U. S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


           [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


          [ ] 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: 333-34243

                              PREMIER BANCORP, INC.
                           --------------------------
        (Exact name of small business issuer as specified in its charter)

            PENNSYLVANIA                             23-2921058
   ------------------------------                -------------------
  (State or other jurisdiction of                  (IRS Employer
   incorporation or organization)                Identification No.)


                  379 NORTH MAIN STREET, DOYLESTOWN, PA 18901
                            --------------------------
                   (Address of principal executive offices)

                                 (215) 345-5100
                           --------------------------
                           (Issuer's telephone number)

                                       N/A
        ----------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __


                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,921,293 as of October 31,
1999.

     Transitional Small Business Disclosure Format (check one): Yes __ No X



<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

                             PREMIER BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>


                                                                               September 30, 1999     December 31, 1998
                                                                               ------------------     -----------------
                                                                            (Dollars in thousands, except per share data)
<S>                                                                                <C>                 <C>
Assets
Cash and due from banks                                                             $  5,136               $  4,765
Federal funds sold                                                                       366                      1
Interest-bearing deposits                                                                305                    134
                                                                                    --------               --------
Cash and cash equivalents                                                              5,807                  4,900
Investment securities:
     Held to maturity (fair value $6,913 in 1999 and $5,479 in 1998)                   6,985                  5,492
     Available for sale (amortized cost $112,896 in 1999 and $94,493 in 1998)        108,189                 93,888
Loans held for sale                                                                      263                  1,627
Loans receivable (net of allowance for loan losses of $2,343 in 1999
     and $1,805 in 1998)                                                             180,789                138,100
Other real estate owned                                                                  864                    200
Premises and equipment                                                                 3,562                  1,638
Accrued interest receivable                                                            2,372                  1,785
Deferred taxes                                                                         2,222                    826
Other assets                                                                             748                    737
                                                                                    --------               --------
Total assets                                                                        $311,801               $249,193
                                                                                    ========               ========
Liabilities, minority interest in subsidiaries and shareholders' equity
Deposits                                                                            $219,255               $191,226
Borrowings                                                                            61,917                 29,936
Accrued interest payable                                                               2,760                  1,531
Other liabilities                                                                      2,517                  3,233
Subordinated debt                                                                      1,500                  1,500
                                                                                    --------               --------
Total liabilities                                                                    287,949                227,426
Corporation-obligated mandatorily redeemable capital securities of subsidiary
     trust holding solely junior subordinated debentures of the Corporation           10,000                 10,000
Shareholders' equity
Common stock- $0.33 par value; 30,000,000 shares authorized; issued and
outstanding 2,921,293 at September 30, 1999 and 2,635,340 at December 31, 1998           974                    879
Additional paid-in capital                                                             9,970                  7,147
Retained earnings                                                                      6,016                  4,140
Accumulated other comprehensive loss                                                  (3,108)                  (399)
                                                                                    --------               --------
Total shareholders' equity                                                            13,852                 11,767
                                                                                    --------               --------
Total liabilities, minority interest in subsidiaries and shareholders' equity       $311,801               $249,193
                                                                                    ========               ========
</TABLE>


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

                                       2
<PAGE>

                              PREMIER BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          For the three months           For the nine months
                                                           ended September 30,           ended September 30,
                                                           1999          1998             1999          1998
                                                        ----------    ----------       ----------    ---------
                                                             (Dollars in thousands; except per share data)
<S>                                                     <C>           <C>              <C>           <C>
Interest income:
   Loans                                                $    3,767    $    2,851       $   10,377    $    8,022
   Federal funds sold and interest-bearing deposits             33            36               71           146
   Investments:
     Taxable                                                 1,704         1,254            4,644         3,360
     Tax-exempt                                                238           140              738           392
                                                        ----------    ----------       ----------    ----------
Total interest income                                        5,742         4,281           15,830        11,920
                                                        ----------    ----------       ----------    ----------
Interest expense:
   Deposits                                                  2,231         1,950            6,361         5,490
   Borrowings                                                  753           352            1,793         1,078
                                                        ----------    ----------       ----------    ----------
Total interest expense                                       2,984         2,302            8,154         6,568
                                                        ----------    ----------       ----------    ----------
Net interest income                                          2,758         1,979            7,676         5,352
Provision for loan losses                                      199           120              551           355
                                                        ----------    ----------       ----------    ----------
Net interest income after loan loss provision                2,559         1,859            7,125         4,997

Non-interest income:

   Service charges and other fees                               46            41              142           132
   Gain (loss), net, on sale of investment
    securities available for sale                              (42)           75             (100)           69
   Gain on sale of loans held for sale                          14            10               74            32
                                                        ----------    ----------       ----------    ----------
Total non-interest income                                       18           126              116           233
Non-interest expense:
   Salaries and employee benefits                              849           586            2,223         1,637
   Occupancy                                                   105           105              313           304
   Data processing                                             157           121              476           333
   Professional services                                        57            82              156           222
   Marketing                                                    66            55              200           154
   Minority interest in expense of subsidiaries                218           123              648           123
   Other                                                       269           293              752           700
                                                        ----------    ----------       ----------    ----------
Total non-interest expense                                   1,721         1,365            4,768         3,473
                                                        ----------    ----------       ----------    ----------
Income before income tax                                       856           620            2,473         1,757
Income tax expense                                             211           200              597           576
                                                        ----------    ----------       ----------    ----------
Net income                                              $      645    $      420       $    1,876    $    1,181
                                                        ==========    ==========       ==========    ==========
Earnings per share:
   Basic                                                $     0.22    $     0.16       $     0.66    $     0.45
   Diluted                                                    0.20          0.14             0.59          0.40
Weighted average number of shares outstanding:
   Basic                                                 2,917,520     2,630,340        2,856,990     2,630,340
   Diluted                                               3,220,156     2,939,386        3,162,954     2,918,689

</TABLE>

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

                                       3

<PAGE>

                              PREMIER BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

For the nine months ended September 30,                                                     1999             1998
---------------------------------------                                                    -------          ------
                                                                                               (In thousands)
<S>                                                                                        <C>              <C>
Operating activities:
   Net income                                                                              $ 1,876          $1,181
   Adjustments to reconcile net income to cash provided by operating activities:
     Depreciation                                                                              258             162
     Provision for loan losses                                                                 551             355
     Writedowns and losses on sale of real estate owned                                         --              77
     Amortization of premiums and discounts on
       investment securities held to maturity                                                    9              13
     Amortization of premiums and discounts on
       investment securities available for sale                                                104             127
     Loss (gain) on sale of investment securities available for sale                           100             (69)
     Gain on sale of loans held for sale                                                       (74)            (32)
     Originations of loans held for sale                                                    (8,342)         (5,008)
     Proceeds from sale of loans held for sale                                               9,780           4,751
     Increase in accrued interest receivable                                                  (587)           (417)
     Increase in other assets                                                                  (11)           (127)
     Increase in deferred loan fees                                                            102              78
     Increase in accrued interest payable                                                    1,229             634
     (Decrease) increase in other liabilities                                                 (677)          4,083
                                                                                           -------          ------
Net cash provided by operating activities                                                    4,318           5,808
                                                                                           -------          ------
Investing activities:
   Proceeds from sale of investment securities available for sale                           12,373          74,503
   Repayment of investment securities available for sale                                     3,425           7,643
   Purchase of investment securities available for sale                                    (34,407)       (104,031)
   Repayment of investment securities held to maturity                                         497           6,801
   Purchase of investment securities held to maturity                                       (1,999)         (1,499)
   Net increase in loans receivable                                                        (44,207)        (21,809)
   Proceeds from sale of other real estate owned                                               200              81
   Purchases of premises and equipment                                                      (2,182)           (202)
                                                                                           -------          ------
Net cash used in investing activities                                                      (66,300)        (38,513)
                                                                                           -------          ------
Financing activities:
   Net increase in deposits                                                              $  28,029       $  30,802
   Net increase (decrease) in borrowings less than 90 days                                  21,981         (12,187)
   Increase in borrowings greater than 90 days                                              10,000           5,000
   Proceeds from common stock offering                                                       2,850              --
   Proceeds from exercised stock options                                                        29              --
   Proceeds from capital securities                                                             --          10,000
                                                                                           -------          ------
Net cash provided by financing activities                                                   62,889          33,615
                                                                                           -------          ------
Increase in cash and cash equivalents                                                          907             910

Cash and cash equivalents:
   Beginning of year                                                                         4,900           4,393
                                                                                           -------          ------
   End of period                                                                           $ 5,807          $5,303
                                                                                           =======          ======
Supplemental disclosures:
   Cash payments for:
     Interest expense                                                                    $6,925.00       $5,934.00
     Taxes                                                                                     775             700
Supplemental disclosure of noncash activities:
   Change in the fair value of investment securities
     available for sale                                                                    $(4,102)        $  (479)
   Change in deferred tax asset related to securities
     available for sale                                                                      1,396             247
   Tax effect of exercised stock options                                                        39              --
   Transfer of loans to other real estate owned                                                864             297
</TABLE>


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

                                       4

<PAGE>

                              PREMIER BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Organization

     Premier Bancorp, Inc. was incorporated under the laws of the Commonwealth
of Pennsylvania on July 15, 1997. We reorganized as the one-bank holding company
of Premier Bank (the Bank) on November 17, 1997. Through our principal
subsidiary bank, Premier Bank, we provide a wide range of financial services to
individual and corporate customers through our branch banking system located in
Bucks and Northampton Counties in Pennsylvania, all of which is managed as one
operating segment. Premier Bank is a Pennsylvania chartered commercial bank and
member of the Federal Reserve Bank of Philadelphia and the Federal Deposit
Insurance Corporation. The Bank competes with other financial institutions and
other financial services companies with respect to services offered and
customers. We are regulated by certain federal agencies and are periodically
examined by them.

2.   Basis of Financial Statement Presentation

     The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for quarterly reports on Form 10-QSB and,
therefore, do not include information or footnotes necessary for a complete
presentation of financial condition, results of operations, shareholders' equity
and cash flows in conformity with generally accepted accounting principles. The
consolidated financial statements include the accounts of Premier Bancorp, Inc.
and our wholly owned subsidiaries, Premier Bank and PBI Capital Trust. All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements. Certain previously reported amounts have been
reclassified to conform to current presentation standards. These
reclassifications had no effect on net income. The results of operations for the
three and nine months ended September 30, 1999 and 1998 are not necessarily
indicative of the results that may be expected for the entire fiscal year.

3.   Use of Estimates

     In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from such estimates. Material estimates that are particularly susceptible to
significant change in the near term include the determination of the allowance
for loan losses and the carrying value of other real estate owned, if any.

4.   Earnings Per Share

     Basic earnings per share is calculated on the basis of the weighted average
number of shares outstanding. Options to purchase 670,279 and 677,349 shares of
common stock were outstanding at September 30, 1999 and 1998, respectively.
Diluted earnings per common share includes dilutive common stock equivalents as
computed under the treasury stock method using average common stock prices.


                                       5
<PAGE>


                              PREMIER BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.   Earnings Per Share (continued)

     The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share calculations.

                                   For the three months ended September 30, 1999
                                   ---------------------------------------------
                                   (Dollars in thousands, except per share data)

                                         Net                        Per share
                                       income          Shares         Amount
                                       ------        ---------       -------
Basic earnings per share               $  645        2,917,520        $ 0.22
Effect of dilutive stock options           --          302,636         (0.02)
                                       ------        ---------        ------
Diluted earnings per share             $  645        3,220,156        $ 0.20
                                       ======        =========        ======


                                   For the three months ended September 30, 1998
                                   ---------------------------------------------
                                   (Dollars in thousands, except per share data)

                                         Net                        Per share
                                       income          Shares         Amount
                                       ------        ---------       -------
Basic earnings per share               $  420        2,630,340        $ 0.16
Effect of dilutive stock options           --          309,046         (0.02)
                                       ------        ---------        ------
Diluted earnings per share             $  420        2,939,386        $ 0.14
                                       ======        =========        ======


                                   For the nine months ended September 30, 1999
                                   --------------------------------------------
                                   (Dollars in thousands, except per share data)

                                         Net                        Per share
                                       income          Shares         Amount
                                       ------        ---------       -------
Basic earnings per share               $1,876        2,856,990        $ 0.66
Effect of dilutive stock options           --          305,964         (0.07)
                                       ------        ---------        ------
Diluted earnings per share             $1,876        3,162,954        $ 0.59
                                       ======        =========        ======


                                   For the nine months ended September 30, 1998
                                   --------------------------------------------
                                   (Dollars in thousands, except per share data)

                                         Net                        Per share
                                       income          Shares         Amount
                                       ------        ---------       -------
Basic earnings per share               $1,181        2,630,340        $ 0.45
Effect of dilutive stock options           --          288,349         (0.05)
                                       ------        ---------        ------
Diluted earnings per share             $1,181        2,918,689        $ 0.40
                                       ======        =========        ======


                                       6

<PAGE>



                              PREMIER BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.   Comprehensive Income (Loss)

     The following table displays net income and the components of other
comprehensive income (loss) to arrive at total comprehensive income (loss). For
us, the only component of other comprehensive income (loss) is the change in the
fair value of investment securities available for sale.


<TABLE>
<CAPTION>
                                                                   For the three months      For the nine months
                                                                    ended September 30,      ended September 30,
                                                                   --------------------      ------------------
                                                                     1999          1998        1999        1998
                                                                   -------        -----      --------      ----
                                                                                (Dollars in thousands)
<S>                                                                <C>            <C>       <C>            <C>
Net income                                                         $   645        $ 420      $  1,876    $1,181
Other comprehensive loss, net of tax:
  Unrealized losses on securities available for sale:
    Unrealized holding losses during the period                       (551)        (455)       (2,752)     (444)
    Reclassification adjustment for losses (gains)
       included in net income                                           28          (49)           43       (35)
                                                                   -------         ----       -------      ----
Other comprehensive loss                                              (523)        (504)       (2,709)     (479)
                                                                   -------         ----       -------      ----
Comprehensive income (loss)                                        $   122         $(84)      $  (833)     $702
                                                                   =======         ====       =======      ====
</TABLE>


6.   Capital Securities

     On August 11, 1998, our subsidiary, PBI Capital Trust issued $10,000,000 of
8.57% capital securities due August 15, 2028. The Trust is a statutory business
trust created under the laws of Delaware. We are the sole owner of the Trust.
The Trust used the proceeds from the capital securities to acquire $10,000,000
in 8.57% junior subordinated deferrable interest debentures issued by us. The
junior subordinated debentures are the sole assets of the Trust, and payments
under the junior subordinated debentures are the sole revenue of the Trust. We
are using the proceeds from the sale of the junior subordinated debentures for
general corporate purposes, including, but not limited to, investments in and
advances to our subsidiary, Premier Bank, repurchases of our common stock,
branch expansion, and funding loans. The precise amount and timing of the
application of the net proceeds used for such corporate purposes depends on the
funding requirements and the availability of other funds to us and the Bank.
Proceeds from the capital securities provide us with additional Tier I and Tier
II capital pursuant to banking regulations.

     At September 30, 1999, we were required to maintain a reserve account equal
to one year's expense on our capital securities. This reserve is required at all
times except during times that the ratio of our total unsecured debt to
shareholders' equity is equal to or less than 70% and the Bank has the capacity
to pay dividends in an amount equal to or greater than two times the amount of
interest payable on the junior subordinated debentures for a one-year period. At
September 30, 1999, we were required to maintain a reserve account since our
unsecured debt to equity ratio exceeded 70%. This reserve account was invested
in available for sale investment securities with a fair value of $933,000 at
September 30, 1999.

     Capital securities are reported in the Consolidated Statements of Financial
Condition under the caption "Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust holding solely junior subordinated
debentures of the Corporation". Expenses related to the capital securities are
included in the "Non-interest expense" section of the Consolidated Statements of
Income under the caption "Minority interest in expense of subsidiaries".


                                       7

<PAGE>


                              PREMIER BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   Common Stock Offering

     On December 22, 1998, we commenced an offering of common stock at $11.00
per share. This offering expired on March 31, 1999. We issued 272,416 shares
during this offering with net proceeds totaling $2,850,000. We will use the net
proceeds of the stock offering for general corporate purposes, including
investments in or advances to the Bank to increase the Bank's capital position
and loan to one borrower lending limits. In addition, these proceeds may be used
to support the continuing development of the Bank's franchise through branch
expansion and possible expansion into related businesses. At September 30, 1999,
2,921,293 shares of common stock were issued and outstanding.




                                       8

<PAGE>


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

GENERAL

     We are a Pennsylvania business corporation and a registered bank holding
company headquartered in Doylestown, Bucks County, Pennsylvania. We were
incorporated on July 15, 1997 and reorganized on November 17, 1997 as the
one-bank holding company of Premier Bank. Each outstanding share of Premier Bank
common stock was converted into one share of Premier Bancorp, Inc. common stock
under the Plan of Reorganization approved by the Bank's shareholders. Our
primary business is the operation of our wholly owned subsidiary, Premier Bank,
which is managed as a single business segment.

     Premier Bank was organized in 1990 as a Pennsylvania chartered banking
institution and began operations on April 24, 1992. The Bank is a
community-oriented financial services provider whose business primarily consists
of attracting retail deposits from the general public and small businesses and
originating commercial and consumer loans in its market area. The Bank also
invests in securities such as mortgage-backed securities, obligations of U.S.
government agencies and government sponsored entities, corporate bonds and state
and municipal bonds.

     The Bank's revenues are derived principally from interest on its loan and
securities portfolios. The Bank's primary sources of funds are deposits,
repayments, prepayments and maturities of loans, repayments, prepayments and
maturities of mortgage-backed and investment securities and borrowed funds.
Currently, the Bank has four full-service Pennsylvania banking offices:
Doylestown, Easton, Southampton and Floral Vale. The Bank opened the Floral Vale
branch on February 19, 1999. The Bank also has two loan production offices
located in Southampton and Colmar, Pennsylvania. The Bank faces significant
competition from other financial services companies, many of which are larger
organizations with more resources and locations than the Bank.

     Our consolidated results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned on
our interest-earning assets, such as loans and securities, and the interest
expense paid on our interest-bearing liabilities, such as deposits and borrowed
money. We also generate non-interest income such as service charges and other
fees. Our non-interest expenses primarily consist of employee compensation and
benefits, occupancy expenses, marketing, data processing costs and other
operating expenses. The Bank is subject to losses from its loan portfolio if
borrowers fail to meet their obligations. Our results of operations are
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory agencies.

     The following is management's discussion and analysis of the significant
changes in the results of operations for the three and nine months ended
September 30, 1999 as compared to the same periods in 1998 and changes in
financial condition from December 31, 1998 to September 30, 1999. Current
performance may not be indicative of future performance. This discussion should
be read in conjunction with the 1998 Annual Report on Form 10-KSB.

     In addition to historical information, this management discussion and
analysis contains forward-looking statements. Forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. We caution readers not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of this date. We are not obligated to publicly revise or update
these forward-looking statements to reflect events or circumstances that arise
after this date. Readers should carefully review the risk factors described in
other documents we file from time to time with the Securities and Exchange
Commission, including annual reports on Form 10-KSB, quarterly reports on Form
10-QSB and any current reports on Form 8-K.


MANAGEMENT STRATEGY

     Our primary strategy is to increase loan and deposit market share in the
communities we serve and to expand our branch network to new markets as deemed
appropriate. We plan to accomplish this growth principally through aggressive
pricing and marketing. The Bank opened its fourth branch office in Lower
Makefield Township, Bucks County, Pennsylvania (the Floral Vale branch) in
February 1999. The Bank plans to open a fifth branch in Bethlehem, Northampton
County, Pennsylvania by year-end 1999.

     We also try to maximize earnings, given our current level of capital and
interest rate sensitivity, by borrowing funds and purchasing investment
securities as discussed in "Capital Leverage Strategy", below. Management

                                       9

<PAGE>

continually monitors the quality of our loan and investment portfolios. In
addition, we use various asset/liability modeling techniques to measure and
manage the impact of interest rate changes on our net interest income and
capital.


CAPITAL LEVERAGE STRATEGY

     We plan to remain "well capitalized" as defined by FDIC regulations and
manage our business accordingly. Current capital levels exceed the regulatory
requirement for the "well capitalized" classification. A portion of the capital
in excess of required amounts has been deployed through the use of a capital
leverage strategy. Pursuant to this strategy, the Bank invests in
mortgage-backed securities, municipal and corporate bonds and U.S. government
agency securities, together called leverage assets, funded by short and
intermediate term borrowings principally from the Federal Home Loan Bank of
Pittsburgh and reverse repurchase agreements. The capital leverage strategy
generates additional earnings by virtue of a positive interest rate spread
between the yield on the leverage assets and the cost of the borrowings. This
positive spread is created because the average term to maturity of the leverage
assets exceeds that of the borrowings used to fund their purchase. The net
interest income earned on the leverage strategy would be expected to decline in
a rising interest rate environment. The capital leverage strategy has been
undertaken in accordance with the limits established by the Board of Directors
for enhancing profitability under moderate levels of interest rate risk.



                                       10

<PAGE>


     The following table sets forth, for the periods indicated, certain key
average balance sheet amounts and their corresponding earnings/expenses and
rates (which have been annualized).

         AVERAGE BALANCES, RATES AND INTEREST INCOME AND EXPENSE SUMMARY

<TABLE>
<CAPTION>
For the three months ended September 30,                                1999                             1998
                                                          ------------------------------    -----------------------------
                                                          Average                Average    Average               Average
                                                          Balance     Interest    Rate      Balance     Interest    Rate
                                                          --------    --------    -----     --------    --------   ------
                                                                               (Dollars in thousands)
<S>                                                       <C>         <C>        <C>        <C>         <C>        <C>
Assets
  Interest-bearing deposits                               $    417     $    4     3.81%     $    216     $    3     5.51%
  Federal funds sold                                         2,134         29     5.39%        2,247         33     5.83%
  Investment securities available for sale
   Taxable                                                  87,766      1,575     7.12%       63,804      1,078     6.70%
   Tax-exempt(1)                                            19,080        361     7.51%       10,777        212     7.80%
  Investment securities held to maturity                     8,210        129     6.23%       10,587        176     6.60%
                                                          --------     ------     ----      --------     ------     ----
   Total investment securities                             115,056      2,065     7.12%       85,168      1,466     6.83%
  Loans, net of unearned income (2)(3)(4)                  174,282      3,778     8.60%      126,057      2,863     9.01%
                                                          --------     ------     ----      --------     ------     ----
  Total interest-earning assets                            291,889      5,876     7.99%      213,688      4,365     8.10%
  Cash and due from banks                                    4,537                             3,327
  Allowance for loan losses                                 (2,229)                           (1,602)
  Other assets                                               8,938                             4,284
                                                          --------                          --------
Total assets                                              $303,135                          $219,697
                                                          ========                          ========

Liabilities, minority interest in subsidiaries
  and shareholders' equity
  Interest checking                                       $ 19,287        124     2.55%       13,111         86     2.60%
  Money market deposit accounts                              1,212          8     2.62%        1,776         11     2.46%
  Savings accounts                                          56,008        482     3.41%       52,250        509     3.86%
  Time deposits                                            122,254      1,617     5.25%       92,363      1,344     5.77%
                                                          --------     ------     ----      --------     ------     ----
    Total interest-bearing deposits                        198,761      2,231     4.45%      159,500      1,950     4.85%
  Short-term borrowings                                     44,768        590     4.23%        8,500        117     5.46%
  Long-term borrowings                                      10,000        136     5.40%       15,000        205     5.42%
                                                          --------     ------     ----      --------     ------     ----
    Total borrowings                                        54,768        726     5.26%       23,500        322     5.44%
  Subordinated debt                                          1,500         27     7.14%        1,500         30     7.93%
                                                          --------     ------     ----      --------     ------     ----
  Total interest-bearing liabilities                       255,029      2,984     4.64%      184,500      2,302     4.95%
  Non-interest-bearing deposits                             19,692                            14,611
  Other liabilities                                          4,860                             3,759
  Capital securities                                        10,000                             5,543
  Shareholders' equity                                      13,554                            11,284
                                                          --------                          --------
Total liabilities, minority interest in
  subsidiaries and shareholders' equity                   $303,135                          $219,697
                                                          ========                          ========

  Net interest income/rate spread                                      $2,892     3.35%                  $2,063     3.15%
                                                                       ======     ====                   ======     ====

  Net interest margin(5)                                                          3.93%                             3.83%

  Average interest-earning assets as a percentage
    of average interest-bearing liabilities                 114.45%                           115.82%

</TABLE>

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

(1)  Interest income on tax-exempt investment securities was presented on a
     tax-equivalent basis. Tax-exempt yields were adjusted to a tax-equivalent
     basis using a 34% rate.

(2)  Includes non-accrual loans of $267,000 and $283,000 on average for the
     three months ended September 30, 1999 and 1998, respectively.

(3)  Includes tax-exempt loans of $1,201,000 and $1,325,000 on average for the
     three months ended September 30, 1999 and 1998, respectively. Tax-exempt
     yields were adjusted to a tax-equivalent basis using a 34% rate.

(4)  Includes loans held for sale of $173,000 and $263,000 on average for the
     three months ended September 30, 1999 and 1998, respectively.

(5)  Net interest margin is calculated as net interest income divided by average
     interest-earning assets.

                                       11

<PAGE>


         The following table sets forth, for the periods indicated, certain key
average balance sheet amounts and their corresponding earnings/expenses and
rates (which have been annualized).

         AVERAGE BALANCES, RATES AND INTEREST INCOME AND EXPENSE SUMMARY

<TABLE>
<CAPTION>
For the nine months ended September 30,                             1999                              1998
                                                     --------------------------------    ----------------------------
                                                     Average                  Average    Average               Average
                                                     Balance      Interest     Rate      Balance     Interest    Rate
                                                     --------     --------    -------    -------     --------  -------
                                                                            (Dollars in thousands)
<S>                                                  <C>           <C>         <C>      <C>           <C>       <C>
Assets
 Interest-bearing deposits                           $    379      $   12      4.23%     $    295     $    9     4.08%
 Federal funds sold                                     1,594          59      4.95%        3,314        137     5.53%
 Investment securities available for sale
  Taxable                                              83,934       4,376      6.97%       54,859      2,732     6.66%
  Tax-exempt(1)                                        19,638       1,118      7.61%       10,039        594     7.91%
 Investment securities held to maturity                 5,732         268      6.26%       12,510        628     6.71%
                                                     --------      ------      ----      --------     ------     ----
  Total investment securities                         109,304       5,762      7.05%       77,408      3,954     6.83%

 Loans, net of unearned income (2)(3)(4)              160,640      10,411      8.67%      118,268      8,059     9.11%
                                                     --------      ------      ----      --------     ------     ----
 Total interest-earning assets                        271,917      16,244      7.99%      199,285     12,159     8.16%
 Cash and due from banks                                4,343                               3,332
 Allowance for loan losses                             (2,049)                             (1,498)
 Other assets                                           7,432                               4,500
                                                     --------                            --------
Total assets                                         $281,643                            $205,619
                                                     ========                            ========
Liabilities, minority interest in subsidiaries
   and shareholders' equity
   Interest checking                                 $ 17,581         341      2.59%     $ 12,362        240     2.60%
   Money market deposit accounts                        1,552          30      2.58%        1,746         33     2.53%
   Savings accounts                                    55,553       1,424      3.43%       49,260      1,425     3.87%
   Time deposits                                      114,992       4,566      5.31%       87,633      3,792     5.79%
                                                     --------      ------      ----      --------     ------     ----
     Total interest-bearing deposits                  189,678       6,361      4.48%      151,001      5,490     4.86%
   Short-term borrowings                               34,444       1,311      5.09%        9,408        382     5.43%
   Long-term borrowings                                10,000         402      5.37%       15,000        607     5.41%
                                                     --------      ------      ----      --------     ------     ----
     Total borrowings                                  44,444       1,713      5.15%       24,408        989     5.42%
   Subordinated debt                                    1,500          80      7.13%        1,500         89     7.93%
                                                     --------      ------      ----      --------     ------     ----
   Total interest-bearing liabilities                 235,622       8,154      4.63%      176,909      6,568     4.96%
   Non-interest-bearing deposits                       18,249                              12,789
   Other liabilities                                    4,103                               3,192
   Capital securities                                  10,000                               1,868

   Shareholders' equity                                13,669                              10,861
                                                     --------                            --------
Total liabilities, minority interest in
  subsidiaries and shareholders" equity              $281,643                            $205,619
                                                     ========                            ========
   Net interest income/rate spread                                 $8,090      3.36%                  $5,591     3.20%
                                                                   ======      ====                   ======     ====
   Net interest margin(5)                                                      3.98%                             3.75%

 Average interest-earning assets as a percentage
   of average interest-bearing liabilities             115.40%                             112.65%

</TABLE>

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

(1)  Interest income on tax-exempt investment securities was presented on a
     tax-equivalent basis. Tax-exempt yields were adjusted to a tax-equivalent
     basis using a 34% rate.

(2)  Includes non-accrual loans of $735,000 and $249,000 on average for the nine
     months ended September 30, 1999 and 1998, respectively.

(3)  Includes tax-exempt loans of $1,229,000 and $1,356,000 on average for the
     nine months ended September 30, 1999 and 1998, respectively. Tax-exempt
     yields were adjusted to a tax-equivalent basis using a 34% rate.

(4)  Includes loans held for sale of $369,000 and $332,000 on average for the
     nine months ended September 30, 1999 and 1998, respectively.

(5)  Net interest margin is calculated as net interest income divided by average
     interest-earning assets.



                                       12
<PAGE>

GROWTH TREND

     Total assets grew in excess of 25% in each of the past five years from
$38,336,000 at December 31, 1993 to $249,193,000 at December 31, 1998. During
this same period, total loans and total deposits grew in excess of 25% and 20%,
respectively, each year. We continued to achieve significant growth throughout
the first three quarters of 1999. Total assets grew to $311,801,000 at September
30, 1999 or by 25% compared to year-end 1998. Loans and deposits totaled
$183,677,000 and $219,255,000, respectively, at September 30, 1999. This
represents a 31% and 15% growth rate for loans and deposits, respectively,
compared to year-end 1998 balances. We continue to focus our lending activity on
small businesses and professionals within our market area. As in the past, we
will continue to hire new loan officers to grow our loan portfolio. We increased
deposits through aggressive pricing, direct marketing and branch expansion. In
February 1999, the Bank opened its fourth branch (the Floral Vale branch) in
Lower Makefield Township, Bucks County, Pennsylvania. The Bank plans to open a
fifth branch in Bethlehem, Northampton County, Pennsylvania by year-end 1999. We
hired new personnel and made improvements to our computer systems to support our
growth initiatives.

     The discussion that follows compares the financial results for the three
and nine months ended September 30, 1999 to the same periods in 1998. The change
in financial results over the prior year-end is described mostly in terms of our
growth.

RESULTS OF OPERATIONS

     For the three months ended September 30, 1999, we reported diluted earnings
per share of $.20, an increase of 43% from the $.14 reported for the same period
in 1998. Net income of $645,000 for the three months ended September 30, 1999
was $225,000 or 54% higher than the $420,000 reported for the same period in
1998. Return on average assets was .84% for the three months ended September 30,
1999 compared to .76% for the same period in 1998. Return on average equity,
exclusive of the unrealized gain/loss on investment securities available for
sale was 15.59% for the three months ended September 30, 1999 compared to 14.90%
for the same period in 1998. Earnings in 1999 were higher than in 1998 primarily
due to the continued growth in interest-earning assets.

     For the nine months ended September 30, 1999, we reported diluted earnings
per share of $.59, an increase of 48% from the $.40 reported for the same period
in 1998. Net income of $1,876,000 for the nine months ended September 30, 1999
was $695,000 or 59% higher than the $1,181,000 reported for the same period in
1998. Return on average assets was.89% for the nine months ended September 30,
1999 compared to .77% for the same period in 1998. Return on average equity,
exclusive of the unrealized gain/loss on investment securities available for
sale was 16.53% for the nine months ended September 30, 1999 compared to 14.61%
for the same period in 1998. Earnings in 1999 were higher than in 1998 primarily
due to the continued growth in interest-earning assets, which outpaced the
growth in interest-bearing liabilities.

Net interest income

     Net interest income is our most significant component of operating income.
Net interest income depends upon the levels of interest-earning assets and
interest-bearing liabilities and the difference or "spread" between the
respective yields earned and rates paid. The interest rate spread is influenced
by the overall interest rate environment and by competition.

     For the three months ended September 30, 1999, net interest income, on a
tax-equivalent basis, was $829,000 higher than the same period in 1998. This
increase was primarily a function of asset growth and an increase in the net
interest rate spread. Average interest-earning assets grew $78,201,000 or 37%
from $213,688,000 at September 30, 1998 to $291,889,000 at September 30, 1999.
Average investment and average loan balances increased $29,888,000 and
$48,225,000, respectively. The net interest rate spread improved 20 basis points
from 3.15% at September 30, 1998 to 3.35% at September 30, 1999. Overall
interest rates moved lower during the later part of 1998 and remained relatively
unchanged throughout the first quarter of 1999. During the second and third
quarters

                                       13
<PAGE>

of 1999 overall interest rates moved higher. The 11 basis point decrease in
average yield on interest-earning assets was more than offset by the 31 basis
point decrease in the average rate on interest-bearing liabilities. The increase
in average earning assets and net interest rate spread had a positive impact on
net interest margin. The net interest margin improved 10 basis points from 3.83%
at September 30, 1998 to 3.93% at September 30, 1999. The ratio of average
interest-earning assets to average interest-bearing liabilities decreased from
115.82% at September 30, 1998 to 114.45% at September 30, 1999. This decrease
had a negative impact on net interest income and net interest margin. During the
three months ended September 30, 1999 the Bank became increasingly dependent on
new deposits to fund asset growth.

     For the nine months ended September 30, 1999, net interest income, on a
tax-equivalent basis, was $2,499,000 higher than the same period in 1998. This
increase was primarily a function of asset growth and a higher ratio of
interest-earning assets to interest-bearing liabilities. Average
interest-earning assets grew $72,632,000 or 36% from $199,285,000 at September
30, 1998 to $271,917,000 at September 30, 1999. Average investment and average
loan balances increased $31,896,000 and $42,372,000, respectively. The ratio of
average interest-earning assets to average interest-bearing liabilities
increased from 112.65% at September 30, 1998 to 115.40% at September 30, 1999.
This increase had a positive impact on net interest income and net interest
margin. The growth in interest-earning assets was funded, in part, by the
proceeds from our capital securities issued in August 1998 and common stock
offering in the first quarter of 1999. The net interest margin improved 23 basis
points from 3.75% at September 30, 1998 to 3.98% at September 30, 1999. The net
interest rate spread improved 16 basis points from 3.20% at September 30, 1998
to 3.36% at September 30, 1999. Overall interest rates moved lower during the
later part of 1998 and were relatively unchanged during the first quarter of
1999. During the second and third quarters of 1999 overall interest rates moved
higher. The 17 basis point decrease in average yield on interest-earning assets
was more than offset by the 33 basis point decrease in the average rate on
interest-bearing liabilities.

Non-interest income

     Non-interest income consists primarily of service charges on deposits and
gains/losses on the sale of investment securities available for sale and loans
held for sale.

     Total non-interest income was $18,000 for the three months ended September
30, 1999 compared to $126,000 for the same period in 1998. The change is
principally due to net losses on the sale of investment securities available for
sale of $42,000 for the three months ended September 30, 1999 compared to net
gains of $75,000 for the same period in 1998. The level of gains or losses on
investment sales is dependent upon the volume of transactions, the types of
securities sold, timing and the interest rate environment.

     Total non-interest income was $116,000 for the nine months ended September
30, 1999 compared to $233,000 for the same period in 1998. The change is
principally due to the amount of losses realized on the sale of investment
securities available for sale during the nine months ended September 30, 1999
compared to net gains in 1998. Net losses on investment sales in 1999 related
primarily to sales of corporate bonds. The level of gains or losses on
investment sales is dependent upon the volume of transactions, the types of
securities sold, timing and the interest rate environment. Net losses on
investment sales were partially offset by a $42,000 increase in gains on the
sale of loans held for sale due to increased lending activity. The volume of
loan originations and sales is largely dependent on interest rates and the
volume of real estate transactions. The volume of loan originations and sales
increased in 1999 due to the addition of two mortgage solicitors and lower
interest rates during the first quarter of the year. As rates moved higher in
the second and third quarters of 1999, originations and sales of loans slowed
considerably.

Non-interest expense

     Non-interest expense consists primarily of general overhead necessary for
operations including employee compensation and benefits, data processing,
occupancy and other expenses. Expenses related to the capital securities issued
in August 1998 are also included in non-interest expense under the caption
"Minority interest in expense of subsidiaries."

     For the three months ended September 30, 1999, non-interest expenses were
$1,721,000 or $356,000 higher than the $1,365,000 recorded during the same
period in 1998. Overhead continues to increase due to the growth of the
institution, which includes the opening of our Floral Vale branch in February
1999 and the hiring of new lenders.

                                       14
<PAGE>

Salaries and benefits were $263,000 or 45% higher in 1999 compared to 1998. This
increase is principally due to an increase in the number of employees and salary
adjustments. The number of full-time equivalent employees grew from 47 at
September 30, 1998 to 63 at September 30, 1999. Minority interest in expense of
subsidiaries was $95,000 higher for the three months ended September 30, 1999
compared to 1998 due to the timing of the capital securities issuance. Data
processing costs increased $36,000 principally due to the growth of the
institution, variable costs associated with item processing and account volumes
and new services.

     For the nine months ended September 30, 1999, non-interest expenses were
$4,768,000 or $1,295,000 higher than the $3,473,000 recorded during the same
period in 1998. Salaries and benefits were $586,000 or 36% higher in 1999
compared to 1998. This increase is principally due to an increase in the number
of employees and salary adjustments. In addition, 1999 results include $648,000
in minority interest in expense of subsidiaries related to the capital
securities issued in August 1998 compared to $123,000 for the same period in
1998. Data processing costs increased $143,000 principally due to the growth of
the institution, variable costs associated with item processing and account
volumes and new services.

Provision for loan losses

     The provision for loan losses represents the amount necessary to be charged
to operations to bring the allowance for loan losses to a level that management
deems adequate to provide for inherent losses. The amount of the provision for
loan losses and the amount of the allowance for loan losses is subject to
ongoing analysis of the loan portfolio which considers current economic
conditions, actual loss experience, the current risk profile of the portfolio,
and the composition of loan types within the portfolio.

     The provision for loan losses increased from $120,000 during the three
months ended September 30,1998 to $199,000 during the same period in 1999. The
provision for loan losses also increased from $355,000 during the nine months
ended September 30, 1998 to $551,000 during the same period in 1999. The
increase is primarily due to the overall increase in the size of the loan
portfolio.

Income tax expense

     We recorded a $211,000 or 24.7% tax provision for the three months ended
September 30, 1999 compared to $200,000 or 32.3% for the same period in 1998. We
recorded a $597,000 or 24.1% tax provision for the nine months ended September
30, 1999 compared to $576,000 or 32.8% for the same period in 1998. The
effective tax rates for the three and nine months ended September 30, 1999 were
lower than the comparable periods in 1998 due principally to a higher level of
tax-exempt securities.

FINANCIAL CONDITION

     Consolidated assets grew $62,608,000 or 25% during the nine months ended
September 30, 1999. Gross loans and investments grew $43,329,000 and
$15,794,000, respectively. Asset growth was funded by a $28,029,000 and
$31,981,000 increase in deposits and borrowings, respectively. Shareholders'
equity grew by $2,085,000 to $13,852,000 at September 30, 1999. This increase
was attributable to $2,850,000 in net proceeds from our common stock offering,
$68,000 from exercised stock options and $1,876,000 in earnings, which were
offset by an increase of $2,709,000 in unrealized losses on investment
securities available for sale.

                                       15

<PAGE>


Investment securities

     Investment securities are classified at the time of purchase by one of
three purposes: trading, available for sale (AFS) or held to maturity (HTM). To
date, the Bank has not purchased any securities for trading purposes. The Bank
usually classifies securities, in particular mortgage-backed securities and
corporate bonds, as AFS to provide management the flexibility to sell securities
and adjust the balance sheet in response to capital levels, liquidity needs
and/or changes in market conditions. The carrying values for AFS and HTM
securities were $108,189,000 and $6,985,000, respectively, as of September 30,
1999. Total investments grew $15,794,000 to $115,174,000 at September 30, 1999
of which approximately 86% are fixed rate.

     The fair value of our investment securities available for sale declined
$4,102,000 from an unrealized loss of $605,000 at December 31, 1998 to an
unrealized loss of $4,707,000 at September 30, 1999. The fair value of fixed
rate securities moved sharply lower during the nine months ended September 30,
1999 due to higher interest rates. The 30-year treasury yield increased 96 basis
points from 5.09% at December 31, 1998 to 6.05% at September 30, 1999. Available
for sale securities are marked to market on the balance sheet with an adjustment
to equity, net of tax, and presented in the caption "Accumulated other
comprehensive loss".


                              INVESTMENT PORTFOLIO

<TABLE>
<CAPTION>

                                                        September 30, 1999
                                       ---------------------------------------------------
                                           Held to Maturity          Available for Sale
                                       -----------------------    ------------------------
                                       Amortized     Estimated    Amortized     Estimated
                                          Cost      Fair Value      Cost        Fair Value
                                       ---------    ----------    ---------     ----------
                                                    (Dollars in thousands)
<S>                                    <C>          <C>           <C>           <C>
U.S. government agency obligations       $4,997       $4,938      $  5,000       $  4,991
Mortgage-backed securities                1,488        1,475        51,111         49,057
State and municipal securities               --           --        17,860         17,250
Corporate bonds                              --           --        32,638         30,590
Equity securities                            --           --         6,172          6,186
Other debt securities                       500          500           115            115
                                         ------       ------      --------       --------
Total                                    $6,985       $6,913      $112,896       $108,189
                                         ======       ======      ========       ========
</TABLE>

<TABLE>
<CAPTION>
                                                          December 31, 1998
                                       ---------------------------------------------------
                                            Held to Maturity        Available for Sale
                                       -----------------------    ------------------------
                                       Amortized     Estimated    Amortized     Estimated
                                          Cost      Fair Value      Cost        Fair Value
                                       ---------    ----------    ---------     ----------
                                                     (Dollars in thousands)
<S>                                    <C>          <C>           <C>           <C>
U.S. government agency obligations       $2,998       $2,993      $     --       $     --
Mortgage-backed securities                1,994        1,986        35,411         35,463
State and municipal securities               --           --        18,533         18,702
Corporate bonds                              --           --        36,689         35,850
Equity securities                            --           --         3,745          3,758
Other debt securities                       500          500           115            115
                                         ------       ------      --------       --------
 Total                                   $5,492       $5,479      $ 94,493       $ 93,888
                                         ======       ======      ========       ========
</TABLE>


Loans held for sale

     The Bank uses an outside company to originate and sell residential
mortgages on its behalf. The $1,364,000 decrease in loans held for sale relates
to the timing of loan originations versus their sale. Typically, these loans are
sold within 30 days of their settlement. Loans held for sale totaled $263,000 at
September 30, 1999.

Loans

     Gross loans increased $43,329,000 from $140,348,000 at December 31, 1998 to
$183,677,000 at September 30, 1999. The majority of the loan portfolio is
collateralized, at least in part, by real estate in the greater Lehigh and
Delaware Valleys of Pennsylvania. Real estate values are subject to risks
associated with the general economy, among other matters.

     Inherent with the lending function is the evaluation and acceptance of
credit risk and interest rate risk along with the opportunity cost of
alternative deployment of funds. We manage credit risk associated with our
lending activities through portfolio diversification, underwriting policies and
procedures, and loan monitoring practices. Interest rate risk is managed within
our asset/liability framework using various modeling techniques and analyses.
The majority of the Bank's loans are fixed rate for a period of five years or
less.

     The Bank's commercial lending activity is focused on small businesses and
professionals within our market area. Lenders will continue to be hired to meet
the credit needs of these communities.


                                 LOAN PORTFOLIO
<TABLE>
<CAPTION>
                                     September 30,1999    % of Total  December 31, 1998    % of Total
                                     -----------------    ----------  -----------------    -----------
                                                            (Dollars in thousands)
<S>                                     <C>                <C>            <C>              <C>
Real estate-construction                  $  1,171            0.64%        $  2,161            1.54%
Real estate-residential                     33,007           17.97%          30,770           21.92%
Real estate-multi-family                     8,364            4.55%           5,135            3.66%
Real estate-commercial                     116,952           63.67%          86,008           61.28%
Commercial                                  23,066           12.56%          14,434           10.29%
Consumer                                     1,117            0.61%           1.840            1.31%
                                          --------          ------         --------          ------
Total loans                               $183,677          100.00%        $140,348          100.00%
                                          ========          ======         ========          ======
Unearned income                                545                              443
Allowance for loan losses                    2,343                            1,805
                                          --------                         --------
Total loans, net                          $180,789                         $138,100
                                          ========                         ========
</TABLE>


Allowance for loan losses

     We maintain an allowance for loan losses and charge losses to this
allowance when losses are realized. The allowance for loan losses is maintained
at a level which management considers adequate to provide for inherent losses
based upon known and inherent risks in the loan portfolio. Management's
evaluation includes such factors as current economic conditions, actual loss
experience and the current risk profile of the loan portfolio. Each commercial
loan is assigned a specific loan loss reserve using a scoring system. This
scoring system takes into consideration collateral type and value, loan to value
ratios, the borrower's risk rating, delinquency and other factors previously
described. Borrowers' risk ratings are determined by loan officers at the
inception of each loan and are subject to ongoing analysis and update by loan
officers and an independent loan reviewer. Homogeneous loans, comprised
primarily of home equity and non-real estate secured consumer loans, are
analyzed in the aggregate. Since the Bank is less than eight years old with a
limited history for loan losses, management also uses peer group analysis

                                       17

<PAGE>

to gauge the overall reasonableness of our loan loss reserves. While the
allowance is determined and calculated based on specific loans or loan
categories, the total allowance is considered available for losses in the entire
loan portfolio. Changes in economic conditions and the financial condition of
borrowers can occur quickly and, as a result, impact management's estimates.

     In addition, regulatory authorities, as an integral part of their
examinations, periodically review the allowance for loan losses. They may
require additions to the allowance based upon their judgment about information
available to them at the time of the examination.

     At September 30, 1999, the Bank had $2,343,000 in its allowance for loan
losses, representing 1.28% of outstanding loans receivable compared to 1.29% and
1.27% at December 31, 1998 and September 30, 1998, respectively.

     The following table sets forth the activity in the allowance for loan
losses and certain key ratios for the periods indicated.


                            ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                         For the nine            For the year          For the nine
                                         months ended                ended             months ended
                                      September 30, 1999       December 31, 1998    September 30, 1998
                                      ------------------       -----------------    ------------------
                                                            (Dollars in thousands)
<S>                                        <C>                  <C>                     <C>
Balance at beginning of period              $ 1,805                $  1,360              $ 1,360
Charge-offs:
  Real estate-residential                        --                      60                   60
  Commercial                                      2                      --                   --
  Consumer                                       11                       8                    8
                                            -------                --------              -------
Total charge-offs                                13                      68                   68

Recoveries:
  Consumer                                       --                       8                    8
                                            -------                --------              -------
Net charge-offs                                  13                      60                   60
Provision for loan losses                       551                     505                  355
                                            -------                --------              -------
Balance at end of period                    $ 2,343                $  1,805              $ 1,655
                                            =======                ========              =======

Total gross loans:
Average                                     160,837                 122,526              118,335
End of period                               183,677                 140,348              130,356

Ratios:
Net charge-offs to:
  Average loans                                0.01%                   0.05%                0.05%
  Loans at end of period                       0.01%                   0.04%                0.04%
  Allowance for loan losses                    0.55%                   3.32%                3.63%
  Provision for loan losses                    2.36%                  11.88%               16.90%

Allowance for loan losses to:
  Total gross loans at end of period           1.28%                   1.29%                1.27%
  Non-performing loans                       230.38%                 106.74%              479.71%
</TABLE>


     Charge-offs against the allowance for loan losses in 1999 totaled $13,000.
Because the Bank's loan portfolio is relatively immature given its recent growth
rates, current charge-off and non-performing asset trends may not be indicative
of future performance.

                                       18

<PAGE>


Non-performing assets

     Non-performing assets are defined as accruing loans past due 90 days or
more, non-accruing loans, restructured loans and other real estate owned.

                              NON-PERFORMING ASSETS

<TABLE>
<CAPTION>

                                                    September 30, 1999  December 31, 1998
                                                    ------------------  -----------------
                                                            (Dollars in thousands)
<S>                                                       <C>                <C>
Loans past due 90 days or more and accruing
  Real estate-residential                                 $    2             $  605
  Commercial                                                   1                  6
                                                          ------             ------
    Total loans past due 90 days or more and accruing          3                611

Loans accounted for on a non-accrual basis
  Real estate-residential                                    141                 25
  Real estate-multi-family                                    --                890
  Real estate-commercial                                      --                165
                                                          ------             ------
  Total non-accrual loans                                    141              1,080
  Other real estate owned                                    864                200
                                                          ------             ------
  Total non-performing assets                             $1,008             $1,891
                                                          ======             ======
Ratio of non-performing loans to total loans                0.08%             1.20%

Ratio of non-performing assets to total assets              0.32%             0.76%
</TABLE>


     Total loans past due 90 days and accruing decreased $608,000 from $611,000
at December 31, 1998 to $3,000 at September 30, 1999. Most of this decrease
relates to the repayment in full of one loan in the amount of $473,000 in June
1999 and the placement of one loan in the amount of $131,000 on non-accrual in
July 1999.

     Total non-accrual loans decreased $939,000 from $1,080,000 at December 31,
1998 to $141,000 at September 30, 1999. The decrease relates principally to the
repayment in full of one commercial real estate loan in the amount of $162,000
in March 1999 and the transfer of one loan in the amount of $864,000 to other
real estate owned in July 1999.

Premises and equipment

     Premises and equipment increased $1,924,000 from $1,638,000 at December 31,
1998 to $3,562,000 at September 30, 1999. In January 1999, the Bank exercised
its option to purchase the Doylestown and Easton branch buildings for $1,251,000
in the aggregate. The remainder of the increase relates primarily to the Floral
Vale branch, which opened in February 1999 and the purchase of the Bethlehem
branch building in September 1999. We also purchased additional furniture and
equipment to support our growth.

Other real estate owned

     Other real estate owned at September 30, 1999 consisted of one apartment
building with a carrying value of $864,000. This building is currently under
agreement of sale with settlement expected by year-end 1999. We do not expect to
record any gain or loss on the sale. There was one 1-4 family residential
property in the amount of $200,000 classified as other real estate owned at
December 31, 1998. This property was sold in April 1999 with no gain or loss
recorded on the sale.

                                       19

<PAGE>

Deferred taxes

     The $1,396,000 increase in deferred taxes from $826,000 at December 31,
1998 to $2,222,000 at September 30, 1999 relates to the change in the fair value
of investment securities available for sale.

Deposits

     Premier Bank, a traditional community-based bank, depends upon a base of
competitively priced core deposits to provide a stable funding source. The Bank
has retained and grown our customer base since our inception through a
combination of price, quality service, convenience, and a stable and experienced
staff. The Bank primarily attracts deposits from within our market area.
Competition for deposits is increasing as our competitors now extend beyond
traditional banking institutions and into a variety of financial services
companies such as insurance companies, securities brokerage firms and mutual
funds. Many of our competitors are significantly larger and have greater
financial resources, personnel and locations to conduct business. In addition,
the internet provides a low cost distribution channel to financial services
companies that is not constrained by geography.

     Core deposits, which exclude time deposits of $100,000 or more, grew
$17,685,000 or 10% during the nine months ended September 30, 1999 to
$193,573,000. Most of this growth occurred in time deposits. Total time deposits
at September 30, 1999 were $123,766,000 or 56% of total deposits, of which
$42,389,000 mature after one year. Depending on market conditions, management
generally prices its time deposits to extend maturities beyond one year.

     During the nine months ended September 30, 1999, total deposits grew
$28,029,000 or 15% to $219,255,000. Future deposit growth will be accomplished
through deposit promotions, business development programs and continued branch
expansion. The Bank opened its fourth branch in February 1999 and plans to open
its fifth branch in Bethlehem, Pennsylvania by year-end 1999.

                        DEPOSITS BY MAJOR CLASSIFICATION

<TABLE>
<CAPTION>
                                         September 30, 1999                December 31, 1998
                                 --------------------------------   -------------------------------
                                 Weighted                           Weighted
                                 Average                            Average
                                 Interest                   % of    Interest                 % of
                                   Rate         Amount      Total     Rate       Amount      Total
                                 --------     --------     ------   --------    --------     ------
                                                       (Dollars in thousands)
<S>                              <C>           <C>         <C>      <C>         <C>          <C>
Interest checking                  2.50%       $ 19,153      8.74%    2.62%     $ 16,432      8.59%
Money market                       2.55%          1,185      0.53%    2.57%        1,580      0.83%
Savings                            3.42%         56,560     25.80%    3.44%       54,082     28.28%
Time                               5.29%        123,766     56.45%    5.46%      100,107     52.35%
                                   ----        --------    ------     ----      --------     -----
  Total interest-bearing deposits  4.48%        200,664     91.52%    4.53%      172,201     90.05%
                                   ====                               ====
Non-interest-bearing deposits                    18,591      8.48%                19,025      9.95%
                                               --------    ------               --------    ------
Total deposits                                 $219,255    100.00%              $191,226    100.00%
                                               ========    ======               ========    ======
</TABLE>

Borrowings

     Borrowings increased $31,981,000 from $29,936,000 at December 31, 1998 to
$61,917,000 at September 30, 1999. Loan growth has outpaced deposit growth
during 1999 causing the Bank to increasingly rely on borrowings as a funding
source. For additional information on our borrowing sources and borrowing
capacity, see the "Liquidity" section that follows.

     At September 30, 1999 securities sold under agreement to repurchase
consisted of $25,000,000 in borrowings from the FHLB maturing within 180 days;
$14,994,000 in borrowings from a securities broker maturing within 90 days; and
$6,923,000 in retail repurchase agreements maturing overnight. At December 31,
1998 securities sold

                                       20

<PAGE>

under agreement to repurchase included $11,000,000 and $3,936,000 in borrowings
from the FHLB and retail customers, respectively.

     Short-term FHLB advances at September 30, 1999 represent debt previously
classified as long-term which the Bank will prepay due to recent FHLB
notification of intent to convert the borrowing to a variable rate. Short-term
FHLB advances were $5,000,000 at September 30, 1999.

     Long-term FHLB advances totaling $10,000,000 mature in the year 2002. These
advances are subject to repricing every six months at which time the issuer may
convert the borrowing to a variable rate if current rates are higher. Should the
issuer convert the borrowing, the Bank may prepay the debt without penalty. We
believe that these advances will be converted or repaid if the recent trend of
higher interest rates continues.

     All borrowings from the FHLB are secured by a blanket lien against all of
the Bank's assets. In addition, the FHLB amended its policies in 1998 to require
its borrowers who exceed 50% of their maximum borrowing capacity to deliver
certain securities to them as collateral. As of September 30, 1999 the Bank
delivered $38,380,000 in investments as collateral to the FHLB under this new
policy. In addition, $14,212,000 in investment securities are held by a
securities broker as collateral against Bank borrowings. Customer repurchase
agreements are collateralized by investment securities in an amount that equals
to or exceeds such borrowings.

                                            BORROWINGS

<TABLE>
<CAPTION>

                                                  September 30, 1999    December 31, 1998
                                                  ------------------    ------------------
                                                            Weighted              Weighted
                                                             Average               Average
                                                   Amount     Rate       Amount     Rate
                                                  -------   --------    -------   --------
                                                           (Dollars in thousands)
<S>                                               <C>         <C>       <C>         <C>
Securities sold under agreement to repurchase     $46,917     5.25%     $14,936     4.74%
Short-term FHLB advances                            5,000     5.47%          --       --
Long-term FHLB advances                            10,000     5.40%      15,000     5.42%
                                                  -------     ----      -------     ----
                                                  $61,917     5.29%     $29,936     5.08%
                                                  =======     ====      =======     ====
</TABLE>

Other liabilities

     Other liabilities decreased $716,000 from $3,233,000 at December 31, 1998
to $2,517,000 at September 30, 1999. This decrease relates principally to the
timing difference between the accrual and payment of normal recurring operating
expenses and the expense associated with the capital securities.


CAPITAL ADEQUACY

     At September 30, 1999, we believe that we are in compliance with all
applicable regulatory requirements to be classified as "well capitalized"
pursuant to FDIC regulations. We plan to remain "well capitalized" and manage
the Bank accordingly. During the past twelve months we completed two capital
raising initiatives.

     On August 11, 1998, our subsidiary, PBI Capital Trust, issued $10,000,000
in capital securities. Proceeds from the capital securities provide us with
additional Tier I and Tier II capital pursuant to banking regulations. The
capital securities, which represent the minority interest in equity accounts of
subsidiaries, are limited to 25% of Tier I capital. As our equity grows, a
greater portion of the capital securities will count towards Tier I capital.

     On December 22, 1998, we commenced an offering of common stock at $11.00
per share. This offering expired on March 31, 1999. We issued 272,416 shares
during this offering with net proceeds totaling $2,850,000. We will use the net
proceeds of the stock offering for general corporate purposes, including
investments in or advances to the Bank to increase the Bank's capital position
and loan to one borrower lending limits. In addition, these proceeds

                                       21

<PAGE>

may be used to support the continuing development of the Bank's franchise
through branch expansion and possible expansion into related businesses.

     The tables below depict our capital components and ratios along with the
"adequately" and "well" capitalized criteria as defined by FDIC regulations. At
September 30, 1999 we exceeded all regulatory requirements and are classified as
"well capitalized".

                               CAPITAL COMPONENTS

<TABLE>
<CAPTION>
                                                  September 30, 1999  December 31, 1998
                                                  ------------------  -----------------
                                                          (Dollars in thousands)
<S>                                                     <C>               <C>
Tier I
Shareholders' equity                                    $ 13,852          $ 11,767
Allowable portion of minority interest in equity
  of subsidiaries                                          5,654             4,000
Net unrealized losses on investment securities
  available for sale                                       3,108               399
                                                        --------          --------
Total Tier I Capital                                    $ 22,614          $ 16,166
                                                        ========          ========

Tier II
Allowable portion of minority interest in equity
  of subsidiaries                                       $  4,346          $  6,000
Allowable portion of the allowance for loan losses         2,343             1,805
Allowable portion of subordinated debt                     1,500             1,500
                                                        --------          --------
Total Tier II Capital                                   $  8,189          $  9,305
                                                        ========          ========

Total Capital                                           $ 30,803          $ 25,471

Risk-weighted assets                                     229,051           185,263
</TABLE>


                                 CAPITAL RATIOS
<TABLE>
<CAPTION>
                                                                                               "Adequately"       "Well"
                                                            Actual              Actual           Capitalized     Capitalized
                                                      September 30, 1999   December 31, 1998       Ratios          Ratios
                                                      ------------------   -----------------    ------------     -----------
<S>                                                         <C>                <C>                 <C>            <C>
Total risk-based capital/risk-weighted assets               13.45%             13.75%              8.00%          10.00%
Tier I capital/risk-weighted assets                          9.87%              8.73%              4.00%           6.00%
Tier I capital/average assets (leverage ratio)               7.46%              6.75%              4.00%           5.00%
</TABLE>


LIQUIDITY

     Liquidity represents an institution's ability to generate cash or otherwise
obtain funds at reasonable rates to satisfy commitments to borrowers and demands
of depositors. Our primary sources of funds are deposits, proceeds from
principal and interest payments on loans, mortgage-backed securities and
investments, and borrowings. While maturities and scheduled amortization of
loans and investments are a predictable source of funds, deposit flows, loan
prepayments and mortgage-backed securities prepayments are influenced by
interest rates, economic conditions and competition.

                                       22

<PAGE>

     For the nine months ended September 30, 1999, operating and financing
activities provided cash and cash equivalents of $4,318,000 and $62,889,000,
respectively, while investing activities used $66,300,000. The cash provided by
financing activities is the result of an increase in deposits and borrowings and
the issuance of common stock. Deposits and borrowings grew $28,029,000 and
$31,981,000, respectively, while net proceeds from the common stock offering
totaled $2,850,000. This cash was primarily used for loan originations and the
purchase of mortgage-backed and other securities.

     For the nine months ended September 30, 1998, operating and financing
activities provided cash and cash equivalents of $5,808,000 and $33,615,000,
respectively, while investing activities used $38,513,000. The cash provided by
financing activities resulted from a $30,802,000 increase in deposits and the
issuance of $10,000,000 in capital securities in August 1998. Cash totaling
$88,947,000 was also provided by the sales and repayment of investment
securities. Together, this cash was primarily used for loan originations, the
purchase of corporate bonds, mortgage-backed and other securities and the
repayment of borrowings. For the nine months ended September 30, 1998, loans and
investments grew $21,809,000 and $16,583,000, respectively, while borrowings
decreased by $7,187,000.

     The Bank monitors it liquidity position on a daily basis. Excess short-term
liquidity is invested in overnight federal funds sales through a correspondent
bank. Conversely, overnight federal funds may be purchased to satisfy daily
liquidity needs. Additional sources of funds are available through use of one of
the following: $4,000,000 unsecured federal funds line of credit with a
correspondent bank or, the Bank's $45,354,000 borrowing limit at the Federal
Home Loan Bank of Pittsburgh. The Bank could also sell or borrow against certain
investment securities. At September 30, 1999, the Bank had $40,000,000 in
borrowings outstanding at the FHLB. Borrowings against certain investment
securities totaled $14,994,000 at September 30, 1999.

RECENT ACCOUNTING PRONOUNCEMENTS

Derivative instruments and hedging activities

     In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which was subsequently amended in June
1999. This Statement standardizes the accounting for derivative instruments,
including certain derivative instruments imbedded in other contracts, and those
used for hedging activities, by requiring that an entity recognize those items
as assets or liabilities in the statement of financial position and measure them
at fair value. The Statement generally provides for matching of gain or loss
recognition on the hedging instrument with the recognition of the changes in the
fair value of the hedged asset or liability that are attributable to the hedged
risk, so long as the hedge is effective. Prospective application of Statement
No. 133 is required for all fiscal years beginning after June 15, 2000, however
earlier application is permitted. We have not yet determined the impact, if any,
of this Statement, including its provisions for the potential reclassifications
of investment securities, on earnings, financial condition or equity.

Accounting for mortgage-backed securities retained after the securitization of
mortgage loans held for sale by a mortgage banking enterprise

   In October 1998 the FASB issued Statement No. 134, "Accounting for
Mortgage-backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise". This Statement requires that,
after the securitization of a mortgage loan held for sale, an entity engaged in
mortgage banking activities classify any retained mortgage-backed securities
based on the ability and intent to sell or hold those investments, except that a
mortgage banking enterprise must classify as trading any retained
mortgage-backed securities that it commits to sell before or during the
securitization process. This Statement is effective for the first quarter
beginning after December 15, 1998. This Statement provides a one-time
opportunity for an enterprise to reclassify, based on the ability and intent on
the date of adoption of this Statement, mortgage-backed securities and other
beneficial interests retained after securitization of mortgage loans held for
sale from the trading category, except for those with commitments in place. We
adopted this Statement on January 1, 1999. There was no impact on earnings,
financial condition or equity from the adoption of this Statement since we do
not engage in the securitization of mortgage loans held for sale.

                                       23


<PAGE>

RECENT LEGISLATION

         On November 8, 1999 Congress enacted the Financial Institutions
Modernization Act. This law will dramatically change the financial services
industry by eliminating the barriers between commercial banking, insurance and
securities. These barriers have existed since the enactment of the
Glass-Steagall Act during the height of the Great Depression. Management is
analyzing the effect of the aforementioned law on the liquidity, capital
resources, and results of operations of the corporation. The law may have a
substantial long-term impact by changing the business environment in which the
corporation operates.

         Management is not aware of any other current specific recommendations
by regulatory authorities or proposed legislation which, if they were
implemented, would have a material adverse effect upon the liquidity, capital
resources, or results of operations, although the general cost of compliance
with numerous and multiple federal and state laws and regulations does have, and
in the future may have, a negative impact on the corporation's results of
operations.


YEAR 2000 ISSUES

     The following section contains forward-looking statements that involve
risks and uncertainties. The actual impact on us of the Year 2000 issue could
materially differ from that which is anticipated in the forward-looking
statements as a result of certain factors identified below.

     The "Year 2000 Problem" (Y2K) arose because many existing computer programs
use only the last two digits to refer to a year. Therefore, these computer
programs may not properly recognize a year that begins with "20" instead of the
familiar "19". If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000. This could cause entire system
failures, miscalculations, and disruptions of normal business operations
including, among other things, a temporary inability to process transactions,
generate statements, compute payments, interest or delinquency, or engage in
similar daily business activities. The extent of the potential impact of the
Year 2000 Problem is not yet known, and if not timely corrected, it could affect
the global economy.

     The Bank is subject to the regulation and oversight of various banking
regulators whose oversight includes the provision of specific timetables,
programs and guidance regarding Year 2000 issues. Regulatory examinations of the
Bank's Year 2000 programs are conducted on a quarterly basis. Management reports
on the status of Y2K readiness to the Board of Directors on a monthly basis.

Company's state of readiness

     Management is committed to ensuring that our daily operations suffer little
or no impact from the century date change. We have applied due diligence
throughout the Y2K process following the guidelines contained in the series of
Federal Financial Institutions Examinations Council's Interagency Guidelines and
the SEC's Release No. 33-7558. The guidelines identify the following phases:
awareness, assessment, renovation or remediation, testing or validation and
implementation.

     Based on an ongoing assessment, we identified certain systems that required
modification or replacement in order to use properly dates beyond December 31,
1999. We presently believe that as a result of modifications to existing
software and hardware and conversions to new software, the adverse effects of
the Year 2000 problem can be mitigated. However, if such modifications and
conversions are not adequate, or are not completed on a timely basis, the Year
2000 problem could have a material adverse impact on our operations.

     Management initiated an enterprise-wide program to prepare our computer
systems and applications for the Year 2000. We developed a comprehensive
inventory of all PC based applications, third-party relationships, environmental
systems, proprietary programs and non-computer-related systems (such as postage
meters and fax machines). We recognize that the Bank's operating, processing and
accounting operations are computer reliant and could be affected by the Y2K
issue and thus, we developed a plan to make the systems Y2K ready. As of
September 30, 1999, we believe that substantially all of our systems are Year
2000 ready. We will continue to test and validate certain systems for Y2K
readiness throughout the fourth quarter of 1999.

                                       24

<PAGE>

     We acquired our mission-critical system, which supports our core business
processes, from a highly regarded third-party vendor. This vendor began in 1997
and completed by October 1998, renovations to our system to make it Y2K ready.
The remediated software was placed into daily production in October 1998. In
November 1998, the Bank, along with other clients of this vendor, began
comprehensive testing of the system's Y2K readiness. This testing was completed
in January 1999 with no significant Y2K related failures. However, because most
computer systems are, by their very nature, interdependent, it is possible that
noncompliant third-party computers could impact our computer systems. We could
be adversely affected by the Y2K problem if we, or unrelated parties, fail to
successfully address the problem. We communicated with the unrelated parties
that we deal with to coordinate Year 2000 compliance. Additionally, we depend on
external suppliers, such as, wire transfer systems, telephone systems, electric
companies, and other utility companies for continuation of service. We are also
assessing the impact, if any, the century date change may have on our credit
risk.

     We communicated with all of our significant vendors, suppliers and large
commercial customers to determine the extent to which we are vulnerable to those
third-parties' failure to remedy their own Year 2000 problems. The Y2K Project
Manager has available each vendors' Y2K readiness efforts which includes their
remediation plan, renovation approach, testing methodologies and target dates.
In the event that any of our significant vendors, suppliers and large commercial
customers do not successfully achieve Year 2000 compliance in a timely manner,
our business or operations could be adversely affected. If significant suppliers
fail to meet Year 2000 operating requirements, we intend to engage alternative
suppliers. For insignificant vendors, we will not necessarily validate that they
are Year 2000 compliant. However, for any insignificant vendor who responded
that it will not be compliant by June 1999, we are seeking a new vendor or
system that is compliant. The Bank has surveyed its large commercial customers
as to their Y2K preparedness. Respondents have acknowledged their awareness of
Y2K issues and currently believe that these issues will not materially affect
their financial condition, liquidity, or results of operations. The extent to
which customers are Y2K compliant is considered in the Bank's decision to extend
credit.

Costs of year 2000

     To date, approximately $67,000 has been expensed as Year 2000 costs.
Management expects to spend an additional $35,000 for this project which will be
expensed as incurred over the next three months. The estimated Year 2000 project
costs include the costs and time associated with the impact of third-parties'
Year 2000 issues and the development of contingency plans, and are based on
presently available information. The total cost of the project is being funded
through operating cash flows. We continue to evaluate appropriate courses of
corrective action, including replacement of certain systems whose associated
costs would be recorded as assets and amortized. Accordingly, we do not expect
the amounts required to be expensed over the next three months to have a
material effect on the financial position or results of operations. We believe
that the cost of addressing the Y2K issues will not be a material event or
uncertainty that would cause reported financial information not to be
necessarily indicative of future operating results or financial conditions.
However, if compliance is not achieved in a timely manner by us or any of our
significant related third-parties, be it a supplier of services or customer, the
Y2K issue could possibly have a material effect on our operations and financial
position. We believe that the costs or the consequences of incomplete or
untimely resolution of our Year 2000 issues do not represent a known material
event or uncertainty that is reasonably likely to affect our future financial
results, or cause our reported financial information not to be necessarily
indicative of future operating results or future financial condition.

     The cost of the projects and the date on which we plan to complete both
Year 2000 modifications and systems conversions are based on management's best
estimates, which were derived utilizing numerous assumptions of future events
including the continued availability of certain resources, third-party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those plans. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.

                                       25
<PAGE>

Risks of year 2000

     At present, management believes its progress in remedying our systems,
programs and applications, installing Y2K compliant upgrades and developing
contingency plans is on target. The Y2K computer problem creates risk for us
from unforeseen problems in our own computer systems and from third-party
vendors who provide the majority of mainframe and PC based computer
applications. Failure of third-party systems, especially electric and telephone
utilities, relative to the Y2K issue could have a material impact on our ability
to conduct business.

Contingency plans

     We developed business resumption and contingency plans to mitigate
potential adverse Y2K risks. These plans involve the use of manual labor to
compensate for the loss of certain automated computer systems and inconveniences
caused by disruption in command systems. These plans address mission-critical
and PC based applications, third-party relationships, environmental systems,
proprietary programs and non-computer-related systems.

                                       26
<PAGE>


                          PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS

     At September 30, 1999, no material legal proceedings were pending.

ITEM 2 -- CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.

ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.


ITEM 5 -- OTHER INFORMATION

     None.


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

The following exhibits are incorporated by reference or attached to this Form
10-QSB:

3.1      Articles of Incorporation (Incorporated by reference to Exhibit 3i to
         our Registration Statement No. 333-34243 on Form S-4 filed with the
         Commission on August 22,1997, as amended on September 9, 1997).
3.2      By-Laws (Incorporated by reference to Exhibit 3ii to our Registration
         Statement No. 333-34243 on Form S-4 filed with the Commission on August
         22,1997, as amended on September 9, 1997).

10.1     Premier Bank's 1995 Incentive Stock Option Plan (Incorporated by
         reference to Exhibit 99.6 to our Registration Statement No. 333-34243
         on Form S-4 filed with the Commission on August 22,1997).

10.2     Change of Control Agreement between Premier Bancorp, Inc., Premier Bank
         and John C. Soffronoff (Incorporated by reference to Exhibit 10.2 to
         our Quarterly Report on Form 10-QSB filed with the Commission on
         November 13, 1998).

10.3     Change of Control Agreement between Premier Bancorp, Inc., Premier Bank
         and John J. Ginley (Incorporated by reference to Exhibit 10.3 to our
         Quarterly Report on Form 10-QSB filed with the Commission on November
         13, 1998).

10.4     Change of Control Agreement between Premier Bancorp, Inc., Premier Bank
         and Bruce E. Sickel (Incorporated by reference to Exhibit 10.4 to our
         Quarterly Report on Form 10-QSB filed with the Commission on November
         13, 1998).

11.1     Statement re: Computation of per share earnings (Included at Note 4 of
         this Form 10-QSB).

27.1     Financial Data Schedule (Exhibit 27).

                                       27

<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on our behalf by the undersigned,
thereunto duly authorized.


                                   Premier Bancorp, Inc.



DATE                               SIGNATURE
----                               ---------

November 12, 1999                  /s/ John C. Soffronoff
                                   ----------------------
                                   John C. Soffronoff
                                   President, Chief Executive Officer, Director
                                   (Principal Executive Officer)


November 12, 1999                  /s/ Bruce E. Sickel
                                   -------------------
                                   Bruce E. Sickel
                                   Chief Financial Officer, Director
                                   (Principal Financial Officer)

                                       28

<PAGE>


<TABLE>
<CAPTION>

                                INDEX OF EXHIBITS

                                                                                                         Page
                                                                                                         ----
<S>      <C>                                                                                             <C>
3.1      Articles of Incorporation (Incorporated by reference to Exhibit 3i to                             *
         our Registration Statement No. 333-34243 on Form S-4 filed with
         the Commission on August 22,1997, as amended on September 9, 1997).

3.2      By-Laws (Incorporated by reference to Exhibit 3ii to our Registration                             *
         Statement No. 333-34243 on Form S-4 filed with the Commission on
         August 22,1997 as amended on September 9, 1997).

10.1     Premier Bank's 1995 Incentive Stock Option Plan (Incorporated by reference to                     *
         Exhibit 99.6 to our Registration Statement No. 333-34243 on Form S-4
         filed with the Commission on August 22,1997).

10.2     Change of Control Agreement between Premier Bancorp, Inc., Premier Bank and                       *
         John C. Soffronoff (Incorporated by reference to Exhibit 10.2 to our Quarterly
         Report on Form 10-QSB filed with the Commission on November 13, 1998).

10.3     Change of Control Agreement between Premier Bancorp, Inc., Premier Bank
         and John J. Ginley (Incorporated by reference to Exhibit 10.3 to our
         Quarterly Report on Form 10-QSB filed with the Commission on November
         13, 1998).                                                                                        *

10.4     Change of Control Agreement between Premier Bancorp, Inc., Premier Bank                           *
         and Bruce E. Sickel (Incorporated by reference to Exhibit 10.4 to our
         Quarterly Report on Form 10-QSB filed with the Commission on November 13, 1998).

11.1     Statement re: Computation of per share earnings (Included at Note 4 of this                       5
         Form 10-QSB).

27.1     Financial Data Schedule (Exhibit 27).                                                            37
</TABLE>

*   Incorporated by reference.

                                       29