------
  Income before income taxes                          1,600                1,353                3,137                2,643
PROVISION FOR INCOME TAXES                              648                  555                1,272                1,085
                                                    -------              -------              -------              -------
NET INCOME                                          $   952              $   798              $ 1,865              $ 1,558
                                                    =======              =======              =======              =======
BASIC EARNINGS PER SHARE                              $0.26                $0.22                $0.51                $0.43
DILUTED EARNINGS PER SHARE                            $0.25                $0.21                $0.50                $0.42
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>
 
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
(Dollars in Thousands)(Unaudited)

<TABLE>
<CAPTION>


                                                                 For the six months ended:
                                                        ------------------------------------------
                                                         June 30, 1998               June 30, 1997
                                                         -------------               -------------
<S>                                                     <C>                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

     Cash received from subscribers                          $ 32,539                    $ 26,081
     Cash paid to providers of care                           (13,900)                    (12,737)
     Cash paid to employees, brokers and suppliers             (7,454)                     (8,777)
     Claims paid                                               (6,443)                     (4,830)
     Interest paid                                                  0                           0
     Interest received                                            260                         196
     Income taxes paid                                         (1,437)                     (1,335)
     Cash transferred from (to) restricted funds                    0                         255
                                                             --------                    --------

       Net cash provided by operating activities                3,565                      (1,147)
                                                             --------                    --------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Purchase of property and equipment, net                     (336)                       (413)
     Purchase of short-term investments                        (2,055)                       (517)
     Proceeds from short-term investments                           0                           0
     Acquisition cost                                               0                      (5,500)
                                                             --------                    --------

       Net cash used in investing activities                   (2,391)                     (6,430)
                                                             --------                    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Issuance of common stock                                      14                           7
     Principal payments on capital leases                           0                           0
     Purchase of treasury stock                                    (1)                         (1)
                                                                -----                      ------

       Net cash used in financing activities                       13                           6
                                                                -----                      ------

       Net change in cash and cash equivalents                  1,187                      (7,571)

CASH AND CASH EQUIVALENTS,
     beginning of period                                        9,047                      15,817
                                                              -------                    --------

CASH AND CASH EQUIVALENTS,
     end of period                                           $ 10,234                     $ 8,246
                                                             ========                     =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>
 
First Commonwealth, Inc. and Subsidiaries
RECONCILIATIONS OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
--------------------------------------------------------------------------------
(Dollars in Thousands)(Unaudited)

<TABLE>
                                                                  For the six months ended:
                                                                ----------------------------- 
                                                                June 30, 1998   June 30, 1997
                                                                -------------   -------------
<S>                                                             <C>             <C>
Net income                                                         $1,865          $1,558
Adjustments to reconcile net income to net cash provided by
  operating activities:
    Depreciation and amortization                                     477             381
    (Increase) decrease in assets:
        Accounts receivable, net                                      135            (778)
        Other receivables                                            (145)            (83)
        Deposit under reinsurance agreement                            91             230
        Prepaid expenses                                               95          (1,683)
        Deferred tax asset                                           (133)            119
        Prepaid income taxes                                           (1)           (409)
        Restricted cash equivalents and government securities         (88)            249
        Deposits and other                                             32               9
    Increase (decrease) in current liabilities:
        Accounts payable - trade                                       56            (125)
        Accounts payable - dental service providers                   431             (57)
        Claims liability                                              (51)           (336)
        Accrued payroll and related costs                             173             (86)
        Other accrued expenses                                        235            (213)
        Deferred subscriber revenue                                   515             373
        Payable under reinsurance agreement                           (91)           (235)
        Income taxes payable                                         (200)           (101)
    Increase in long-term liabilities:
        Long-term deferred tax liability                              169              40
                                                                   ------         -------
    Net cash provided by operating activities                      $3,565         $(1,147)
                                                                   ======         =======
</TABLE>


The accompanying notes are an integral part of these financial statements.


                                       7

<PAGE>
 
                           FIRST COMMONWEALTH, INC.

                  Notes to Consolidated Financial Statements
                                 June 30, 1998


1.   Interim Financial Statements

     The accompanying consolidated financial statements include the accounts of
First Commonwealth, Inc., together with its subsidiaries and an affiliate
(collectively, the "Company"). All material intercompany transactions and
balances have been eliminated in consolidation.

     The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain notes and other information normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from the interim financial
statements presented in this quarterly report on Form 10-Q in accordance with
such rules and regulations. In the opinion of the Company's management, the
accompanying consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to state fairly the
financial position of the Company as of June 30, 1998, and the results of its
operations and cash flows for the periods indicated. The results of operations
for the three months ended June 30, 1998 are not necessarily indicative of the
results to be expected for the full year. The accompanying consolidated
financial statements should be read in conjunction with the Company's financial
statements and notes thereto included in the Company's annual report on Form 10-
K for the year ended December 31, 1997.

2.   Earnings Per Share

     Under SFAS No. 128, primary earnings per share is replaced by "Basic"
earnings per share ("EPS"), which excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the period. "Diluted" EPS, which is computed similarly to
fully diluted EPS, reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.

     The following table reconciles the numerators (Net Income) and denominators
(Shares) of the basic and diluted earnings per share computations.

<TABLE>
<CAPTION>
                      Three Months Ended            Three Months Ended
                           June 30, 1998      EPS        June 30, 1997      EPS
                           -------------                 -------------      ---
<S>                        <C>               <C>         <C>               <C>
Net Income                    $  952,000                    $  798,000
                              ==========                    ==========

Basic Shares/EPS               3,640,625     $0.26           3,612,926     $0.22
                                             =====                         =====

Effect of dilutive
 common stock options            107,357                       121,857
                              ----------                    ----------

Diluted Shares/EPS             3,747,982     $0.25           3,734,783     $0.21
                              ==========     =====          ==========     =====
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION> 

                           Six Months Ended           Six Months Ended
                              June 30, 1998    EPS       June 30, 1997   EPS
<S>                        <C>                 <C>    <C>                <C>
Net Income                       $1,865,000                 $1,558,000
                                 ==========                 ==========

Basic Shares/EPS                  3,639,794    $0.51         3,611,360   $0.43
                                               =====                     =====

Effect of dilutive
 common stock options               102,857                    114,022
                                 ----------                 ----------

Diluted Shares/EPS                3,742,651    $0.50         3,725,382   $0.42
                                 ==========    =====        ==========   =====
</TABLE>

                                       9
<PAGE>
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

     The following discussion should be read in conjunction with the attached
consolidated financial statements and notes thereto.

Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997

     Total subscriber revenue increased by $2.1 million, or 15.1%, to $16.0
million in the three months ended June 30, 1998 from $13.9 million in the three
months ended June 30, 1997. This increase is attributable to increased
enrollment in the Company's managed care plans as well as the price increases
that took effect on the managed care and indemnity/PPO plans effective January
1, 1998. Managed care revenue increased by $1.1 million, or 10.2%, to $11.9
million in the three months ended June 30, 1998 from $10.8 million in the same
period in 1997, primarily due to an increase in new members and price increases.
Indemnity/PPO revenue increased $0.9 million to $3.8 million in 1998 from $2.9
million in 1997, primarily as a result of adding new indemnity/PPO plan members.
 
     Total gross margin increased by $559,000 or 11.8% to $5.3 million in the
three months ended June 30, 1998 from $4.7 million in the three months ended
June 30, 1997. Total gross margin as a percentage of revenue was 33.2% in 1998
as compared to 34.2% in 1997. This percentage decline was primarily the result
of a decrease in the indemnity/PPO gross margin. In addition, the overall
indemnity/PPO business increased as a percentage of total revenue, but carries a
lower gross margin percentage than the managed care business. Managed care gross
margin as a percentage of managed care revenue was 37.5% in 1998 as compared to
37.3% in 1997. The indemnity/PPO gross margin as a percentage of indemnity/PPO
revenue decreased to 14.7% in 1998 from 17.0% in 1997. This change is the result
of an increase in dental benefit expenses primarily under the Company's
indemnity/PPO contracts. The Company expects the indemnity/PPO gross margin
percentage to remain fairly consistant with the current level throughout the
balance of 1998. The Company does not expect the indemnity/PPO gross margin
percentage to return to pre-1997 levels in 1998. In addition, overall gross
margin percentages will vary if the mix of the Company's indemnity/PPO and
managed care business changes from current levels.
 
     SG&A expenses increased by $385,000, or 11.0% to $3.9 million for the three
months ended June 30, 1998 from $3.5 million for the three months ended June 30,
1997. As a percentage of revenue, SG&A expenses dropped to 24.3% for 1998 from
25.2% for 1997. The change is primarily the result of economies of scale in
meeting the administrative needs of increased enrollment due to the relatively
fixed nature of certain SG&A expenses as well as higher revenues relative to the
SG&A expenses associated with the indemnity/PPO plans.
 
     Operating income increased by $174,000, or 14.0%, to $1.4 million for the
three months ended June 30, 1998 from $1.2 million for the three months ended
June 30, 1997. As a percentage of revenue, operating income was 8.9% in 1998 as
compared to 9.0% in 1997. The decline was due primarily to the lower gross
margin, partially offset by the lower SG&A as a percentage of revenue.

     Interest income increased by $73,000 to $184,000 for the three months ended
June 30, 1998 from $111,000 for the three months ended June 30, 1997 primarily
as a result of improved cash flow from operations.

                                      10
<PAGE>
 
     The effective tax rate for the three months ended June 30, 1998 was 40.5%
versus 41.0% for the three months ended June 30, 1997, primarily due to
investments in tax-free funds.

     Net income increased by $154,000, or 19.3%, to $952,000 for the three
months ended June 30, 1998 from $798,000 for the three months ended June 30,
1997. Diluted earnings per share was $0.25 and $0.21 for the three months ended
June 30, 1998 and 1997, respectively.


Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
 
     Total subscriber revenue increased by $4.3 million, or 15.8%, to $31.6
million in the six months ended June 30, 1998 from $27.3 million in the six
months ended June 30, 1997. This increase is attributable to increased
enrollment in the Company's managed care plans as well as the price increases
that took effect on the managed care and indemnity/PPO plans effective January
1, 1998. Managed care revenue increased by $2.3 million, or 10.8% to $23.6
million in the six months ended June 30, 1998 from $21.3 million in the same
period in 1997, primarily due to an increase in new members and price increases.
Indemnity/PPO revenue increased $1.8 million or 32.1%, to $7.4 million in 1998
from $5.6 million in 1997, primarily as a result of adding new indemnity/PPO
plan members and price increases.
 
     Total gross margin increased by $1.1 million, or 11.7%, to $10.5 million in
the six months ended June 30, 1998 from $9.4 million in the six months ended
June 30, 1997. Total gross margin as a percentage of revenue was 33.1% in 1998
as compared to 34.5% in 1997. This percentage decline was primarily the result
of a decrease in the indemnity/PPO gross margin. In addition, the overall
indemnity/PPO business increased as a percentage of total revenue, but carries a
lower gross margin percentage than the managed care business. Managed care gross
margin as a percentage of managed care revenue was 37.4% in 1998 as compared to
37.2% in 1997. The indemnity/PPO gross margin as a percentage of indemnity/PPO
revenue decreased to 14.7% in 1998 from 19.2% in 1997. This change is the result
of an increase in dental benefit expenses primarily under the Company's
indemnity/PPO contracts. The Company expects the indemnity/PPO gross margin
percentage to remain fairly consistant with the current level throughout the
balance of 1998. The Company does not expect the indemnity/PPO gross margin
percentage to return to pre-1997 levels in 1998. In addition, overall gross
margin percentages will vary if the mix of the Company's indemnity/PPO and
managed care business changes from current levels.
 
     SG&A expenses increased by $639,000, or 9.2%, to $7.6 million for the six
months ended June 30, 1998 from $7.0 million for the six months ended June 30,
1997. As a percentage of revenue, SG&A expenses dropped to 24.2% for 1998 from
25.7% for 1997. The change is primarily the result of economies of scale in
meeting the administrative needs of increased enrollment due to the relatively
fixed nature of certain SG&A expenses as well as higher revenues relative to the
SG&A expenses associated with the indemnity/PPO plans.
 
     Operating income increased by $384,000, or 15.8%, to $2.8 million for the
six months ended June 30, 1998 from $2.4 million for the six months ended June
30, 1997. As a percentage of revenue, operating income remained stable at 8.9%
in 1998 and 1997. The lower gross margin percentage was offset by thelower SG&A
as a percentage of revenue.

     Interest income increased by $110,000 to $328,000 for the six months ended
June 30, 1998 from $218,000 for the six months ended June 30, 1997 primarily as
a result of improved cash flow from operations.

                                       11
<PAGE>
 
     The effective tax rate for the six months ended June 30, 1998 was 40.5%
versus 41.1% for the six months ended June 30, 1997, primarily due to
investments in tax-free funds.

     Net income increased by $307,000, or 19.7%, to $1.9 million for the six
months ended June 30, 1998 from $1.6 million for the six months ended June 30,
1997. Diluted earnings per share was $0.50 and $0.42 for the six months ended
June 30, 1998 and 1997, respectively.


Liquidity and Capital Resources
 
     The Company's operating cash requirements for the six months ended June 30,
1998 have been met principally through operating cash flows. The primary uses of
cash have been for the operating activities and capital investments in the
business. The Company believes that cash generated from operations will be
adequate to finance its anticipated operating needs for the foreseeable future.

     Cash flows from operating activities were $3.6 million and ($1.1) million
for the six months ended June 30, 1998, and 1997, respectively. The increase in
cash flows is partially the result of the timing difference in prepaid expenses
relating to capitation payments in the first quarter of 1997. The Company
primarily receives premium payments in advance of disbursing managed care
dentist capitation payments and indemnity claims payments. Cash balances in
excess of current needs are invested in interest-bearing accounts or cash
equivalents. Cash flows from operations consist primarily of subscriber premiums
and investment income net of capitation payments to network dentists, claims
paid, brokers' commissions, general and administrative expenses and income
taxes.
 
     Cash used in investing activities was $2.4 million and $6.4 million for the
six months ended June 30, 1998 and 1997, respectively. The primary use in 1997
was a $5.5 million payment for Champion Dental Services, Inc. which closed
December 31, 1996, but funds were paid on January 2, 1997. In addition, the
first six months of 1998 and 1997 includes a net of $2.1 million and $517,000,
respectively, used to purchase short term investment grade securities
(securities which mature between 3 months and 12 months). Capital expenditures
were $336,000 for the six months ended June 30, 1998 primarily for computer
software enhancements and $413,000 for the six months ended June 30, 1997,
for furniture, leasehold improvements, and computer equipment as the Company
expanded its leased office space.
 
     As of June 30, 1998, the Company had cash and cash equivalents of $10.2
million as well as short term investments of $2.1 million and no long-term debt
outstanding.
 
     Under applicable insurance laws of the states in which the Company conducts
business, the Company's subsidiaries operating in the particular state are
required to maintain a minimum level of net worth and reserves. The Company may
be required from time to time to invest funds in one or more of its subsidiaries
to meet regulatory requirements, or to expand its operations into new geographic
areas. In addition, applicable laws generally limit the ability of the Company's
subsidiaries to pay dividends to the extent that required regulatory capital or
surplus would be impaired.

Impact of Inflation

     The Company does not believe the impact of inflation has significantly
affected the Company's operations.

                                      12
<PAGE>
 
                         PART II.   OTHER INFORMATION
                         ----------------------------

Item 4. Submission of Matters to a Vote of Security-Holders.

          At the Annual Meeting of Shareholders of the Company, held on May 5,
          1998, the following numbers of votes were cast for the matters
          indicated:

          1.   Election of two Class III directors of the Company.

<TABLE>
<CAPTION>

                 Nominee                For       Withhold     Broker Non-Vote
          --------------------------------------------------------------------
          <S>                        <C>          <C>          <C>
          Richard M. Burdge, Sr.     3,018,582     13,800           - 0 -
          -------------------------------------------------------------------
          Christopher C. Multhauf    3,018,582     13,800           - 0 -
          -------------------------------------------------------------------
</TABLE>

          2.   Proposal to Approve the Amendment to the 1995 Long-Term Incentive
               Plan of the Company.

<TABLE>
<CAPTION>

             For             Against       Abstain     Broker Non-Vote
          -------------------------------------------------------------------
          <S>                <C>           <C>         <C>
          2,593,076          438,076        1,230           - 0 -
          -------------------------------------------------------------------
</TABLE>

Item 6.   Exhibits and Reports on Forms 8-K

<TABLE>
<CAPTION>

(a)  Exhibits:

     Exhibit No.        Description
     --------------     --------------------------------------------------
     <C>                <S>
      11                Statement Regarding Computation of Earnings Per
                        Share (Included as Note 2 in Notes to Consolidated Financial
                        Statements filed herewith)

      27                Financial Data Schedule
</TABLE>

(b) Reports on Form 8-K filed during the quarter ended June 30, 1998:

                        None

                                       13
<PAGE>
 
                                  SIGNATURES


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

                              FIRST COMMONWEALTH, INC.
                                    (Registrant)


Date:  August 14, 1998        By:  /s/ Christopher C. Multhauf
                                   ----------------------------------------
                                   Christopher C. Multhauf
                                   Chairman and Chief Executive Officer



Date:  August 14, 1998        By:  /s/ David W. Mulligan
                                   ----------------------------------------
                                   David W. Mulligan
                                   President, Secretary and Chief Operating
                                   Officer



Date:  August 14, 1998        By:  /s/ Scott B. Sanders
                                   ----------------------------------------
                                   Scott B. Sanders
                                   Chief Financial Officer and Treasurer
                                   (Principal Financial and Accounting Officer)

                                       14
<PAGE>


                                 EXHIBIT INDEX
                                 -------------


Exhibit No.            Description
-----------            -----------

11                Statement Regarding Computation of Earnings Per Share
                  (Included as Note 2 in Notes to Consolidated Financial
                  Statements filed herewith)

27                Financial Data Schedule