UNITED STATES
                       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 March 31, 1999

                                       OR

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

          For the transition period from _____________ to ____________

                         Commission File Number 0-23499

                      DELAWARE FIRST FINANCIAL CORPORATION
       (Exact name of small business issuer as specified in its charter)

            Delaware                                             52-2063973
-------------------------------                             --------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

          400 Delaware Avenue
          Wilmington, Delaware                                          19801
(Address of principal executive offices)                              (Zip Code)

                                 (302) 421-9090
                (Issuer's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_   No ___

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest  practicable  date: As of May 12, 1999,  there
were issued and outstanding  1,157,000 shares of the Registrant's  Common Stock,
par value $.01 per share.

Transitional Small Business Disclosure Format:  Yes _X_   No ___



<PAGE>

               DELAWARE FIRST FINANCIAL CORPORATION AND SUBSIDIARY

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
Part I.  Financial Information


Item 1.  Consolidated Financial Statements

         Consolidated Statements of Financial Condition as of
         December 31, 1998 and March 31, 1999 (unaudited)                      1

         Consolidated Statements of Operations for the three
         months ended March 31, 1999 (unaudited) and 1998 (unaudited)          2

         Consolidated Statement of Changes in Stockholders' Equity
         for the three months ended March 31, 1999 (unaudited)                 3

         Consolidated Statements of Cash Flows for the three
         months ended March 31, 1999 (unaudited) and 1998 (unaudited)          4

         Notes to Unaudited Consolidated Financial Statements                  5

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                             8


Part II. Other Information


Item 1.   Legal Proceedings                                                   11
Item 2.   Changes in Securities and Use of Proceeds                           11
Item 3.   Defaults Upon Senior Securities                                     11
Item 4.   Submission of Matters to a Vote of Security Holders                 11
Item 5.   Other Information                                                   11
Item 6.   Exhibits and Reports on Form 8-K                                    11

Signatures



<PAGE>

<TABLE>
DELAWARE FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
---------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                               March 31,     December 31,
ASSETS                                                                           1999           1998
                                                                             ------------    ------------
                                                                              (Unaudited)
                                                                                           
<S>                                                                          <C>             <C>         
Cash and cash equivalents                                                    $  7,323,628    $ 10,483,297
Mortgage-backed securities available for sale
  (amortized cost - 1999, $2,564,802; 1998, $2,950,049)                         2,550,784       2,942,264
Loans receivable - net                                                         82,257,541      81,027,313
Federal Home Loan Bank stock - at cost                                            975,000         975,000
Accrued interest receivable:
  Loans                                                                           794,079         714,730
  Investments                                                                      19,400          36,550
  Mortgage-backed securities                                                       11,565          14,393
Real estate owned                                                                  71,391          70,645
Office property and equipment, net                                              1,966,528       1,988,371
Prepaid expenses and other assets                                                  63,271          64,303
Prepaid income taxes                                                                                8,527
Mortgage servicing rights                                                         321,743         335,650
Deferred income taxes                                                             183,439         181,319
                                                                             ------------    ------------
TOTAL ASSETS                                                                 $ 96,538,369    $ 98,842,362
                                                                             ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits                                                                   $ 64,041,715    $ 66,344,996
  Advances from Federal Home Loan Bank                                         13,198,011      13,742,153
  Advances by borrowers for taxes and insurance                                 1,212,431         673,655
  Accrued interest payable                                                        176,604         254,970
  Accrued income taxes                                                                369
  Accounts payable and accrued expenses                                         1,507,679       1,546,691
                                                                             ------------    ------------

      Total liabilities                                                        80,136,809      82,562,465

Commitments and contingencies

Stockholders' Equity:
   Preferred stock, $.01 par value, 500,000 shares authorized, none issued
   Common stock, $.01 par value, 3,000,000 authorized; 1,157,000 issued
         and outstanding                                                           11,570          11,570
   Additional paid in capital                                                  10,988,356      10,988,356
   Common stock acquired by the ESOP                                             (740,480)       (740,480)
   Accumulated other comprehensive loss                                            (9,735)         (5,622)
   Retained earnings-substantially restricted                                   6,151,849       6,026,073
                                                                             ------------    ------------

      Total stockholders' equity                                               16,401,560      16,279,897
                                                                             ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $ 96,538,369    $ 98,842,362
                                                                             ============    ============
</TABLE>


See notes to unaudited consolidated financial statements.

                                       1

<PAGE>

DELAWARE FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

                                                        Three months ended
                                                              March 31,
                                                    ----------------------------
                                                        1999            1998
                                                            (Unaudited)

INTEREST INCOME:
  Interest on loans                                 $ 1,580,818     $ 1,728,744
  Interest on mortgage-backed securities                 34,564          39,651
  Interest and dividends on investments                 108,493         220,191
                                                    -----------     -----------
           Total interest income                      1,723,875       1,988,586
                                                    -----------     -----------

INTEREST EXPENSE:
  Deposits                                              760,970       1,057,582
  Federal Home Loan Bank advances                       213,439         261,344
                                                    -----------     -----------

           Total interest expense                       974,409       1,318,926
                                                    -----------     -----------

NET INTEREST INCOME                                     749,466         669,660

PROVISION FOR LOAN LOSSES                                15,000          15,000
                                                    -----------     -----------

NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                                       734,466         654,660
                                                    -----------     -----------

OTHER INCOME:
  Service fees                                           23,866          15,537
  Gain on sale of loans                                                   7,491
  Other                                                  14,404          15,823
                                                    -----------     -----------

           Total other income                            38,270          38,851
                                                    -----------     -----------

OTHER EXPENSES:
  Salaries and employee benefits                        282,030         257,145
  Advertising                                            25,844          85,530
  Federal insurance premiums                             10,758          18,331
  Occupancy expense                                      44,627          51,371
  Data processing expense                                33,697          48,310
  Directors fees                                         12,041          29,823
  Other general and administrative expenses             146,963         137,148
                                                    -----------     -----------

           Total other expenses                         555,960         627,658
                                                    -----------     -----------

INCOME BEFORE PROVISION
  FOR INCOME TAXES                                      216,776          65,853
                                                    -----------     -----------

PROVISION FOR INCOME TAXES                              (91,000)        (27,700)
                                                    -----------     -----------


NET INCOME                                          $   125,776     $    38,153
                                                    ===========     ===========

BASIC EARNINGS PER SHARE                            $      0.11     $      0.03
                                                    ===========     ===========


See notes to unaudited consolidated financial statements.

                                       2

<PAGE>

<TABLE>
DELAWARE FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                            Common
                                                                            Stock
                                                                           Acquired                      Accumulated
                                                          Additional       by Stock                         Other         Total
                                            Common         Paid-in          Benefit        Retained     Comprehensive  Stockholders'
                                             Stock         Capital           Plans         Earnings          Loss         Equity

<S>                                      <C>             <C>             <C>             <C>            <C>            <C>         
BALANCE, JANUARY 1, 1999                 $     11,570    $ 10,988,356    $   (740,480)   $  6,026,073   $     (5,622)  $ 16,279,897

  Net income for the
    three months ended
    March 31, 1999 (unaudited)                                                                125,776                       125,776

  Change in unrealized losses
    on available for sale
    securities, net of tax (unaudited)                                                                        (4,113)        (4,113)
                                         ------------    ------------    ------------    ------------   ------------   ------------

BALANCE, MARCH 31, 1999 (unaudited)      $     11,570    $ 10,988,356    $   (740,480)   $  6,151,849   $     (9,735)  $ 16,401,560
                                         ============    ============    ============    ============   ============   ============
</TABLE>

See notes to unaudited consolidated financial statements.


                                       3

<PAGE>

<TABLE>
DELAWARE FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------

<CAPTION>
                                                                Three-month Period Ended
                                                                        March 31,
                                                              ----------------------------
                                                                  1999            1998
                                                                       (Unaudited)

<S>                                                           <C>             <C>         
OPERATING ACTIVITIES:
  Net income                                                  $    125,776    $     38,153
  Adjustments to reconcile net income to net cash
    (used in) provided by operating activities:
    Depreciation                                                    21,483          24,544
    Provision for loan losses                                       15,000          15,000
    Gain on sale of loans                                                           (7,491)
    Loss on disposal of office property and equipment                                7,067
    Amortization of:
      Deferred loan fees                                           (23,830)        (39,081)
      Discount on investment and
        mortgage-backed securities                                   1,192           2,570
    Changes in assets and liabilities which
      provided (used) cash:
      Accrued interest receivable                                  (59,371)         (4,900)
      Mortgage servicing rights                                     13,907          15,349
      Prepaid expenses and other assets                              1,032          99,005
      Accrued interest payable                                     (78,366)        (83,281)
      Accounts payable and accrued expenses                        (39,012)        371,318
      Income taxes                                                   8,896          28,985
      Deferral of loan fees                                         30,544          30,549
                                                              ------------    ------------
        Net cash provided by operating activities                   17,251         497,787
                                                              ------------    ------------

INVESTING ACTIVITIES:
  Proceeds from maturity of investments                                          2,000,000
  Principal collected on long-term loans
    and mortgage-backed securities                               5,121,682       5,120,133
  Long-term loans originated                                    (5,989,955)     (4,334,775)
  Proceeds from sale of loans                                                      544,200
  Purchase of investments                                                       (1,336,747)
  Purchases of office property and equipment                                       (30,644)
                                                              ------------    ------------
        Net cash provided by (used in) investing activities       (868,273)      1,962,167
                                                              ------------    ------------

FINANCING ACTIVITIES:
  Net decrease in deposits                                      (2,303,281)     (2,056,957)
  Increase in advances by borrowers for taxes
    and insurance                                                  538,776         488,112
  Repayments of Federal Home Loan Bank advances                   (544,142)     (2,000,000)
  Payment of additional conversion costs                                            (5,841)
                                                              ------------    ------------

        Net cash used in financing activities                   (2,308,647)     (3,574,686)
                                                              ------------    ------------

NET DECREASE IN CASH AND
   CASH EQUIVALENTS                                             (3,159,669)     (1,114,732)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                           10,483,297      15,199,726
                                                              ------------    ------------

CASH AND CASH EQUIVALENTS,
  END OF PERIOD                                               $  7,323,628    $ 14,084,994
                                                              ============    ============

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest                                                  $  1,052,775    $  1,402,207
                                                              ============    ============
    Income taxes                                              $     75,966    $           
                                                              ============    ============
    Transfers of loans receivable into real estate owned      $               $     71,726
                                                              ============    ============
</TABLE>

See notes to unaudited consolidated financial statements.

                                       4

<PAGE>

DELAWARE FIRST FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
--------------------------------------------------------------------------------

1.   BASIS OF PRESENTATION

     The accompanying  consolidated  financial  statements have been prepared in
     accordance  with  instructions  to Form  10-QSB.  Accordingly,  they do not
     include all of the information and footnotes required by generally accepted
     accounting  principles for complete  financial  statements.  However,  such
     information reflects all adjustments (consisting solely of normal recurring
     adjustments) which are, in the opinion of management,  necessary for a fair
     presentation of results for the unaudited interim periods.

     The results of  operations  for the three month period ended March 31, 1999
     are not necessarily indicative of the results to be expected for the fiscal
     year  ending  December  31,  1999.  The  unaudited  consolidated  financial
     statements  presented herein should be read in conjunction with the audited
     consolidated financial statements and related notes thereto included in the
     Company's Form 10-KSB dated March 31, 1999.

     On November  18,  1998,  the Company  agreed to be acquired by Crown Group,
     Inc.,  in a cash  transaction  valued  at  approximately  $17,900,000.  The
     Agreement  and Plan of  Reorganization,  executed  by the Company and Crown
     Group,  Inc.,  provides  for the  exchange  of each share of the  Company's
     common stock for $15.50 in cash. The acquisition is contingent upon receipt
     of approvals from regulatory  authorities  and the Company's  shareholders.
     The  special  meeting for  shareholders  to  consider  the  approval of the
     agreement has been scheduled for June 8, 1999 at 1:30 p.m.

     Certain items in the 1998 financial  statements  have been  reclassified to
     conform with the presentation in the 1999 financial statements.

                                       5

<PAGE>

2.   MORTGAGE-BACKED SECURITIES

     Mortgage-backed securities are summarized as follows:

<TABLE>
<CAPTION>
                                                              March 31, 1999                            December 31, 1998
                                                  ----------------------------------------   ---------------------------------------
                                                                   Gross       Approximate                   Gross       Approximate
                                                  Amortized     Unrealized        Fair       Amortized     Unrealized       Fair
                                                     Cost          Loss           Value         Cost          Loss          Value
                                                  ----------    ----------     ----------    ----------    ----------     ----------
<S>                                               <C>           <C>            <C>           <C>           <C>            <C>       
Available for sale:
FHLMC pass-through certificates                   $  216,255    $     (731)    $  215,524    $  302,954    $     (309)    $  302,645
Collateralized Mortgage Obligations                2,348,547       (13,287)     2,335,260     2,647,095        (7,476)     2,639,619
                                                  ----------    ----------     ----------    ----------    ----------     ----------

              Total                               $2,564,802    $  (14,018)    $2,550,784    $2,950,049    $   (7,785)    $2,942,264
                                                  ==========    ==========     ==========    ==========    ==========     ==========
</TABLE>

3.   LOANS RECEIVABLE

     Loans receivable consist of the following:

                                                       March 31,    December 31,
                                                         1999           1998
                                                     -----------    -----------

First mortgage loans (primarily one-
  to four-family residential)                        $71,294,543    $70,855,074
Loans on savings accounts                                680,913        630,761
Home equity loans - fixed rate                         7,219,308      7,556,783
Equity lines of credit - variable rate                 2,692,393      2,551,908
Small business loans                                   1,734,057        774,746
                                                     -----------    -----------

    Total                                             83,621,214     82,369,272

Less:
  Allowance for loan losses                              504,355        489,355
  Deferred loan fees                                     859,318        852,604
                                                     -----------    -----------

    Total                                            $82,257,541    $81,027,313
                                                     ===========    ===========

                                       6

<PAGE>

     The following is an analysis of the allowance for loan losses:

                                                          Three Months Ended
                                                               March 31,
                                                       ------------------------
                                                         1999            1998

Balance, beginning of period                            489,355         462,815
Provisions charged to operations                         15,000          15,000
Charge-offs                                                   0         (41,468)
                                                       --------        --------

Balance, end of period                                  504,355         436,347
                                                       ========        ========


     Loans  delinquent  more than 90 days are placed on  nonaccrual  status.  At
     March  31,  1999 and  December  31,  1998,  nonaccrual  loans  amounted  to
     approximately  $188,000 and $94,000,  respectively.  Interest reserved from
     these loans  amounted  to $8,585 and $3,880 at March 31, 1999 and  December
     31, 1998, respectively.

4.   DEPOSITS

     Deposits by stated type are summarized as follows:

<TABLE>
<CAPTION>
                                          March 31, 1999             December 31, 1998
                                     -----------------------    -------------------------
                                        Amount       Percent         Amount       Percent

<S>                                  <C>               <C>      <C>               <C> 
Demand deposit accounts              $ 2,163,425       3.4%     $ 1,999,737       3.0%
Passbook accounts                      1,706,483       2.7        1,697,025       2.6
Money market deposit accounts:         7,501,427      11.7        7,043,797      10.6
91-day to five-year money market
  certificates:                       52,670,380      82.2       55,604,437      83.8
                                     -----------     -----      -----------     ----- 

Total                                $64,041,715     100.0%     $66,344,996     100.0%
                                     ===========     =====      ===========     ===== 
</TABLE>

5.   COMPREHENSIVE INCOME

     The Company adopted  Statement of Financial  Accounting  Standards No. 130,
     Reporting  Comprehensive  Income,  effective January 1, 1998. The statement
     requires disclosure of amounts from transactions and other events which are
     currently  excluded  from the  statement  of  operations  and are  recorded
     directly to stockholders'  equity. Total comprehensive income for the three
     month  periods ended March 31, 1999 and 1998 amounted to income of $121,663
     and $40,955, respectively.

                                       7

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition

     Total assets  decreased  $2.3 million or 2.3% to $96.5 million at March 31,
1999 compared to $98.8 million at December 31, 1998. Such decrease was primarily
due to a decrease in cash and cash  equivalents.  Cash and cash equivalents were
used to fund deposit outflows.  Total liabilities decreased $2.4 million or 2.9%
to $80.1  million  at March 31,  1999.  Such  decrease  was  primarily  due to a
decrease in both  deposits and advances from the Federal Home Loan Bank ("FHLB")
of Pittsburgh.  Stockholders' equity amounted to $16.4 million at March 31, 1999
and $16.3 million at December 31, 1998.

Results of Operations for the Three Months Ended March 31, 1999 and 1998.

     General.  Net income  amounted to $126,000 and $38,000 for the three months
ended March 31, 1999 and 1998,  respectively.  The increase of $88,000 or 230.0%
was primarily due to a decrease in interest expense and other expenses partially
offset by a decrease in interest income.

     Net Interest  Income.  Net interest  income is  determined by the Company's
interest  rate spread  (i.e.,  the  difference  between the yields earned on its
interest-earning assets and the rates paid on its interest-bearing  liabilities)
and  the  relative  amounts  of  interest-earning  assets  and  interest-bearing
liabilities.  Net interest income increased $80,000 or 11.9% to $749,000 for the
three  months  ended March 31, 1999  compared to $670,000 for the same period in
1998.  The  increase  in net  interest  income was due to a decrease in interest
expense of $345,000. This decrease was due to lower average balances of deposits
and FHLB advances.

     Interest  Income.  Interest  income  decreased  $265,000  or  13.3% to $1.7
million for the three months ended March 31, 1999 compared to the same period in
1998.  The  decrease  in  interest  income was  primarily  due to a decrease  in
interest  income on loans,  due to a  decrease  in the  average  balance of such
assets.  The average  balance of loans  receivable  decreased  due to fewer loan
originations and an increase in loan prepayments.

     Interest Expense.  Interest expense decreased $345,000 or 26.1% to $974,000
for the three  months  ended  March 31, 1999  compared  to $1.3  million for the
comparable  period in 1998.  Such  decrease was  primarily  due to a decrease in
interest  expense on deposits and advances from the FHLB,  which was caused by a
decrease in the average balance of such liabilities.

     Provision  for Loan Losses.  The  allowance for loan losses is increased by
charges to income and decreased by charge-offs (net of recoveries). Management's
periodic evaluation of the adequacy of the allowance is based on the Bank's past
loan  loss  experience,  known  and  inherent  risks in the  portfolio,  adverse
situations that may affect the borrower's  ability to repay, the estimated value
of any underlying collateral, and current economic conditions.

                                       8

<PAGE>

     The  provision  for loan losses  amounted  to $15,000 for the three  months
ended March 31, 1999 and 1998.

     Other Income. Other income decreased $1,000 or .1% to $38,000 for the three
months  ended  March  31,  1999  compared  to the same  period  in 1998 due to a
decrease in the gain on sale of loans,  partially offset by increases in service
fees.  During the three month period ended March 31, 1999, the Bank did not sell
loans to third parties.

     Other Expenses.  Other expenses  decreased $72,000 or 11.4% to $556,000 for
the three months ended March 31, 1999 compared to the same period in 1998.  Such
decrease was primarily due to decreases in advertising and directors'  fees. The
decrease in  advertising  was  primarily  due to the lack of  expenses  incurred
during the first quarter of 1999,  compared to the same quarter for 1998. During
the first quarter of 1998,  the Bank incurred  additional  advertising  expenses
relating to the announcement of its name change.  No such expenses were incurred
in the first quarter of 1999.  The decrease in  directors'  fees was due to both
the reduction in the number of the Company's  directors  being paid and to fewer
meetings during 1999.

     Income  Taxes.  The  provision  for income  taxes  amounted  to $91,000 and
$28,000  for the  three  months  ended  March 31,  1999 and 1998,  respectively,
resulting in effective tax rates of 42.0% and 42.1%, respectively.

Liquidity and Capital Resources

     The  Bank's  liquidity,  represented  by cash  and cash  equivalents,  is a
product of its operating, investing and financing activities. The Bank's primary
sources  of  funds  are  deposits,  borrowings,  amortization,  prepayments  and
maturities  of  outstanding  loans,  sales of loans,  maturities  of  investment
securities and other short-term  investments and funds provided from operations.
Although  scheduled loan  amortization  and maturing  investment  securities and
short-term  investments  are relatively  predictable  sources of funds,  deposit
flows and loan  prepayments  are greatly  influenced by general  interest rates,
economic conditions and competition.  The Bank invests excess funds in overnight
deposits and other short-term interest-earning assets which provide liquidity to
meet lending requirements. As an additional source of funds, the Bank may borrow
from the FHLB of  Pittsburgh  and has  access to the  Federal  Reserve  discount
window.  At March 31, 1999 the Bank had $13.2  million of  outstanding  advances
from the FHLB of Pittsburgh.

     As of March 31, 1999,  the Bank's  regulatory  capital was in excess of all
applicable regulatory requirements. At March 31, 1999, the Bank's tangible, core
and risk-based capital ratios amounted to 14.3%, 14.3% and 25.2%,  respectively,
compared to regulatory requirements of 1.5%, 3.0% and 8.0%, respectively.

                                       9

<PAGE>

Impact of Inflation and Changing Prices

     The financial  statements and related  financial data presented herein have
been prepared in accordance with instructions to Form 10-QSB,  which require the
measurement of financial  position and operating  results in terms of historical
dollars,  without considering changes in relative purchasing power over time due
to inflation.

     Unlike most  industrial  companies,  virtually all of the Bank's assets and
liabilities are monetary in nature. As a result, interest rates generally have a
more significant impact on a financial  institution's  performance than does the
effect of inflation.

The Year 2000 Issue

     The Company is aware of the issues  associated with the programming code in
existing  computer systems as the Year 2000  approaches.  The Year 2000 Issue is
the result of computer  programs being written using two digits rather than four
digits to define the applicable year. Computer programs that have time-sensitive
coding may  recognize  a date using "00" as the year 1900  rather  than the year
2000.  Systems that do not properly  recognize such  information  could generate
erroneous data or cause a system to fail.

     The Bank has  conducted a review of its  computer  systems to identify  the
systems  that  could be  affected  by the Year 2000 issue and has  developed  an
implementation  plan to  resolve  the issue.  The  majority  of the Bank's  data
processing is provided by a third party service  bureau.  The service  bureau is
actively  involved in resolving  Year 2000 issues and has provided the Bank with
frequent updates regarding their progress. The Bank tested their system for Year
2000  compliance  during the third  quarter of 1998 with no material  exceptions
noted.  The Bank presently  believes  that,  based on the progress of the Bank's
service  bureau,  the Year 2000  problem will not pose  significant  operational
problems  for the Bank's  computer  system.  Since the  critical  portion of the
Company's  Year 2000 issue  involves its third party service  bureau,  and since
testing  of that  system  has been  completed  with no  significant  exceptions,
additional costs are anticipated to be immaterial at this time.

                                       10

<PAGE>

               DELAWARE FIRST FINANCIAL CORPORATION AND SUBSIDIARY

                                     Part II

Item 1.   Legal Proceedings

          Neither the  Corporation nor the Bank is involved in any pending legal
          proceedings other than non-material legal proceedings occurring in the
          ordinary course of business.

Item 2.   Changes in Securities and Use of Proceeds

          Not applicable.

Item 3.   Defaults Upon Senior Securities

          Not applicable.

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

          None.

                                       11

<PAGE>

                                   SIGNATURES


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



                                            DELAWARE FIRST FINANCIAL CORPORATION



Date: May 12, 1999                          By: /s/Ernest J. Peoples            
                                                --------------------------------
                                                Ernest J. Peoples
                                                President


Date: May 12, 1999                          By: /s/Jerome P. Arrison           
                                                --------------------------------
                                                Jerome P. Arrison
                                                Vice President
                                                (principal financial officer)