<PAGE>

                                                                      EXHIBIT 13

                              2001 ANNUAL REPORT

                        [LOGO] First Bell Bancorp, Inc.

<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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Table of Contents
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<TABLE>
<S>                                               <C>
Selected Financial and Other Data of the Company    1
-----------------------------------------------------
Letter to Our Shareholders                          3
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Management's Discussion and Analysis of
Financial Condition and Results of Operations       8
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Management's Report on Internal Control and
Compliance with Laws and Regulations               22
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Independent Auditors' Report                       23
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Consolidated Financial Statements                  24
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Notes to Consolidated Financial Statements         29
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Executive Management and Directors                 45
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Shareholder Information                            47
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Office Locations                                   48
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</TABLE>

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<PAGE>


Selected Financial and Other Data of the Company
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 The following table sets forth certain summary historical financial informa-
tion concerning the financial position of the Company for the period and at the
dates indicated. The financial data is derived in part from, and should be read
in conjunction with, the consolidated financial statements and related notes
contained elsewhere herein.

<TABLE>
<CAPTION>
                                                At December 31,
                                  ---------------------------------------------
                                    2001      2000     1999     1998     1997
                                  --------  -------- -------- -------- --------
                                                 (in thousands)
<S>                               <C>       <C>      <C>      <C>      <C>
Financial Condition Data:
Total assets..................... $855,203  $832,680 $821,171 $767,606 $675,684
Investments carried at cost......       --        --    4,989    9,980    9,973
Investments carried at fair
 value...........................  281,430   213,234  202,382  136,677   15,902
Cash and cash equivalents........   32,198    40,509   20,468   21,543   24,523
Total loans receivable, net......  436,473   527,811  533,259  545,535  579,394
Mortgage-backed securities, at
 fair value......................   55,995    21,523       --       --   31,855
Deposits.........................  561,352   536,685  511,931  495,128  495,055
Borrowings.......................  214,250   219,250  238,000  180,000   90,000
Stockholders' equity.............   66,441    61,620   54,518   73,902   72,983

<CAPTION>
                                            Year Ended December 31,
                                  ---------------------------------------------
                                    2001      2000     1999     1998     1997
                                  --------  -------- -------- -------- --------
                                     (in thousands, except per share data)
<S>                               <C>       <C>      <C>      <C>      <C>
Selected Operating Data:
Interest income.................. $ 49,737  $ 52,705 $ 52,090 $ 49,649 $ 49,226
Interest expense.................   41,148    40,677   37,061   32,843   32,329
                                  --------  -------- -------- -------- --------
 Net interest income.............    8,589    12,028   15,029   16,806   16,897
 Provision for loan losses.......       --        --      120       90       45
                                  --------  -------- -------- -------- --------
 Net interest income after
  provision for loan losses......    8,589    12,028   14,909   16,716   16,852
Total other income...............    2,434       858      598      643      829
                                  --------  -------- -------- -------- --------
Total other expenses.............    5,170     5,598    6,116    5,643    5,060
                                  --------  -------- -------- -------- --------
Income before provision for
 income taxes....................    5,853     7,288    9,391   11,716   12,621
Provision for income taxes.......     (505)      586    1,349    3,878    5,046
                                  --------  -------- -------- -------- --------
Net income....................... $  6,358  $  6,702 $  8,042 $  7,838 $  7,575
                                  ========  ======== ======== ======== ========
Earnings per share
 Basic........................... $   1.55  $   1.61 $   1.68 $   1.41 $   1.29
                                  ========  ======== ======== ======== ========
 Diluted......................... $   1.52  $   1.57 $   1.61 $   1.35 $   1.23
                                  ========  ======== ======== ======== ========
Dividends declared per common
 share........................... $   0.48  $   0.48 $   0.40 $   0.40 $   0.40
                                  ========  ======== ======== ======== ========
</TABLE>
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                                                                               1
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FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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<TABLE>
<CAPTION>
                                         At or For the Year Ended December
                                                        31,
                                         --------------------------------------
                                          2001    2000    1999    1998    1997
                                         ------  ------  ------  ------  ------
<S>                                      <C>     <C>     <C>     <C>     <C>
Selected Financial Ratios and Other
 Data:
Book value per share...................  $13.89  $12.95  $10.51  $12.11  $11.21
Stockholders' equity to assets at
 period end............................    7.77%   7.40%   6.64%   9.63%  10.80%
Return on average assets (net income
 divided by average total assets)......    0.75    0.82    0.99    1.09    1.08
Return on average equity (net income
 divided by average equity)............    9.40   12.28   12.50   10.36   10.25
Stockholders' equity to assets ratio
 (average stockholders' equity divided
 by average total assets)..............    7.95    6.68    7.96   10.50   10.55
Dividend payout ratio..................   30.84   29.38   23.04   28.48   31.04
Average interest rate spread (1)(4)....    1.25    1.62    1.91    1.99    1.90
Net interest margin (2)(4).............    1.48    1.94    2.36    2.53    2.45
Other income to average assets.........    0.29    0.10    0.07    0.09    0.11
Other expenses to average assets.......    0.61    0.69    0.76    0.78    0.72
Non-performing assets to total assets..    0.12    0.07    0.08    0.08    0.09
Non-performing loans to total loans....    0.24    0.11    0.05    0.09    0.11
Allowance for loan losses to total
 loans.................................    0.21    0.18    0.17    0.15    0.12
Allowance for loan losses to non-
 performing assets.....................    .88x   1.56x   1.40x   1.39x   1.13x
Efficiency ratio (3)...................   35.81   34.27   31.50   30.34   28.95
Net interest income to other expenses
 (4)...................................   2.30x   2.76x   3.08x   3.18x   3.34x
Net interest income after provision for
 loan losses to total other expenses
 (4)...................................   2.30x   2.76x   3.06x   3.17x   3.33x
Average interest-earning assets to
 average interest-bearing liabilities..   1.05x   1.06x   1.09x   1.12x   1.12x
Number of:
 Depositor accounts....................  55,128  56,581  54,257  53,579  53,628
 Full-service customer service
  facilities...........................       7       7       7       7       7
</TABLE>
-------
(1) The interest rate spread represents the difference between the weighted-
    average yield on interest-earning assets and the weighted-average cost of
    interest-bearing liabilities.
(2) The net interest margin represents net interest income as a percentage of
    average interest-earning assets.
(3) The efficiency ratio represents the ratio of recurring other expenses to
    recurring other income and net interest income.
(4) Ratios are based on net interest income determined with tax equivalent
    rates of return for non-taxable investment securities.
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2
<PAGE>


To Our Shareholders
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                             The year 2001 was a difficult one, due in sub-
                            stantial measure to the recession and the finan-
                            cial impact of the September 11 attacks. In these
                            demanding conditions, First Bell Bancorp, the par-
                            ent corporation of Bell Federal Savings and Loan
                            Association of Bellevue, produced a mixed record
                            of financial performance. Our performance, cer-
                            tainly respectable in view of the environment,
                            compared favorably with our regional competitors.
                            Although our results compared favorably with our
                            peers, our performance was not as positive as we
                            had hoped in our goal to reward the confidence of
                            our shareholders.

                             Net income slipped slightly to $6.4 million from
                            $6.7 million in the year 2000. Earnings per share
                            were also down, to $1.52 from $1.57. We did see
                            our total assets grow to more than $855.2 million,
                            up from $832.7 in 2000, and our deposits increased
                            to $561.4 million from $536.7 million. We take
                            special pride in our performance when measured
                            against the eight community institutions which
                            form the principal competition in our region. Our
                            return on average assets was third highest, our
                            efficiency ratio was second, and our ratio of non-
                            performing assets to total assets was the lowest,
                            at 0.12%.

                             Market forces play a decisive role in our indus-
                            try: interest rates on mortgages and investment
                            instruments are determined by those forces, which
                            are of course beyond our control, and by regula-
                            tory decisions we cannot hope to influence. If we
                            were to point to a single factor shaping our own
                            financial fortunes last year, it would without
                            question be the eleven interest rate reductions
                            announced by the Federal Reserve Board. These cuts
                            meant that refinancings of real estate loans
                            became extremely popular; loans contracted at
                            8.5%, for instance, could be refinanced at 6.5%.
                            No less than $71.0 million of our mortgages were
                            paid off much more rapidly than originally antici-
                            pated, with the consequence that our portfolio
                            yield declined appreciably.

                             There were two silver linings in that cloud:
                            first, market rates paid on certificates of
                            deposit dropped, thus reducing our costs, and sec-
                            ond, we were able further to reduce our interest
                            rate risk. As you may know, interest rate risk has
                            been a subject of concern, both with management
                            and with regulators of the savings and loan indus-
                            try over the last few years.
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                                                                              3
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FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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                             We were able further to improve our interest rate
                            risk position, and also to reduce our exposure to
                            rapid principal repayment, by selling $21.2 mil-
                            lion of mortgage-backed securities and $20.2 mil-
                            lion of residential mortgages. We were able to
                            realize a combined gain of $376,000 on these two
                            sales. At the same time, we purchased $20 million
                            in bank-owned life insurance. This purchase
                            increased in value by just over $1 million for the
                            year. This increase in value reduced our firm's
                            employee benefits costs in areas such as health
                            insurance, eye and dental insurance, life and dis-
                            ability insurance, and retirement benefits pro-
                            vided by the Company's ESOP, and 401K plans.

                             After a lengthy search, we were able to find a
                            highly qualified candidate as our senior lending
                            officer. Edward O. Donnell, who joined us early in
                            the first quarter of 2002, has had more than three
                            decades experience in mortgage and construction
                            lending in the Pittsburgh region. Since the resi-
                            dential loan market in the metropolitan area
                            remains strong and full of potential, we believe
                            that his appointment will make important contribu-
                            tions to our 2002 bottom line.

                             Indeed, at this writing the first stirrings of
                            economic recovery are beginning to create hope in
                            many corners of our economy. We believe that once
                            recovery begins and market rates return to a nor-
                            mal middle ground, we should be able to return to
                            the more broadly successful results of past years.

                             Our business is of course a service business, one
                            which is profoundly shaped by market forces--as
                            2001 so unmistakably demonstrated--but in which
                            success against the competition stems in large
                            part from the quality of our people. Although
                            there are many complicated financial ratios in our
                            business, the bottom line is a simple matter: when
                            you hire good people, you get good results, even
                            in the most challenging conditions. We are proud
                            of our staff; they are on the line every day,
                            dealing with customer problems, developing special
                            solutions to meet individual needs, providing
                            service when customers need effective help. More-
                            over, they are citizens of this community, always
                            trying to put something valuable back into it and
                            make it a better place for their families.
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4
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                             This report provides an excellent opportunity to
                            introduce some of the people who make us work as a
                            day-to-day operation, people who do the jobs that
                            are absolutely essential. These people play an
                            active role in community life. I wish I could
                            introduce all of them. Space only permits a few,
                            who tell a bit of their story on the following
                            pages. I hope you'll get to know them.

                                              Sincerely,
                                              /s/ Albert H. Eckert, II
                                              Albert H. Eckert, II
                                              President and Chief Executive
                                               Officer
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                                                                              5
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FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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[PHOTO]
Bebette Dimbokowitz
Teller, Bellevue Office
                             "I've been a teller for fifteen and a half years,
                            and let's get the first question out of the way
                            that everyone always asks when they find out
                            you're a teller. No, I've never been robbed. Being
                            a teller keeps me so focused on the work that if
                            somebody said give me all your money, I'd say,
                            "Sorry, I'm busy, you'll have to come back later.'

                             "I like being busy, though, and I like the con-
                            stant contact with people. There are people who
                            can look at big columns of figures and get very
                            interested, very absorbed. I like human faces, and
                            I get to see a lot of them. The people behind
                            those faces are pretty nice, for the most part.
                            It's true, you get some unpleasant customers
once in a while--really, it's not very often--and I find that when I get one, I
just automatically get that much more polite.

 "When you watch the faces, you can learn a lot. Once, a customer was standing
in line, waiting to cash a check, and she was very nervous. Something was obvi-
ously wrong--this wasn't the way she usually was. I alerted a manager; it
turned out, the customer had--shall we say--"borrowed' the check from an older
relative and was going to cash it without her knowledge. We were able to stop
it before it happened. It was a good feeling."
Bebette Dimbokowitz
Teller, Bellevue Office

[PHOTO]
Ed Donnell
Senior Lending Officer,
Bellevue Office
                             "I have just joined Bell Federal Savings, so per-
                            haps I'm not the best person to tell you much
                            about the institution. But I was hired to build
                            the mortgage and construction lending business--
                            and that is something I know a little about. I've
                            spent thirty-two years working with builders and
                            land developers in the Pittsburgh region, and
                            right now I serve on the board of directors of
                            both the area's builders associations: Builders
                            Association of Metropolitan Pittsburgh and the
                            North Suburban Builders Association.

                             "There's no question in my mind that this local
                            market has terrific potential. Housing and new
                            construction are strong and I think they're going
                            to stay strong. A respected institution like Bell
                            Federal, with deep local roots, offering competi-
                            tive rates in its construction lending program,
                            should be an extremely effective player. The fact
                            that, as of the spring of 2002, the economy seems
                            to be awakening from the recession is obviously
                            even better news.

 "I'm delighted to be here, and looking forward to developing the possibilities
of this market."
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6
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[PHOTO]
Diane Grogan
Accounting, Bellevue office
                             "I haven't been at Bell Federal all that long,
                            only a few months, but I have lived in Pittsburgh
                            all my life. It's a good place, but like any big
                            city it has its problems. One of the most trouble-
                            some is homelessness. My church, like many
                            churches in the region, have a number of programs
                            for trying to help the homeless. I help get them
                            food, gather clothes for them for all different
                            seasons, pass out those clothes--that sort of
                            thing.
                             "It's important to mention that I'm just one of
                            many, many people doing this kind of volunteer
                            work. There's nothing heroic about it--it's just
                            something we think is right. I mean, when you live
                            in one place all your life, and you get to know it
                            pretty well, you can't help but see that there are
                            people who are less fortunate than
you. I suppose some people just shrug at that, but there are lots who don't--
who simply want to try to do something. We're not going to change society,
we're not even trying to change society. We're just trying to make some lives
better."
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                                                                               7
<PAGE>

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

 First Bell Bancorp, Inc., (the "Company") is a Delaware corporation organized
by the Board of Directors in 1995 to serve as the holding company of Bell Fed-
eral Savings and Loan Association of Bellevue, (the "Association"). All mate-
rial business of the Company is transacted through the subsidiary thrift
institution. Since 1891, the Association has operated a traditional savings
and loan institution serving the greater Pittsburgh, Pennsylvania area with
the mission to achieve superior profitability while maintaining a strong capi-
tal and liquidity position. As a community oriented savings and loan, the
Company's primary investment is in one- to four-family residential mortgage
loans and investment securities. The primary sources of funds are from retail
deposit accounts and borrowings. The Company's successful longevity has come
from conservative underwriting, control of overhead expenses and the ability
to adapt to changing economic and environmental conditions.

 The Company's long-term policy of originating loans secured by one- to four-
family, owner-occupied, primary residences has resulted in the maintenance of
high quality assets. The balance of non-performing loans may fluctuate based
on unusual circumstances, which affect our borrowers. With active management
of the loan portfolio, however, the Company, again in 2001, did not have a
loan charge-off. The Company has not had a loan charge-off since 1994.

 Continued prudent management of non-interest expenses has contributed to the
production of consistent returns for the Company's shareholders. The Company
consistently ranks as one of the most efficient savings and loan associations
in the country. The ratio of other expenses to average assets was 0.61%, 0.69%
and 0.76% for the years ended December 31, 2001, 2000, and 1999, respectively.
Low operating costs are maintained by managing and monitoring overhead costs,
primarily through controlling the growth in personnel. At December 31, 2001,
the Company's seven offices and $855.2 million in assets were operated by a
total of fifty-one full-time equivalent employees, resulting in an average of
$16.7 million in assets per employee.

 First Bell has utilized technology to expand its product distribution. With
the introduction of telephone banking and internet banking, depositors have
the ability to access their accounts, transfer money between accounts, or make
loan payments from their home or office 24-hours per day. Optionally, deposi-
tors may sign up for electronic bill paying to further the management of their
finances.

 Deposit growth has been the integral source of funds and the means of growth
for the Company. In this regard, management has emphasized providing an
increased level of service to its customers in its local market areas in order
to retain and develop deposit relationships with such customers. In 2001 and
2000, First Bell placed considerable emphasis on core deposit relationships,
consisting of money market, NOW, passbook, club and statement savings
accounts. These accounts tend to be stable and lower cost than other types of
deposits. Certificates of deposit are offered with terms ranging from three
months to ten years and are priced at competitive rates.

 The Company utilizes borrowings from the Federal Home Loan Bank of Pittsburgh
("FHLB") to augment its retail deposits and to manage its interest rate risk
position, fund the investment portfolio and to help manage the Company's
equity position. As of December 31, 2001 the Company had borrowings from the
FHLB of $208.0 million and a bank line of credit of $6.3 million.

Private Securities Litigation Reform Act of 1995 Safe Harbor Statement

 In addition to historical information, this Annual Report includes certain
forward-looking statements based on current management expectations. Examples
of this forward looking information can be found in, but are not limited to,
the: President's "Letter to Shareholders", "Management's Discussion and Analy-
sis of Financial Condition and Results of Operations", "Asset Quality", "In-
terest Rate Sensitivity Analysis", and in the "Notes to Consolidated Financial
Statements for the Years Ended December 31, 2001, 2000, and 1999", "Note 5-
Investment Securities Available for Sale", "Note 16-Commitments and Contingen-
cies" and "Note 17-Fair Values of Financial Instruments". The Company's actual
results could differ materially from those management expectations. Factors
that could cause future results to vary from current management expectations
include, but are not limited to, general economic conditions, legislative and
regulatory changes, monetary and fiscal policies of the federal government,
changes in tax policies, rates and regulations of federal, state and local tax
authorities, changes in interest rate, deposit flows, the cost of funds,
demand for loan products, demand for financial services, competition, changes
in the quality or composi-
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8
<PAGE>


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tion of the Company's loan and investment portfolios, changes in accounting
principles, policies or guidelines, and other economic, competitive, govern-
mental and technological factors affecting the Company's operations, markets,
products, services and prices. Further description of the risks and uncertain-
ties to the business are included in detail in Item 1, "Business" of the
Company's 2001 Annual Report on Form 10-K.


Financial Condition

 The following table sets forth information concerning the composition of the
Company's assets at December 31, 2001 and 2000. Dollar amounts are in thou-
sands.

<TABLE>
<CAPTION>
                                          December 31, 2001   December 31, 2000
                                         ------------------- -------------------
                                                  Percent of          Percent of
                                          Amount    Total     Amount    Total
                                         -------- ---------- -------- ----------
<S>                                      <C>      <C>        <C>      <C>
ASSETS
Cash and cash equivalents............... $ 32,198     3.76%  $ 40,509     4.86%
Federal funds sold......................    4,150     0.49      6,425     0.77
Investment securities...................  337,425    39.46    234,757    28.19
Loans, net..............................  436,473    51.03    527,811    63.39
FHLB stock..............................   10,400     1.22     11,400     1.37
Bank owned life insurance...............   21,012     2.46         --       --
Deferred tax asset......................    2,708      .32      1,232      .15
Other assets............................   10,837     1.26     10,546     1.27
                                         --------   ------   --------   ------
  Total Assets.......................... $855,203   100.00%  $832,680   100.00%
                                         ========   ======   ========   ======
</TABLE>


Total Assets

 Total assets increased by $22.5 million or 2.7% to $855.2 million at December
31, 2001 from $832.7 million at December 31, 2000. The increase in total
assets was the result of increases in investment securities, mortgage-backed
securities and other assets. Offsetting these increases were decreases in con-
ventional mortgages, net, federal funds sold and cash and cash equivalents.
Also in 2001, the Company purchased $20 million in bank owned life insurance.
This insurance was purchased as a means to offset employee benefit costs and
earned $1.0 million in the year ended December 31, 2001.

Conventional Mortgage Loans

 The Company emphasizes the origination of conventional one- to four-family
residential mortgage loans for its portfolio in its primary market, the
greater Pittsburgh Metropolitan area. The Company originates primarily 15 and
30 year, fixed-rate and adjustable-rate mortgage loans. The Company also orig-
inates residential construction loans and home equity installment and line of
credit loans on one- to four-family properties. Conventional mortgage loans
decreased by $91.1 million, or 17.3%, to $435.7 million at December 31, 2001
from $526.8 million at December 31, 2000. The decrease was primarily the
result of the sale of $20.2 million in mortgage loans, principal repayments of
$100.4 million offset by the funding of conventional mortgage loans of $26.0
million. Conventional mortgage loans are comprised of residential mortgages,
residential construction loans, home equity installment and line of credit
loans and Multi-family loans. At December 31, 2001, residential mortgage loans
totaled $420.8 million or 95.3% of the total loan portfolio. At December 31,
2001, $398.6 million or 90.3% of the loan portfolio consisted of fixed-rate
mortgage loans in comparison to $468.6 million or 92.3% as of the prior year-
end date. The Company emphasizes the origination of adjustable rate mortgages
to reduce the susceptibility to interest rate risk when market conditions per-
mit. Residential construction mortgage loans totaled $5.7 million or 1.3% of
total loans and home equity loans totaled $14.0 million or 3.2% of total
loans.

Investment Securities and Other Interest Earning Investments

 In recent years, the Company has placed more emphasis on its investment port-
folio to support the Company's continued growth. The investment portfolio is
comprised of mortgage-backed securities, Bank Qualified Municipal Securities,
Collateralized Mortgage Obligations
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                                                                              9
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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("CMO's"), Treasury Securities and in 2001, Small Business Administration
securities, and a FHLB bond. Investment securities increased by $102.6 mil-
lion, or 43.7%, to $337.4 million at December 31, 2001 from $234.8 million at
December 31, 2000. The increase was the result of the purchase of $56.0 mil-
lion of Small Business Administration securities, $45.0 million of CMO's,
$66.0 million of mortgage-backed securities and $5.0 million of Trust Pre-
ferred securities. This was offset by the sale of $19.0 million in municipal
securities, $21.2 million of mortgage-backed securities and $5.9 million of
CMO's, along with principal payments on investment securities of $23.8 mil-
lion. The net unrealized loss on securities available for sale increased from
$1.8 million at December 31, 2000 to $2.4 million at December 31, 2001. The
balance invested in FHLB stock decreased $1.0 million from $11.4 million at
December 31, 2000 to $10.4 million at December 31, 2001. The investment
required by the FHLB is based on the balance of borrowings from the FHLB and
the balance of the Company's investment in mortgages and securities collater-
alized by mortgages. Federal funds sold decreased by $2.2 million or 34.4% to
$4.2 million at December 31, 2001 from $6.4 million at December 31, 2000. This
decrease was the result of the funds being invested in interest bearing
accounts at the FHLB at rates equivalent to the Federal funds rate.

Asset Quality

 In 2001, the Company's assets continued to be comprised of quality invest-
ments. For the seventh consecutive year the Company has not experienced a loan
charge-off. Prudent underwriting, conservative lending policies and active
management of the mortgage loan portfolio have enabled the Company to minimize
losses inherent in the operation of a savings and loan. At December 31, 2001,
total non-performing assets totaled $1.1 million or 0.12% of total assets. The
non-performing assets consisted of 23 first mortgage loans. The Company has
established a reserve for possible loan losses of $925,000, which is equal to
87.6% of non-performing assets as of December 31, 2001.

 While every effort is made to originate quality assets, management cannot
guarantee that problem loans will not occur. The allowance is based on manage-
ment's assessment of prospective national and local economic conditions, the
regulatory environment and inherent risks in the portfolio, not to specific
problem loans existing in the portfolio. Management believes that the current
level of reserves is adequate. However, the balance of reserves necessary can
be greatly influenced by regulatory changes and economic conditions. There-
fore, the level of future reserves and the related effect on net income cannot
be assured.

Liquidity and Capital Resources

 The Company is required to maintain liquid assets at a level, which would be
consistent with the safe and sound operation of the Association. Management of
the Association believes that it has met or exceeded these requirements during
the current and prior fiscal years.

 The primary source of cash flow for the Company is dividend payments from the
Association, sales and maturities of investment securities and, to a lesser
extent, earnings on deposits held by the Company. Dividend payments by the
Association have primarily been used to fund stock repurchase programs. The
ability of the Association to pay dividends and other capital distributions to
the Company is generally limited by the Office of Thrift Supervision("OTS").
Additionally, the OTS may prohibit the payment of dividends which are other-
wise permissible by regulation for safety and soundness reasons. As of Decem-
ber 31, 2001, the Association had approximately $24.7 million of dividends it
could pay to the Company without regulatory approval and the Company (uncon-
solidated) had $250,000 in cash or cash equivalents. Any dividend by the Asso-
ciation beyond its current year net income combined with retained net income
of the preceding two years would require notification to or approval of the
OTS. To the extent the Association was to apply for a dividend distribution to
the Company in excess of the regulatory permitted dividend amounts, no assur-
ances can be made that such application would be approved by the regulatory
authorities.

 The Association's sources of funds are deposits, borrowings and principal and
interest payments on loans and investment securities. While maturities and
scheduled amortization of loans are predictable sources of funds, deposit
flows and mortgage prepayments are strongly influenced by changes in general
interest rates, economic conditions and competition.

 At December 31, 2001, loan commitments were $13.0 million. The Association
anticipates that it will have sufficient funds available to meet its current
loan origination commitments. Certificates of deposit, which are scheduled to
mature in one year or less from December 31, 2001, totaled $303.7 million.
Management believes that a significant portion of such deposits will remain
with the Association. As a member of the FHLB, the Association has the ability
to borrow from the FHLB, if
-------------------------------------------------------------------------------

10
<PAGE>


--------------------------------------------------------------------------------
necessary. As of December 31, 2001, the Association had $208.0 million in out-
standing borrowings from the FHLB. The most recent FHLB report had the Associa-
tion's additional borrowing capacity from the FHLB at $262.0 million.

Impact of Inflation and Changing Prices

 The Financial Statements and Notes thereto presented herein have been prepared
in accordance with accounting principles generally accepted in the United
States of America, which require the measurement of financial position and
operating results in terms of historical dollars without considering the
changes in the relative purchasing power of money over time due to inflation.
The impact of inflation is reflected in the increased cost of the Company's
operations. Unlike industrial companies, nearly all of the assets and liabili-
ties of the Company are monetary in nature. As a result, interest rates have a
greater impact on the Company's performance than do the effects of general lev-
els of inflation. Interest rates do not necessarily move in the same direction
or to the same extent as the price of goods and services.

Interest Rate Sensitivity / Net Portfolio Value Analysis

 The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are interest rate sensitive. The Company's
interest rate sensitivity is monitored by management through selected interest
rate risk measures produced internally and by the OTS. The Company's interest
rate risk is measured by modeling the change in net portfolio value ("NPV") and
net interest income over a variety of interest rate scenarios and, to a lesser
extent, through GAP analysis.

 The OTS calculates interest rate risk through modeling. All calculations have
limitations because of inherent assumptions which must be made with respect to
market values, discount rates, prepayments, the interest rate sensitivity of
the assets and liabilities to changes in base interest rates, the value of
options imbedded in the asset or liability, the likelihood that the option will
be exercised and the extent to which customers elect to make prepayments on
loans or deposits or withdrawals from savings accounts. Management bases their
assumptions on historical data accumulated over a variety of interest rate sce-
narios.

 As of December 31, 2001, the Association's NPV, as measured by the OTS, was
$81.1 million or 9.14% of the market value of assets. Following a 200 basis
point increase in interest rates, the Association's "post-shock" NPV, which
provides a larger decline than a 200 basis point decrease, was $42.5 million,
or 5.10% of the market value of assets. The change in the NPV ratio or the
Association's Sensitivity Measure was -404 basis points. Under OTS capital
requirements which have not been fully implemented, the decline in the NPV
ratio at December 31, 2001 would reflect an above average interest rate risk.
If the regulations were implemented as proposed, the Association would be sub-
ject to a deduction from total capital for purposes of determining compliance
with regulatory capital requirements, but would still comply with the fully
phased in capital requirements. Management reviews the quarterly OTS measure-
ments and compares them to evaluations produced through internally generated
simulation models. These measures are used in conjunction with NPV measures to
identify excessive interest rate risk.

 The following analysis sets forth the Association's NPV as of December 31,
2001, as calculated by the Office of Thrift Supervision, which are consistent
with internal calculations, for instantaneous and sustained changes in interest
rates relative to the NPV in an unchanging interest rate environment. Due to
the current interest rate environment, a change in interest rates of -200 basis
points would not be meaningful.

<TABLE>
<S>                 <C>                 <C>            <C>
Change in Interest
       Rates        Net Portfolio Value   Net Change   Projected Percentage
 (in basis points)    (in thousands)    (in thousands)    Change to Base
       +200               42,488           (38,608)            -48%
       +100               62,755           (18,341)            -23%
         --               81,096                --              --
       -100               83,419            2,323               +3%
</TABLE>
--------------------------------------------------------------------------------

                                                                              11
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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

Interest Rate Sensitivity / GAP Analysis

 Another method to calculate interest rate sensitivity is through "GAP" analy-
sis. In a GAP analysis, assets and liabilities are analyzed by examining the
extent to which such assets and liabilities are "interest rate sensitive" and
by monitoring an institution's interest rate sensitivity "GAP." In a rising
interest rate environment, an institution with a positive gap would be in a
better position to invest in higher yielding assets, which would result in the
yield on its assets increasing at a pace closer to the cost of its interest-
bearing liabilities, than would be the case if it has a negative gap. During a
period of falling interest rates, an institution with a positive gap would
tend to have its assets repricing at a faster rate than one with a negative
gap, which would tend to restrain the growth or decrease net interest income.

 The following table sets forth the amount of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2001, which are
anticipated to re-price or mature in each of the future time periods shown.
The amounts of assets and liabilities shown which re-price or mature during a
particular period were determined in accordance with the earlier of term to
(i) repricing or (ii) the contractual terms of the asset or liability adjusted
for prepayment rates. The prepayment rates for fixed-rate mortgage loans on
one- to four-family residences are assumed to prepay at a rate of 9% per year
and are net of deferred loan origination fees and the allowance for loan loss-
es. Decay rates of 14% for passbook accounts, 17% for NOW accounts and 31% for
money market deposit accounts are assumed. In addition, it is assumed that
fixed maturity deposits are not withdrawn prior to maturity. Although manage-
ment believes the assumptions are reasonable, they should not be regarded as
necessarily indicative of the actual decay rates that may be experienced in
the future. While a conventional gap measure may be useful, it is limited in
its ability to predict trends in future earnings. A gap presentation makes no
presumptions about changes in prepayment tendencies, deposit or loan maturity
preferences or repricing time lags that may occur in response to a change in
the interest rate environment.

 Certain shortcomings are inherent in this method of analysis. For example,
although certain assets and liabilities may have similar maturities or periods
to repricing, they may react in different degrees to changes in market inter-
est rates. Also, the interest rates on certain types of assets and liabilities
may fluctuate in advance of changes in market interest rates, while interest
rates on other types may lag behind changes in market rates.
-------------------------------------------------------------------------------

12
<PAGE>


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

<TABLE>
<CAPTION>
                                                    At December 31, 2001
                          -------------------------------------------------------------------------------
                                      More                           More      More
                                      Than    More Than    More      Than      Than
                                     Three       Six     Than One   Three      Five
                           Three     Months   Months to  Year to   Years to  Years to    More
                           Months    to Six    Twelve     Three      Five      Ten     Than Ten
                          or Less    Months    Months     Years     Years     Years     Years     Total
                          --------  --------  ---------  --------  --------  --------  --------  --------
                                                   (Dollars in thousands)
<S>                       <C>       <C>       <C>        <C>       <C>       <C>       <C>       <C>
INTEREST EARNING ASSETS:
 Real Estate Loans:
 ARM Loans..............  $  1,086  $  1,379  $   2,546  $ 13,637  $ 16,806  $  1,170  $  1,407  $ 38,031
 Fixed Rates Loans......     6,784     6,704     13,459    47,360    41,644   150,970   113,339   380,260
 Residential
  Construction Loans....        --        --         --        --        --        --     3,148     3,148
 Multi-Family...........        --        --          2        54        --       185        --       241
 Second Mortgage Loans..     2,263        40         54     3,187     6,202     2,269        --    14,015
 Consumer Loans.........       778        --         --        --        --        --        --       778
 Mortgage-backed
  securities............    55,995        --         --        --        --        --        --    55,995
 Investment securities..    85,668     6,326      5,775   164,253     7,577    32,039    12,738   314,376
 FHLB Stock.............        --        --         --        --        --        --    10,400    10,400
                          --------  --------  ---------  --------  --------  --------  --------  --------
Total Interest Earning
 Assets.................   152,574    14,449     21,836   228,491    72,229   186,633   141,032   817,244
INTEREST BEARING
 LIABILITIES:
 Passbook, Club and
  Other Accounts........     2,986     2,986      5,972    19,106    14,131    21,255    18,881    85,317
 Money Market and NOW
  Accounts..............     3,721     3,721      7,443    20,227    12,259    14,297     7,957    69,625
 Certificate Accounts...   135,490    57,030    111,163    75,679    18,161     8,886        --   406,409
 Borrowings.............     6,250        --         --        --        --   208,000        --   214,250
 Advances by Borrowers
  for Taxes and
  Insurance.............     9,471        --         --        --        --        --        --     9,471
                          --------  --------  ---------  --------  --------  --------  --------  --------
Total Interest Bearing
 Liabilities............   157,918    63,737    124,578   115,012    44,551   252,438    26,838   785,072
                          --------  --------  ---------  --------  --------  --------  --------  --------
Interest Sensitivity
 Gap....................  $ (5,344) $(49,288) $(102,742) $113,479  $ 27,678  $(65,805) $114,194  $ 32,172
                          ========  ========  =========  ========  ========  ========  ========  ========
Cumulative Interest
 Sensitivity Gap........  $ (5,344) $(54,632) $(157,374) $(43,895) $(16,217) $(82,022) $ 32,172  $ 32,172
                          ========  ========  =========  ========  ========  ========  ========  ========
Cumulative Interest
 Sensitivity Gap as a
 Percentage of Total
 Assets.................    (0.62%)   (6.39%)   (18.40%)   (5.13%)   (1.90%)   (9.59%)     3.76%     3.76%
Cumulative Net Interest
 Earning Assets as a
 Percentage of
 Cumulative Interest
 Bearing Liabilities....     96.62%    75.35%     54.55%    90.48%    96.79%    89.18%   104.10%   104.10%
</TABLE>
--------------------------------------------------------------------------------

                                                                              13
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

--------------------------------------------------------------------------------
Average Balances, Interest and Average Yields

 The following table sets forth certain information relating to the Company's
balance sheet at December 31, 2001, and average balance sheets and statements
of income for the years ended December 31, 2001, 2000 and 1999, and reflect the
tax equivalent average yield on assets and average cost of liabilities for the
periods indicated. Such yields and costs are derived by dividing income or
expense by the average monthly balance of assets or liabilities, respectively,
for the years presented. Average balances are based on average daily balances.
The yields and costs include fees, which are considered adjustments to yields.
Interest income for 2001 and 2000 shown in the chart below is the tax equiva-
lent interest income. Tax equivalent interest income is being used because
interest on investment securities includes tax-exempt securities. Tax-exempt
securities carry pre-tax yields lower than comparable taxable assets. There-
fore, it is more meaningful to analyze interest income on a tax-equivalent
basis. Tax equivalent adjustments of $3.3 million, $3.4 million and $3.8 mil-
lion were made to interest income on investment securities in 2001, 2000 and
1999, respectively.

<TABLE>
<CAPTION>
                                 At December 31,
                                      2001         Year Ended December 31, 2001
                               ------------------- ----------------------------
                                                   Average            Average
                               Balance  Yield/Cost Balance  Interest Yield/Cost
                               -------- ---------- -------- -------- ----------
                                            (Dollars in thousands)
<S>                            <C>      <C>        <C>      <C>      <C>
Interest-earning Assets:
  Investment securities (1)... $320,626    5.76%   $285,546 $16,636     5.83%
  Conventional loans (2)......  435,695    7.07     480,494  34,186     7.11
  Other loans.................      778    5.88         929      64     6.89
  Mortgage-backed securities..   55,995    4.72      39,123   1,956     5.00
  Federal funds sold..........    4,150    1.69       7,141     307     4.30
                               --------            -------- -------
    Total interest-earning
     assets...................  817,244    6.37     813,233  53,149     6.54
                                                            -------
    Non-interest earning
     assets...................   37,959              38,096
                               --------            --------
      TOTAL ASSETS............ $855,203            $851,329
                               ========            ========
Interest-bearing Liabilities:
  Passbook, club and other
   accounts(5)................ $ 94,789    1.95    $ 73,756 $ 2,437     3.30%
  Money market and NOW
   accounts...................   69,625    1.95      76,970   1,601     2.08
  Certificate accounts........  406,409    5.10     410,250  24,475     5.97
  Borrowings..................  214,250    5.67     216,552  12,635     5.83
                               --------            -------- -------
    Total interest-bearing
     liabilities..............  785,073    4.60     777,528  41,148     5.29
                                                   -------- -------
    Non-interest-bearing
     liabilities..............    3,689               6,143
                               --------            --------
      TOTAL LIABILITIES.......  788,762             783,671
  Stockholders' equity........   66,441              67,658
                               --------            --------
  Total liabilities and
   stockholders' equity....... $855,203            $851,329
                               ========            ========
Net tax equivalent interest
 income/net interest rate
 spread(3)....................                              $12,001     1.25%
Net tax equivalent yield on
 average interest-earning
 assets(4)....................             1.77%                        1.48%
Ratio of average interest-
 earning assets to average
 interest-bearing liabilities.             1.04%                        1.05
</TABLE>
-------
(1)  Includes interest-bearing deposits in other financial institutions and
     FHLB stock.
(2)  Includes non-accrual loans, deferred net loan origination fees,
     undisbursed portion of loans in process, and allowance for loan losses.
(3)  Net interest rate spread represents the difference between the average
     yield on interest-earning assets, and the average cost of interest-bearing
     liabilities.
(4)  Net interest margin represents net interest income as a percentage of
     average interest-earning assets.
(5)  Includes advances by borrowers for taxes and insurance.
--------------------------------------------------------------------------------

14
<PAGE>


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


<TABLE>
<CAPTION>
                               December 31, 2000            December 31, 1999
                          ---------------------------- ----------------------------
                          Average            Average   Average            Average
                          Balance  Interest Yield/Cost Balance  Interest Yield/Cost
                          -------- -------- ---------- -------- -------- ----------
                                           (Dollars in thousands)
<S>                       <C>      <C>      <C>        <C>      <C>      <C>
Interest-earning Assets:
  Investment securities
   (1)..................  $238,737 $15,932     6.67%   $241,728 $15,765     6.52%
  Conventional loans
   (2)..................   533,002  38,376     7.20     535,222  38,974     7.28
  Other loans...........       980      69     7.04         937      66     7.04
  Mortgage-backed
   securities...........    13,567     977     7.20          --      --       --
  Federal funds sold....    13,200     800     6.06      18,518   1,073     5.79
                          -------- -------             -------- -------
    Total interest-
     earning assets.....   799,486  56,154     7.02     796,405  55,878     7.02
                                   -------                      -------
    Non-interest earning
     assets.............    17,201                       12,190
                          --------                     --------
      TOTAL ASSETS......  $816,687                     $808,595
                          ========                     ========
Interest-bearing
 Liabilities:
  Passbook, club and
   other accounts(5)....  $ 59,000 $ 2,737     4.64%   $ 85,151 $ 3,021     3.55%
  Money market and NOW
   accounts.............    83,044   1,637     1.97      53,508   1,404     2.62
  Certificate accounts..   389,054  23,256     5.98     356,439  19,751     5.54
  Borrowings............   221,960  13,047     5.88     230,335  12,886     5.59
                          -------- -------             -------- -------
    Total interest-
     bearing
     liabilities........   753,058  40,677     5.40     725,433  37,062     5.11
                          -------- -------                      -------
    Non-interest-bearing
     liabilities........     9,071                       18,836
                          --------                     --------
      TOTAL LIABILITIES.   762,129                      744,269
  Stockholders' equity..    54,558                       64,326
                          --------                     --------
  Total liabilities and
   stockholders' equity.  $816,687                     $808,595
                          ========                     ========
Net interest income/net
 interest rate
 spread(3)..............           $15,477     1.62%            $18,816     1.91%
                                   =======                      =======
Net yield on average
 interest-earning
 assets.................                       1.94%                        2.36%
Ratio of average
 interest-earning
 assets to average
 interest-bearing
 liabilities............                       1.05                         1.10
</TABLE>
--------------------------------------------------------------------------------

                                                                              15
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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

Rate/Volume Analysis

 The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing liabili-
ties have affected the Company's interest income and interest expense during
the years indicated. Information is provided in each category with respect to
(i) changes attributable to changes in volume (changes in volume multiplied by
prior rate), (ii) changes attributable to changes in rate (changes in rate mul-
tiplied by current volume) and (iii) the changes attributable to the combined
impact of volume and rate. The change in interest due to both rate and volume
in the rate/volume analysis table have been allocated to changes due to rate
and volume in proportion to the absolute amounts of the changes in each. The
average rates for investment securities used to calculate the variances in the
following table, for 2001, 2000 and 1999, are tax equivalent rates.

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                           Year Ended December 31,           2000 vs. 1999
                                2001 vs. 2000           Increase (Decrease) in
                            Increase (Decrease) in      Net Interest Income Due
                          Net Interest Income Due to              to
                          ---------------------------- ---------------------------
                                              Total                       Total
                                             Increase                    Increase
                          Volume    Rate    (Decrease) Volume   Rate    (Decrease)
                          -------  -------  ---------- ------  -------  ----------
                                             (In thousands)
<S>                       <C>      <C>      <C>        <C>     <C>      <C>
Interest-earning assets:
  Investment securities.  $ 3,124  $(2,420)  $   704   $ (195) $   362   $   167
  Conventional loans....   (3,781)    (409)   (4,190)    (162)    (436)     (598)
  Other loans...........       (4)      (1)       (5)       3       --         3
  Mortgage-backed
   securities...........    1,840     (861)      979      977       --       977
  Federal funds sold....     (367)    (126)     (493)    (308)      35      (273)
                          -------  -------   -------   ------  -------   -------
    Total interest-
     earning assets.....      812   (3,817)   (3,005)     315      (39)      276
                          -------  -------   -------   ------  -------   -------
Interest-bearing
 liabilities:
  Passbook, club and
   other accounts.......      685     (985)     (300)    (928)     644      (284)
  Money Market and NOW
   accounts.............     (120)      84       (36)     774     (541)      233
  Certificate accounts..    1,267      (48)    1,219    1,807    1,698     3,505
  Borrowings............     (318)     (94)     (412)    (468)     629       161
                          -------  -------   -------   ------  -------   -------
    Total interest-
     bearing
     liabilities........    1,514   (1,043)      471    1,185    2,430     3,615
                          -------  -------   -------   ------  -------   -------
Net change in net
 interest income........  $  (702) $(2,774)  $(3,476)  $ (870) $(2,469)  $(3,339)
                          =======  =======   =======   ======  =======   =======
</TABLE>
--------------------------------------------------------------------------------

16
<PAGE>


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


Sources of Funding

 Deposit growth and borrowings have been the integral source of funds and the
means of growth for the Company. In this regard, management has emphasized
providing an increased level of service to its customers in its local market
areas in order to retain and develop deposit relationships with such custom-
ers. In 2001 and 2000, First Bell placed considerable emphasis on core deposit
relationships, consisting of money market, NOW, passbook, club and statement
savings accounts. These accounts tend to be stable and lower cost than other
types of deposits. Certificates of deposit are offered with terms ranging from
three months to ten years and are priced at competitive rates.

 As of December 31, 2001, the Company had outstanding borrowings from the FHLB
in the amount of $208.0 million and a bank line of credit balance outstanding
of $6.3 million. These borrowings were used to fund the investment portfolio
and to help manage the Company's equity and the interest rate risk position.

 The following table sets forth information concerning the Company's liabili-
ties and stockholders' equity at December 31, 2001 and 2000. Dollar amounts
are in thousands.


<TABLE>
<CAPTION>
                                         December 31, 2001   December 31, 2000
                                        ------------------- -------------------
                                                 Percent of          Percent of
                                         Amount    Total     Amount    Total
                                        -------- ---------- -------- ----------
<S>                                     <C>      <C>        <C>      <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits............................... $561,352    65.64%  $536,685    64.45%
Borrowings.............................  214,250    25.05    219,250    26.33
Other liabilities......................   13,160     1.54     15,125     1.82
Stockholders' equity...................   66,441     7.77     61,620     7.40
                                        --------   ------   --------   ------
TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY................................ $855,203   100.00%  $832,680   100.00%
                                        ========   ======   ========   ======
</TABLE>

Liabilities

 Total liabilities increased to $788.8 million at December 31, 2001 from
$771.1 million at December 31, 2000. The $17.7 million or 2.3% increase was
the result of increases in deposits, offset by decreases in borrowings.
Borrowings decreased by $5.0 million or 2.3% to $214.3 million at December 31,
2001 from $219.3 million at December 31, 2000. Total deposits increased by
$24.7 million or 4.6% to $561.4 million at December 31, 2001 from $536.7 mil-
lion at December 31, 2000. The increase was the result of a net increase in
core savings accounts of $23.7 million or 18.1% and certificate accounts
increasing by $940,000.


Capital

 Total stockholders' equity increased by $4.8 million or 7.8% to $66.4 million
at December 31, 2001, from $61.6 million at December 31, 2000. The primarily
factors contributing to the increase in total stockholders' equity were net
income of $6.4 million. This increase was offset by dividends paid of $2.0
million.
-------------------------------------------------------------------------------
                                                                             17
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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


December 31, 2001 Operating Results

 The following table presents selected components of net income for the years
ended December 31, 2001, 2000 and 1999. Dollar amounts are in thousands.

<TABLE>
<CAPTION>
                                               For the Years Ended December 31,
                                               --------------------------------
                                                   2001       2000       1999
                                               ---------- ---------- ----------
<S>                                            <C>        <C>        <C>
Tax Equivalent Interest income................ $   53,149 $   56,154 $   55,878
Interest expense..............................     41,148     40,677     37,061
                                               ---------- ---------- ----------
Net interest income...........................     12,001     15,477     18,817
Provision for loan loss.......................         --         --        120
Other income..................................      2,434        858        598
Other expenses................................      5,170      5,598      6,116
Income taxes..................................      2,907      4,035      5,137
                                               ---------- ---------- ----------
Net Income....................................    $ 6,358    $ 6,702 $    8,042
                                               ========== ========== ==========
</TABLE>

 Net income for the year ended December 31, 2001 decreased by $344,000 or 5.1%
to $6.4 million from $6.7 million for the year ended December 31, 2000. The
decrease was primarily the result of a decrease in net interest income offset
by an increase in other income and a decrease in income taxes.

Interest Income

 Interest income discussed in this section is tax equivalent interest income.
Tax equivalent interest income is being used because interest on investment
securities includes tax-exempt securities. Tax-exempt securities carry pre-tax
yields lower than comparable taxable assets. Therefore, it is more meaningful
to analyze interest income on a tax-equivalent basis. Tax equivalent adjust-
ments of $3.3 million, $3.4 million and $3.8 million were made for the years
ended December 31, 2001, 2000 and 1999, respectively. Interest income
decreased by $3.0 million or 5.4% to $53.1 million for the year ended December
31, 2001 from $56.2 million for the year ended December 31, 2000. The decrease
was primarily due to a decrease in interest earned on conventional mortgages
offset by an increase in interest earned on investment securities and mort-
gage-backed securities. Interest on investment securities and mortgage-backed
securities increased by $572,000 and $979,000, respectively, for the year
ended December 31, 2001 in comparison to the year-ended December 31, 2000. The
increase was the result of the average balance of the investment portfolio
increasing from $238.7 million to $285.5 million and the average balance of
the mortgage-backed portfolio increasing from $13.6 million to $39.1 million.
Interest on conventional mortgage loans decreased by $4.2 million or 11.0% to
$34.2 million for the year ended December 31, 2001 from $38.4 million for the
year ended December 31, 2000. The decrease was the result of the average bal-
ance for conventional mortgage loans decreasing by $52.5 million to $480.5
million for the year ended December 31, 2001 from $533.0 million for the com-
parable 2000 period. Also contributing to the decrease was a nine basis points
decline in the average rate earned on conventional mortgage loans. The average
rate earned on conventional mortgage loans for 2001 was 7.11% compared to
7.20% for 2000.

Interest Expense

 Interest expense increased to $41.1 million for the year ended December 31,
2001 from $40.7 million for the year ended December 31, 2000. The $471,000 or
1.2% increase was the result of an increase in the average balance of inter-
est-bearing liabilities to $768.8 million for the year-end December 31, 2001
from $753.1 million for the comparable 2000 period offset by a decrease in the
average cost of interest bearing deposits from 5.40% to 5.35% for the two com-
parable periods, respectively. This increase in average balances, and the tim-
ing of repricing fixed maturity deposits offset or delayed any decreases in
interest expense, which would have been realized as a result of the reduction
in interest rates by the Federal Reserve Board during the year. The average
balance on borrowings decreased to $216.6 million for the year ended December
31, 2001 from $222.0 million for the year ended December 31, 2000. A decrease
in interest expense on money market and Now deposits of $300,000 and a
decrease in interest expense for passbook, club and other accounts of $36,000
-------------------------------------------------------------------------------

18
<PAGE>


-------------------------------------------------------------------------------
contributed to the decrease in interest on interest bearing liabilities.

Net Interest Income

 Tax equivalent net interest income decreased by $3.5 million or 22.5% to
$12.0 million for the year ended December 31, 2001 from $15.5 million for the
year ended December 31, 2000. The decrease was the result of interest income
decreasing by $3.0 million and an increase in interest expense of $471,000.

Provision for Loan Loss

 No additional provision for loan loss was recorded during the year ended
December 31, 2001. In determining the provision for loan losses, management
assesses the risk inherent in its loan portfolio including, but not limited
to, an evaluation of the concentration of loans secured by properties located
in the Pittsburgh area, the trends in national and local economies, trends in
the real estate market and in the Company's loan portfolio and the level of
non-performing loans and assets. The Company's history of loan losses has been
minimal, which management believes is a reflection of the Company's underwrit-
ing standards. There were no charge-offs for the years ended December 31, 2001
and 2000. Management believes the current level of loan loss reserve is ade-
quate to cover losses inherent in the portfolio as of such date. However,
there can be no assurance that the Company will not sustain losses in future
periods.

Other Income

 Other income increased by $1.6 million or 183.7% to $2.4 million for the year
ended December 31, 2001 from $858,000 for the year ended December 31, 2000.
The increase was the result of gains on sales of investment securities
increasing to $329,000 for the year ended December 31, 2001 compared to
$138,000 for the year ended December 31, 2000. In addition, service fees and
charges increased $425,000, and an increase in the cash-surrender value of
bank-owned life insurance of $1.0 million was realized for the year ended
December 31, 2001. The association did not own any bank-owned life insurance
in 2000.

Other Expenses

 Other expenses decreased by $428,000 or 7.7% to $5.2 million for the year
ended December 31, 2001 from $5.6 million for the year ended December 31,
2000. The decrease was primarily the result of a decrease in compensation and
payroll taxes, fringe benefits and federal insurance premiums offset by
increases in computer, office occupancy and miscellaneous expenses. During
fiscal year 2001, compensation, payroll taxes and fringe benefits decreased
$147,000 or 5.3% while computer services, office occupancy and miscellaneous
expenses increased by $277,000 or 10.2%.

Income Taxes

 Income taxes decreased to a benefit of $505,000 from and expense of $586,000
as a larger percentage of the Company's income was derived from tax-exempt
earning assets in the year ended December 31, 2001 in comparison to the year
ended December 31, 2000. The annualized effective tax rate was (8.6%) for 2001
compared to 8.0% for 2000.

December 31, 2000 Operating Results

 Net income for the year ended December 31, 2000 decreased by $1.3 million or
16.7% to $6.7 million from $8.0 million for the year ended December 31, 1999.
The decrease was primarily the result of a decrease in net interest income
offset by a decrease in other expenses and income taxes.

Interest Income

 Interest income discussed in this section is tax equivalent income. Tax
equivalent interest income is being used because interest on investment secu-
rities includes tax-exempt securities. Tax-exempt securities carry pre-tax
yields lower than comparable taxable assets. Therefore, it is more meaningful
to analyze interest income on a tax-equivalent basis. Tax equivalent adjust-
ments of $3.4 million, $3.8 million and $1.1 million were made for the years
ended December 31, 2000, 1999 and 1998, respectively. Interest income
increased by $276,000 or 0.5% to $56.2 million for the year ended December 31,
2000 from $55.9 million for the year ended December 31, 1999. The increase was
primarily due to an increase in interest earned on investment securities and
mortgage-backed securities offset by a decrease in interest earned on conven-
tional mortgage loans. Interest on investment securities and mortgage-backed
securities increased by $167,000 and $977,000, respectively for the year ended
December 31, 2000 and 1999. The increase was the result of the average rate
earned on the investment portfolio increasing to 6.67% for the year ended
December 31, 2000 from 6.52% for the year ended December 31, 1999. There were
no mortgage-
-------------------------------------------------------------------------------

                                                                             19
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

--------------------------------------------------------------------------------
backed securities held in the Association's portfolio as of December 31, 1999.
Interest on conventional mortgage loans decreased by $598,000 or 1.5% to $38.4
million for the year ended December 31, 2000 from $39.0 million for the year
ended December 31, 1999. The decrease was the result of the average balance for
conventional mortgage loans decreasing by $2.2 million to $533.0 million for
the year ended December 31, 2000 from $535.2 million for the comparable 1999
period. Also contributing to the decrease was an eight basis points decline in
the average rate earned on conventional mortgage loans. The average rate earned
on conventional mortgage loans for 2000 was 7.20% compared to 7.28% for 1999.

Interest Expense

 Interest expense increased to $40.7 million for the year ended December 31,
2000 from $37.1 million for the year ended December 31, 1999. The $3.6 million
or 9.8% increase was the result of a rising interest rate environment. Over an
eighteen-month period, beginning in June 1999 the Federal Reserve Bank
increased interest rates 175 basis points or 1.75%. As a result, in fiscal year
2000, the average rate for certificates of deposit and on the Company's
borrowings increased from 5.54% to 5.98% and from 5.59% to 5.88%, respectively.
Also, average balance of certificates of deposit increased $32.6 million or
9.15% from $356.4 million to $389.1 million. The average balance on borrowings
decreased to $222.0 million for the year ended December 31, 2000 from $230.3
million for the year ended December 31, 1999. An increase in interest expense
on money market and NOW deposits of $233,000 was offset by a corresponding
decrease in interest expense for passbook, club and other accounts of $284,000.

Net Interest Income

 Tax equivalent net interest income decreased by $3.3 million or 17.7% to $15.5
million for the year ended December 31, 2000 from $18.8 million for the year
ended December 31, 1999. The increase was the result of interest income rising
by $276,000 offset by an increase in interest expense of $3.6 million.

Provision for Loan Loss

 No additional provision for loan loss was recorded during the year ended
December 31, 2000. In determining the provision for loan losses, management
assesses the risk inherent in its loan portfolio including, but not limited to,
an evaluation of the concentration of loans secured by properties located in
the Pittsburgh area, the trends in national and local economies, trends in the
real estate market and in the Company's loan portfolio and the level of non-
performing loans and assets. The Company's history of loan losses has been min-
imal, which management believes is a reflection of the Company's underwriting
standards. There were no charge-offs for the years ended December 31, 2000 and
1999. Management believes the current level of loan loss reserve is adequate to
cover losses inherent in the portfolio as of such date. However, there can be
no assurance that the Company will not sustain losses in future periods.

Other Income

 Other income increased by $260,000 or 43.5% to $858,000 for the year ended
December 31, 2000 from $598,000 for the year ended December 31, 1999. The
increase was the result of gains on sales of investment securities increasing
to $138,000 for the year ended December 31, 2000 compared to $45,000 for the
year ended December 31, 1999. In addition, service fees and charges and miscel-
laneous income increased $81,000 and $86,000, respectively.

Other Expenses

 Other expenses decreased by $518,000 or 8.5% to $5.6 million for the year
ended December 31, 2000 from $6.1 million for the year ended December 31, 1999.
The decrease was primarily the result of a decrease in compensation, payroll
taxes and fringe benefits, federal insurance premiums and office occupancy
expense offset by increases in computer services and miscellaneous expenses.
During fiscal year 2000, compensation, payroll taxes and fringe benefits
decreased $416,000 or 13.0% due to reduced staffing and reductions in benefit
costs linked to the company's stock price. Federal insurance premiums decreased
$192,000 or 64.0% and office occupancy expense decreased $50,000, while com-
puter services and miscellaneous expenses increased $137,000.
--------------------------------------------------------------------------------

20
<PAGE>


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

Income Taxes

 Income taxes decreased to $586,000 from $1.3 million as a larger percentage of
the Company's income was derived from the tax-exempt securities in the year
ended December 31, 2000 in comparison to the year ended December 31, 1999. Tax
equivalent adjustments of $3.4 million and $3.8 million were made for the years
ended December 31, 2000 and 1999, respectively. The annualized effective tax
rate after the tax equivalent increase was 37.6% for 2000 compared to 39% for
1999.

New Accounting Pronouncements

 For a discussion of new accounting pronouncements and their effect on the Com-
pany, see Note 2 of the Consolidated Financial Statements.
--------------------------------------------------------------------------------

                                                                              21
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

Management's Report on Internal Control
and Compliance with Laws and Regulations
-------------------------------------------------------------------------------


February 22, 2002

To the Stockholders of First Bell Bancorp, Inc.:

Financial Statements

 The management of First Bell Bancorp, Inc. (the "Company") is responsible for
the preparation, integrity, and fair presentation of its published financial
statements and all other information presented in this annual report. The
financial statements have been prepared in accordance with accounting princi-
ples generally accepted in the United States of America and, as such, include
amounts based on informed judgements and estimates made by management.

Internal Control

 Management is responsible for establishing and maintaining effective internal
control over financial reporting, including safeguarding of assets, for finan-
cial presentations in conformity with both accounting principles generally
accepted in the United States of America and the Office of Thrift Supervision
("OTS") instructions for Thrift Financial Reports ("TFR"). The internal con-
trol contains monitoring mechanisms, and actions are taken to correct defi-
ciencies identified.

 There are inherent limitations in the effectiveness of any internal control,
including the possibility of human error and the circumvention or overriding
of controls. Accordingly, even effective internal control can provide only
reasonable assurance with respect to financial statement preparation. Further,
because of changes in conditions, the effectiveness of internal control may
vary over time.

 Management assessed the institution's internal control over financial report-
ing, including safeguarding of assets, for financial presentations in confor-
mity with both accounting principles generally accepted in the United States
of America and TFR instructions as of December 31, 2001. This assessment was
based on criteria for effective internal control over financial reporting,
including safeguarding of assets, described in Internal Control--Integrated
Framework issued by the committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, management believes that the Company
maintained effective internal control over financial reporting, including
safeguarding of assets, presented in conformity with both accounting princi-
ples generally accepted in the United States of America and TFR instructions
as of December 31, 2001.

Internal Control (Continued)

 The Audit Committee of the Board of Directors is comprised entirely of out-
side directors who are independent of the Company's management. The Audit Com-
mittee is responsible for recommending to the Board of Directors, the selec-
tion of independent auditors. It meets periodically with management, the
independent auditors, and the internal auditor to ensure that they are carry-
ing out their responsibilities. The Committee is also responsible for perform-
ing an oversight rule by reviewing and monitoring the financial, accounting,
auditing procedures of the Company in addition to reviewing the Company's
financial reports. The independent auditors and the internal auditor have full
and free access to the Audit Committee, with or without the presence of man-
agement, to discuss the adequacy of internal control over financial reporting
and any other matters which they believe should be brought to the attention of
the Committee.

Compliance with Laws and Regulations

 Management is also responsible for ensuring compliance with the federal laws
and regulations concerning loans to insiders and the federal and state laws
and regulations concerning dividend restrictions, both of which are designated
by the Federal Deposit Insurance Corporation as safety and soundness laws and
regulations.

 Management assessed its compliance with the designated safety and soundness
laws and regulations and has maintained records of its determinations and
assessments as required by the OTS. Based on this assessment, management
believes that the Company has complied, in all material respects, with the
designated safety and soundness laws and regulations for the year ended Decem-
ber 31, 2001.


/s/ Albert H. Eckert, II

Albert H. Eckert, II
Chief Executive Officer

/s/ Jeffrey M. Hinds

Jeffrey M. Hinds
Chief Financial Officer

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

22
<PAGE>


Report Of Independent Auditors
-------------------------------------------------------------------------------
23Board of Directors and Stockholders
First Bell Bancorp, Inc.:

 We have audited the accompanying consolidated balance sheet of First Bell
Bancorp, Inc. and subsidiary as of December 31, 2001, and the related consoli-
dated statements of income, comprehensive income, changes in stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The con-
solidated balance sheet as of December 31, 2000 and the related consolidated
statements of income, comprehensive income, changes in stockholders' equity
and cash flows for each of the two years in the period ending December 31,
2000, were audited by other auditors whose report dated March 23, 2001
expressed an unqualified opinion on those statements.

 We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the finan-
cial statements are free of material misstatement. An audit includes examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting princi-
ples used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit pro-
vides a reasonable basis for our opinion.

 In our opinion, the consolidated financial statements referred to above pres-
ent fairly, in all material respects, the financial position of First Bell
Bancorp, Inc. and subsidiary as of December 31, 2001 and the results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ S. R. Snodgrass, A.C.

Wexford, PA
January 25, 2002
-------------------------------------------------------------------------------

                                                                             23
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

Consolidated Balance Sheet
(In thousands, except per share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               December 31,
                                                             ------------------
                                                               2001      2000
               ASSETS                                        --------  --------
<S>                                                          <C>       <C>
CASH AND CASH EQUIVALENTS:
  Cash on hand.............................................  $  1,103  $    988
  Noninterest-bearing deposits.............................     2,299     2,113
  Interest-bearing deposits................................    28,796    37,408
                                                             --------  --------
    Total cash and cash equivalents........................    32,198    40,509
FEDERAL FUNDS SOLD.........................................     4,150     6,425
INVESTMENT SECURITIES AVAILABLE-FOR-SALE--at fair value....   281,430   213,234
MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE--at fair
 value.....................................................    55,995    21,523
LOANS--Net of allowance for loan losses of $925............   436,473   527,811
PREMISES AND EQUIPMENT--Net................................     3,417     3,682
FEDERAL HOME LOAN BANK STOCK--At cost......................    10,400    11,400
BANK OWNED LIFE INSURANCE--cash surrender value............    21,012        --
OTHER ASSETS...............................................    10,128     8,096
                                                             --------  --------
    Total assets...........................................  $855,203  $832,680
                                                             ========  ========

<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                          <C>       <C>
DEPOSITS...................................................  $561,352  $536,685
BORROWINGS.................................................   214,250   219,250
ADVANCES BY BORROWERS FOR TAXES AND INSURANCE..............     9,471    10,993
OTHER LIABILITIES..........................................     3,689     4,132
                                                             --------  --------
    Total liabilities......................................   788,762   771,060
                                                             --------  --------
STOCKHOLDERS' EQUITY:
Preferred stock ($.01 par value; 2,000,000 shares
 authorized; no shares issued or outstanding)..............        --        --
Common stock ($.01 par value; 20,000,000 shares authorized;
 8,596,250 shares issued, one stock right per share).......        86        86
Additional paid-in capital.................................    62,854    62,556
Retained earnings--substantially restricted................    72,914    68,519
Unearned ESOP shares (459,999 and 495,807 shares)..........    (3,254)   (3,507)
Unearned MRP shares (180,845 and 210,727 shares)...........    (2,521)   (2,937)
Treasury stock, at cost (3,837,890 shares).................   (62,030)  (62,030)
Accumulated other comprehensive loss, net of taxes.........    (1,608)   (1,067)
                                                             --------  --------
    Total stockholders' equity.............................    66,441    61,620
                                                             --------  --------
    Total liabilities and stockholders' equity.............  $855,203  $832,680
                                                             ========  ========
</TABLE>

 See notes to consolidated financial statements.
--------------------------------------------------------------------------------

24
<PAGE>


Consolidated Statement of Income
(In thousands, except per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                              Years Ended December
                                       31,
                             -------------------------
                              2001     2000     1999
                             -------  -------  -------
<S>                          <C>      <C>      <C>
INTEREST AND DIVIDEND
 INCOME:
  Loans..................... $34,250  $38,445  $39,040
  Interest-bearing deposits.   1,346    1,218    1,027
  Mortgage-backed              1,956
   securities...............              977       --
  Federal funds sold........     307      800    1,073
  Investment securities,       2,908
   taxable..................            1,438    3,212
  Investment securities,       8,267
   non-taxable..............            9,021    6,981
  Federal Home Loan Bank         703
   stock....................              806      757
                             -------  -------  -------
    Total interest and        49,737
     dividend income........           52,705   52,090
                             -------  -------  -------
INTEREST EXPENSE:
  Deposits..................  28,513   27,630   24,175
  Borrowings................  12,635   13,047   12,886
                             -------  -------  -------
    Total interest expense..  41,148   40,677   37,061
                             -------  -------  -------
NET INTEREST INCOME.........   8,589   12,028   15,029
PROVISION FOR LOAN LOSSES...      --       --      120
                             -------  -------  -------
NET INTEREST INCOME AFTER      8,589
 PROVISION FOR LOAN LOSSES..           12,028   14,909
                             -------  -------  -------
OTHER INCOME:
  Service fees and charges..   1,048      623      542
  Gain on sale of                329
   investments, net.........              138       45
  Gain on sale of loans.....      62       --       --
  Earnings on bank owned       1,012
   life insurance...........               --       --
  Gain (loss) on sale of         (21)
   real estate owned........               84      (11)
  Miscellaneous income......       4       13       22
                             -------  -------  -------
    Total other income......   2,434      858      598
                             -------  -------  -------
OTHER EXPENSES:
  Compensation, payroll        2,630
   taxes and fringe
   benefits.................            2,777    3,193
  Federal insurance              104
   premiums.................              108      300
  Office occupancy expense..     890      766      813
  Computer services.........     324      298      261
  Miscellaneous expenses....   1,222    1,649    1,549
                             -------  -------  -------
    Total other expenses....   5,170    5,598    6,116
                             -------  -------  -------
INCOME BEFORE PROVISION FOR    5,853
 INCOME TAXES...............            7,288    9,391
                             -------  -------  -------
PROVISION FOR INCOME TAXES:
  Current:
   Federal..................     452    1,149    1,609
   State....................     375      666      728
  Deferred tax benefit......  (1,332)  (1,229)    (988)
                             -------  -------  -------
    Total provision for         (505)
     income taxes...........              586    1,349
                             -------  -------  -------
NET INCOME.................. $ 6,358  $ 6,702  $ 8,042
                             =======  =======  =======
BASIC EARNINGS PER SHARE.... $  1.55  $  1.61  $  1.68
                             =======  =======  =======
DILUTED EARNINGS PER SHARE.. $  1.52  $  1.57  $  1.61
                             =======  =======  =======
</TABLE>

 See notes to consolidated financial statements.
--------------------------------------------------------------------------------

                                                                              25
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

Consolidated Statement of Comprehensive Income (Loss)
(In thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                                    --------------------------
                                                     2001     2000      1999
                                                    -------  -------  --------
<S>                                                 <C>      <C>      <C>
Net Income......................................... $ 6,358  $ 6,702  $  8,042
Unrealized gains (losses) arising during the
 period............................................  (1,149)  12,911   (16,551)
Less: reclassification adjustment for gains
 (losses) realized in net income...................     329       --       (45)
                                                    -------  -------  --------
Other comprehensive income (loss), before taxes....   5,538   19,613    (8,554)
Tax benefit (expense)..............................     279   (5,047)    6,486
                                                    -------  -------  --------
Other comprehensive income (loss), net of taxes.... $ 5,817  $14,566  $ (2,068)
                                                    =======  =======  ========
</TABLE>

See notes to consolidated financial statements.

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

26
<PAGE>

Consolidated Statement of Changes in Stockholders' Equity
(In thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                         Common Stock                                            Accumulated
                         -------------                                              Other
                                       Additional Unearned  Unearned            Comprehensive
                                  Par   Paid-in     ESOP      MRP     Treasury     Income,    Retained
                         Shares  Value  Capital    Shares    Shares    Stock       (Loss)     Earnings   Total
                         ------  ----- ---------- --------  --------  --------  ------------- --------  --------
<S>                      <C>     <C>   <C>        <C>       <C>       <C>       <C>           <C>       <C>
BALANCE, DECEMBER 31,
 1998................... 6,100    $86   $61,768   $(3,972)  $(3,839)  $(38,918)   $  1,179    $57,598    $73,902
 Purchase of treasury
  stock.................  (911)    --        --        --        --    (16,604)         --         --    (16,604)
 Allocation of MRP
  shares................    --     --       129        --       461         --          --         --        590
 Allocation of ESOP
  shares................    --     --       320       232        --         --          --         --        552
 Unrealized loss in
  securities available-
  for-sale, net of
  taxes.................    --     --        --        --        --         --     (10,110)        --    (10,110)
 Dividends ($.40 per
  share)................    --     --        --        --        --         --          --     (1,854)    (1,854)
 Net income.............    --     --        --        --        --         --          --      8,042      8,042
                         -----    ---   -------   -------   -------   --------    --------    -------   --------
BALANCE, DECEMBER 31,
 1999................... 5,189     86    62,217    (3,740)   (3,378)   (55,522)     (8,931)    63,786     54,518
 Purchase of treasury
  stock.................  (431)    --        --        --        --     (6,508)         --         --     (6,508)
 Allocation of MRP
  shares................    --     --        91        --       441         --          --         --        532
 Allocation of ESOP
  shares................    --     --       248       233        --         --          --         --        481
 Unrealized gain in
  securities available-
  for-sale, net of
  taxes.................    --     --        --        --        --         --       7,864         --      7,864
 Dividends ($.48 per
  share)................    --     --        --        --        --         --          --     (1,969)    (1,969)
 Net income.............    --     --        --        --        --         --          --      6,702      6,702
                         -----    ---   -------   -------   -------   --------    --------    -------   --------
BALANCE, DECEMBER 31,
 2000................... 4,758     86    62,556    (3,507)   (2,937)   (62,030)     (1,067)    68,519     61,620
 Purchase of treasury
  stock.................    --     --        --        --        --         --          --         --         --
 Allocation of MRP
  shares................    --     --        19        --       416         --          --         --        435
 Allocation of ESOP
  shares................    --     --       279       253        --         --          --         --        532
 Unrealized loss in
  securities available-
  for-sale, net of
  taxes.................    --     --        --        --        --         --        (541)        --       (541)
 Dividends ($.48 per
  share)................    --     --        --        --        --         --          --     (1,963)    (1,963)
 Net income.............    --     --        --        --        --         --          --      6,358      6,358
                         -----    ---   -------   -------   -------   --------    --------    -------   --------
BALANCE, DECEMBER 31,
 2001................... 4,758    $86   $62,854   $(3,254)  $(2,521)  $(62,030)   $ (1,608)   $72,914   $ 66,441
                         =====    ===   =======   =======   =======   ========    ========    =======   ========
</TABLE>

See notes to consolidated financial statements.
--------------------------------------------------------------------------------

                                                                              27
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

Consolidated Statement of Cash Flows
(In thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                                 -----------------------------
                                                   2001       2000      1999
                                                 ---------  --------  --------
<S>                                              <C>        <C>       <C>
OPERATING ACTIVITIES:
 Net income..................................... $   6,358  $  6,702  $  8,042
 Adjustments to reconcile net income to net
  cash provided by operating activities:
  Depreciation..................................       300       294       291
  Deferred income taxes.........................    (1,332)   (1,229)     (988)
  Amortization of premiums and accretion of
   discounts....................................       388       (82)      (93)
  Provision for loan loss.......................        --        --       120
  Compensation expense--allocations of ESOP and
   MRP shares...................................       967     1,013     1,055
  Gain on sale of investments, net..............      (329)     (138)      (45)
  Gain on sale of loans.........................       (62)       --        --
  Earnings on bank owned life insurance.........    (1,012)       --        --
  Increase or decrease in other assets and
   liabilities:
   Accrued interest receivable..................       294      (436)     (676)
   Accrued interest on deposits.................      (134)      166       103
   Accrued interest on borrowings...............      (110)      319         1
   Accrued income taxes.........................      (732)     (929)      658
   Other, net...................................      (267)   (1,096)     (303)
                                                 ---------  --------  --------
   Net cash provided by operating activities....     4,329     4,584     8,165
                                                 ---------  --------  --------
INVESTING ACTIVITIES:
 Securities available-for-sale
  Purchase of investment securities.............  (112,005)       --   (90,188)
  Purchase of mortgage-backed securities........   (66,375)  (23,073)       --
  Principal paydowns............................    23,821     3,637     4,700
  Net proceeds from sale of investment
   securities...................................    29,885        --     3,317
  Net proceeds from sale of mortgage-backed
   securities...................................    21,184        --        --
 Securities held-to-maturity
  Maturity of investment securities.............        --        --     5,000
  Net proceeds from sale of investment
   securities...................................        --     5,125        --
 Purchase of bank owned life insurance..........   (20,000)       --        --
 Net decrease in federal funds sold.............     2,275    26,575     3,175
 Net decrease in conventional loans.............    71,002     5,421    11,765
 Net proceeds from sale of conventional loans...    20,207        --        --
 Net (increase)decrease in other loans..........       191        (2)      (68)
 Redemption (purchase) of Federal Home Loan
  Bank stock....................................     1,000        --    (2,400)
 Net proceeds from sale of real estate owned....        29       493       140
 Purchase of premises and equipment.............       (36)      (53)     (810)
                                                 ---------  --------  --------
   Net cash provided by (used in) investing
    activities..................................   (28,822)   18,123   (65,369)
                                                 ---------  --------  --------
FINANCING ACTIVITIES:
 Net increase in deposits....................... $  24,667  $ 24,754  $ 16,803
 Decrease in Advances by borrowers for taxes
  and insurance.................................    (1,522)     (230)     (132)
 Proceeds from Borrowings.......................        --     5,000    58,000
 Repayments on borrowings.......................    (5,000)  (23,750)       --
 Dividends paid.................................    (1,963)   (1,932)   (1,938)
 Purchase of treasury stock.....................        --    (6,508)  (16,604)
                                                 ---------  --------  --------
   Net cash provided by (used in) financing
    activities..................................    16,182    (2,666)   56,129
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS....................................    (8,311)   20,041    (1,075)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR....    40,509    20,468    21,543
                                                 ---------  --------  --------
CASH AND CASH EQUIVALENTS, END OF YEAR.......... $  32,198  $ 40,509  $ 20,468
                                                 =========  ========  ========
SUPPLEMENTAL DISCLOSURES:
 Cash paid for:
  Interest on deposits and advances by
   borrowers for taxes and insurance............ $  28,379  $ 27,464  $ 24,073
  Interest on borrowings........................    12,745    12,728    12,886
  Income taxes..................................     1,613     2,752     1,731
</TABLE>

See notes to consolidated financial statements.
--------------------------------------------------------------------------------

28
<PAGE>


Notes to Consolidated Financial Statements
Years Ended December 31, 2001, 2000, and 1999
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION

  The consolidated financial statements include the accounts of First Bell
  Bancorp, Inc., ("First Bell") and its wholly-owned subsidiary, Bell Federal
  Savings and Loan Association of Bellevue (the "Association" or "Bell Feder-
  al"), and the Association's wholly owned subsidiary, 1891 Associates, Inc.,
  collectively (the "Company"). All significant inter-company transactions
  have been eliminated in consolidation. The investment in 1891 Associates,
  Inc. on Bell Federal's financial statements and the investment in Bell Fed-
  eral on First Bell's parent company financial statements are carried at the
  parent company's equity in the underlying net assets.

  The principal business of the Company is to operate a traditional customer
  oriented savings and loan association. The Association's business is pri-
  marily conducted through six branch offices located throughout the suburban
  Pittsburgh, Pennsylvania area and its principal office in the borough of
  Bellevue. The Company's principal executive office is located in Wilming-
  ton, Delaware.

  The consolidated financial statements have been prepared in accordance with
  accounting principles generally accepted in the United States of America
  and with general practices within the banking industry. In preparing such
  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 consolidated financial statements and the reported
  amounts of revenues and expenses during the period. Actual results could
  differ from those estimates.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  a.  Federal Home Loan Bank System--The Association is a member of the Fed-
      eral Home Loan Bank ("FHLB") system. As a member, the Association is
      required to maintain a minimum investment in capital stock of the FHLB
      of not less than 1% of the Association's outstanding conventional mort-
      gage loans or 0.3% of its total assets. Deficiencies, if any, in the
      required investment at the end of any reporting period are purchased in
      the subsequent reporting period. The Association receives dividends on
      its FHLB stock.

  b.  Regulation--The Association is subject to extensive regulation, super-
      vision and examination by the Office of Thrift Supervision ("OTS"), its
      primary regulator, and by the Federal Deposit Insurance Corporation
      ("FDIC"), which insures its deposits.

  c.  Cash and Cash Equivalents--For the purpose of presenting the consoli-
      dated statement of cash flows, cash on hand and interest and non-inter-
      est-bearing deposits with original maturities of less than 90 days are
      considered cash equivalents.

    The Association services mortgage loans for the Federal National Mort-
    gage Association ("FNMA"). The Association is required to restrict cash
    balances equal to the corresponding escrow funds. As of December 31,
    2001 and 2000, restricted cash of approximately $659,000 and $362,000,
    respectively, has been segregated on the books of the Association.
    The Association's reserve requirements imposed by the Federal Reserve
    Bank averaged approximately $1,050,000 and $1,132,000 for the years
    ended December 31, 2001 and 2000, respectively.

  d.  Investment and Mortgage-Backed Securities--The Company follows State-
      ment of Financial Accounting Standards ("SFAS") No. 115, "Accounting
      for Certain Debt and Equity Securities," for investments and mortgage-
      backed securities. Investments and mortgage-backed securities that may
      be sold as part of the Company's asset/liability or liquidity manage-
      ment or in response to or in anticipation of changes in interest rates
      and prepayment risk or other factors are classified as available-for-
      sale and are carried at fair market value. Unrealized gains and losses
      on such securities are reported net of related taxes as other compre-
      hensive income and as a separate component of stockholders' equity.
      Securities that the Company has the intent and ability to hold to matu-
      rity are classified as held-to-maturity and are carried at amortized
      cost. Realized gains and losses on sales of all securities are reported
      in earnings and are computed using the specific identification cost
      basis.

    Premiums are amortized and discounts are accreted to maturity using the
    level yield meth-
--------------------------------------------------------------------------------

                                                                              29
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

-------------------------------------------------------------------------------
    od. The Company does not maintain a trading account.

  e.  Loans--Loans are stated at the principal amount outstanding net of
      deferred loan fees and the allowance for loan losses. Interest income
      on loans is recognized on the accrual method. Accrual of interest on
      loans is generally discontinued after 90 days when it is determined
      that a reasonable doubt exists as to the collectibility of principal,
      interest, or both. When a loan is placed on non-accrual status, unpaid
      interest is charged against income. Interest received on non-accrual
      loans is either applied to principal or reported as interest income
      according to management's judgment as to the collectibility of princi-
      pal. Loans are returned to accrual status when past due interest is
      collected and the collection of principal is probable.

    Loan origination and commitment fees as well as certain direct loan
    origination costs are being deferred and the net amount amortized as an
    adjustment to the related loan's yield. These amounts are being amor-
    tized over the contractual lives of the related loans.

  f.  Servicing of Loans--The total amount of loans serviced for others was
      $30,950,000 and $16,539,000, at December 31, 2001, 2000, respectively.

  g.  Allowance for Loan Losses--

    The allowance for loan losses represents the amount that management
    estimates to be adequate to provide for probable losses inherent in its
    loan portfolio, as of the balance sheet date. The allowance method is
    used in providing for loan losses. Accordingly, all loan losses are
    charged to the allowance, and all recoveries are credited to it. The
    allowance for loan losses is established through a provision for loan
    losses charged to operations. The provision for loan losses is based on
    management's periodic evaluation of individual loans, economic factors,
    past loan loss experience, changes in the composition and volume of the
    portfolio, and other relevant factors. The estimates used in determining
    the adequacy of the allowance for loan losses, including the amounts and
    timing of future cash flows expected on impaired loans, are particularly
    susceptible to changes in the near term.

    Impaired loans are loans for which it is probable the Company will not
    be able to collect all amounts due according to the contractual terms of
    the loan agreement. The Company individually evaluates loans for impair-
    ment and does not aggregate loans by major risk classifications. The
    definition of "impaired loans" is not the same as the definition of
    "non-accrual loans", although the two categories overlap. The Company
    may choose to place a loan on non-accrual status due to payment delin-
    quency or uncertain collectability, while not classifying the loan as
    impaired. Factors considered by management in determining impairment
    include payment status and collateral value. The amount of impairment
    for these types of impaired loans is determined by the difference
    between the present value of the expected cash flows related to the
    loan, using the original interest rate, and its recorded value, or as a
    practical expedient in the case of collateralized loans, the difference
    between the fair value of the collateral and the recorded amount of the
    loans. When foreclosure is probable, impairment is measured based on the
    fair value of the collateral.

    Mortgage loans on one-to-four family properties and all consumer loans
    are large groups of smaller-balance homogeneous loans and are measured
    for impairment collectively. Loans that experience insignificant payment
    delays, which are defined as 90 days or less, generally are not classi-
    fied as impaired. Management determines the significance of payment
    delays on a case-by-case basis taking into consideration all circum-
    stances surrounding the loan and the borrower including the length of
    the delay, the borrower's prior payment record, and the amount of
    shortfall in relation to the principal and interest owed.

  h.  Mortgage Servicing Rights ("MSR's")--The Company has agreements for the
      express purpose of selling loans in the secondary market. The Company
      maintains servicing rights for most of these loans. Originated MSRs are
      recorded by allocating total costs incurred between the loan and ser-
      vicing rights based on
-------------------------------------------------------------------------------

30
<PAGE>


-------------------------------------------------------------------------------
     their relative fair values. MSRs are amortized in proportion to the
     estimated servicing income over the estimated life of the servicing
     portfolio. MSRs are a component of other assets on the consolidated bal-
     ance sheet.

  i.  Real Estate Owned--Real estate owned is initially recorded at the lower
      of carrying value or fair value less estimated costs to sell. Subse-
      quently, such real estate is carried at the lower of fair value less
      estimated costs to sell or its initial recorded value. Reductions in
      the carrying value of real estate subsequent to acquisition are
      recorded through a valuation allowance. Costs related to the develop-
      ment and improvement of the real estate are capitalized, whereas those
      costs relating to holding the real estate are charged to expense.

    Recovery of the carrying value of real estate acquired in settlement of
    loans is dependent to a great extent on economic, operating and other
    conditions that may be beyond the Company's control.

  j.  Premises and Equipment--Premises, equipment and leasehold improvements
      are stated at cost less accumulated depreciation and amortization.
      Depreciation and amortization are computed on a straight-line basis
      over the estimated useful lives (3-50 years) or leasehold period, if
      shorter, of the related assets.

  k.  Deposits--Interest on deposits is accrued and charged to operating
      expense monthly and is paid in accordance with the terms of the respec-
      tive accounts.

  l.  Income Taxes--The Company follows the provisions of SFAS No. 109, "Ac-
      counting for Income Taxes." SFAS No. 109 requires the asset and liabil-
      ity method of accounting for income taxes, under which deferred income
      taxes are recognized for the tax consequences of "temporary differ-
      ences" by applying enacted statutory tax rates to differences between
      the financial statement carrying amounts and the tax bases of existing
      assets and liabilities. Under SFAS No. 109, the effect on deferred
      taxes of a change in tax rates is recognized in income in the period
      that includes the enactment date. Management considers whether a valua-
      tion allowance is required for existing deferred tax assets.

  m.  Other Comprehensive Income--The Financial Accounting Standards Board
      ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income," which
      became effective for financial statements for fiscal years beginning
      after December 15, 1997. SFAS No. 130 established standards for report-
      ing and display of comprehensive income and its components (revenues,
      expenses, gains and losses) in a full set of general-purpose financial
      statements.

  n.  Earnings Per Share--Basic EPS is computed by dividing net income avail-
      able to common stockholders by the weighted average number of common
      shares outstanding for the period. Diluted EPS is computed by dividing
      net income available to common stockholders, adjusted for dilutive
      securities, by the weighted average number of common shares outstand-
      ing, adjusted for dilutive securities.

  o.  Treasury Stock--Treasury stock is recorded at cost.

  p.  Interest Rate Risk--A significant portion of the Company's assets con-
      sist of long-term fixed-rate residential mortgage loans, while a sig-
      nificant portion of the Company's liabilities consist of deposits with
      considerably shorter terms. As a result of these differences in the
      maturities of assets and liabilities, any significant increase in
      interest rates will have an adverse effect on the Company's results of
      operations.

  q.  Recent Accounting Pronouncements--In July 2001, FASB issued SFAS No.
      141, Business Combinations, effective for all business combinations
      initiated after June 30, 2001, as well as all business combinations
      accounted for by the purchase method that are completed after June 30,
      2001. The new statement requires that the purchase method of accounting
      be used for all business combinations and prohibits the use of the
      pooling-of-interests method. The adoption of Statement No. 141 is not
      expected to have a material effect on the Company's financial position
      or results of operations.

    In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangi-
    ble Assets, effec-
-------------------------------------------------------------------------------

                                                                             31
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

-------------------------------------------------------------------------------
    tive for fiscal years beginning after December 15, 2001. The statement
    changes the accounting for goodwill from an amortization method to an
    impairment-only approach. Thus, amortization of goodwill, including
    goodwill recorded in past business combinations, will cease upon adop-
    tion of this statement. However, the new statement did not amend SFAS
    No. 72, Accounting for Certain Acquisitions of Banking or Thrift Insti-
    tutions, which requires recognition and amortization of unidentified
    intangible assets relating to the acquisition of financial institutions
    or branches thereof. The FASB has decided to undertake a limited scope
    project to reconsider the provisions of SFAS No. 72 in 2002. Therefore,
    the adoption of Statement No. 142 is not expected to have a material
    effect on the Company's financial position or results of operations.

    In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
    Retirement Obligations, which requires that the fair value of a liabil-
    ity be recognized when incurred for the retirement of a long-lived asset
    and the value of the asset be increased by that amount. The statement
    also requires that the liability be maintained at its present value in
    subsequent periods and outlines certain disclosures for such obliga-
    tions. The adoption of this statement, which is effective January 1,
    2003, is not expected to have a material effect on the Company's finan-
    cial statements.

    In October 2001, the FASB issued SFAS No. 144, Accounting for the
    Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supercedes
    SFAS No. 121 and applies to all long-lived assets (including discontin-
    ued operations) and consequently amends APB Opinion No. 30, Reporting
    Results of Operations--Reporting the Effects of Disposal of a Segment of
    a Business. SFAS No. 144 requires that long-lived assets that are to be
    disposed of by sale be measured at the lower of book value or fair value
    less costs to sell. SFAS No. 144 is effective for financial statements
    issued for fiscal years beginning after December 15, 2001 and, general-
    ly, its provisions are to be applied prospectively. The adoption of this
    statement is not expected to have a material effect on the Company's
    financial statements.

  r.  Reclassification--Certain items in the prior year financial statements
      have been reclassified to conform to the current year presentation.
      Such reclassifications did not affect net income or stockholders' equi-
      ty.

3. STOCKHOLDER RIGHTS PLAN

  The Company adopted a Stockholder Rights Plan on November 18, 1998 in which
  preferred stock purchase rights were distributed as a dividend at the rate
  of one right for each share of common stock held as of the close of busi-
  ness on November 30, 1998 and for each share of Company Common Stock issued
  (including shares distributed from Treasury) by the Company thereafter and
  prior to the Distribution Date.

  Each Right will entitle stockholders to buy one one-thousandth of a share
  of Series A Preferred Stock of the Company at an exercise price of $50.00.
  The Rights will be exercisable only if a person or group acquires benefi-
  cial ownership of 10% or more of the Company's outstanding Common Stock or
  commences a tender or exchange offer upon consummation of which a person or
  group would beneficially own 10% or more of the Company's outstanding Com-
  mon Stock.

  If any person becomes the beneficial owner of 10% or more of Company's Com-
  mon Stock or a holder of 10% or more of the Company's Common Stock engages
  in certain self-dealing transactions or a merger transaction in which the
  Company is the surviving corporation and its Common Stock remains outstand-
  ing, then each Right not owned by such person or certain related parties
  will entitle its holder to purchase, at the Right's then-current exercise
  price, units of the Company's Series A Preferred Stock having a market
  value equal to twice the then-current exercise price. In addition, if First
  Bell is involved in a merger or other business combination transactions
  with another person after which its Common Stock does not remain outstand-
  ing, or sells 50% or more of its assets or earning power to another person,
  each Right will entitle its holder to purchase, at the Right's then-current
  exercise price, shares of common stock of the ultimate parent of such other
  person having a market value equal to twice the then-current exercise
  price.

  First Bell will generally be entitled to redeem the Rights at $0.01 per
  right at any time until the 10th business day following public announcement
  that a
-------------------------------------------------------------------------------

32
<PAGE>


-------------------------------------------------------------------------------
  person or group has acquired 10% or more of the Company's Common Stock.

4. INVESTMENT SECURITIES HELD-TO-MATURITY

  There were no investment securities held-to-maturity at December 31, 2001
  and 2000. In 2000, the Company sold a $5.1 million U.S. Treasury Note which
  had previously been classified as "Held to Maturity" resulting in a gain of
  $138,000. The sale of the security was done to improve the Company's inter-
  est rate risk position. The proceeds from the sale were used to help fund
  the purchase of the adjustable rate mortgage-backed securities.

5.  INVESTMENT SECURITIES AVAILABLE-FOR-SALE

  These investments consist of municipal securities and collateralized mort-
  gage obligations ("CMO's"), agency securities and Trust Preferred Securi-
  ties. The following is a summary of investment securities available-for-
  sale at December 31, 2001 and 2000 (in thousands):
<TABLE>
<CAPTION>
                                                           2001
                                             ----------------------------------
                                                       Gross   Gross
                                              Amor-   Unreal- Unreal-
                                              tized    ized    ized      Fair
                                               Cost    Gain    Loss     Value
                                             -------- ------- -------  --------
   <S>                                       <C>      <C>     <C>      <C>
   Municipal Securities..................... $179,969   492   $(2,299) $178,162
   CMO's....................................   45,989    58       (58)   45,989
   Agency Securities........................   52,895    --      (620)   52,275
   Trust Preferred Securities...............    5,000    --        --     5,000
   Other Investments........................        4    --        --         4
                                             --------  ----   -------  --------
                                             $283,857  $550   $(2,977) $281,430
                                             ========  ====   =======  ========
<CAPTION>
                                                           2000
                                             ----------------------------------
   <S>                                       <C>      <C>     <C>      <C>
   Municipal Securities..................... $199,196   608   $(2,618) $197,186
   CMO's....................................   11,037    12        (5)   11,044
   FHLB Bond................................    5,000    --        --     5,000
   Other Investments........................        4    --        --         4
                                             --------  ----   -------  --------
                                             $215,237  $620   $(2,623) $213,234
                                             ========  ====   =======  ========
</TABLE>

  In 2001, proceeds from the sale of investment securities available-for-sale
  were $29.9 million, resulting in gross gains of $70,000 and gross losses of
  $55,000.

  There were no sales of investment securities available-for-sale during the
  year ended December 31, 2000.

  In 1999, proceeds from the sale of investment securities available-for-sale
  were $3.3 million resulting in gross and net gains of $45,000.

  The carrying value and fair value of investment securities available-for-
  sale by contractual maturity as of December 31, 2001, are shown below (in
  thousands):

<TABLE>
<CAPTION>
                                                             Amortized   Fair
                                                               Cost     Value
                                                             --------- --------
   <S>                                                       <C>       <C>
   Due after one through five years......................... $    520  $    541
   Due after five years through ten years...................   74,708    74,892
   Due after ten years......................................  208,629   205,997
                                                             --------  --------
                                                             $283,857  $281,430
                                                             ========  ========
</TABLE>

  The expected maturity may differ from the contractual maturity for the
  municipal securities because most of these securities have a call feature
  that is earlier than the contractual maturity date. For the CMO's, the
  expected maturity may differ from the contractual maturity because borrow-
  ers may have the right to prepay obligations with or without prepayment
  penalties.

6.  MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE

  The following is a summary of mortgage-backed securities available-for-sale
  held at December 31, 2001 and 2000 (in thousands)

<TABLE>
<CAPTION>
                                                              2001
                                                 -------------------------------
                                                          Gross   Gross
                                                  Amor-  Unreal- Unreal-
                                                  tized   ized    ized    Fair
                                                  Cost    Gains   Loss    Value
                                                 ------- ------- ------- -------
   <S>                                           <C>     <C>     <C>     <C>
   Federal National Mortgage Association........ $56,004  $108    $(117) $55,995
                                                 =======  ====    =====  =======

<CAPTION>
                                                              2000
                                                 -------------------------------
                                                          Gross   Gross
                                                  Amor-  Unreal- Unreal-
                                                  tized   ized    ized    Fair
                                                  Cost    Gains   Loss    Value
                                                 ------- ------- ------- -------
   <S>                                           <C>     <C>     <C>     <C>
   Federal National Mortgage Association........ $ 9,229  $146    $  --  $ 9,375
   Government National Mortgage Association.....  12,042   106       --   12,148
                                                 -------  ----    -----  -------
                                                 $21,271  $252    $  --  $21,523
                                                 =======  ====    =====  =======
</TABLE>
-------------------------------------------------------------------------------

                                                                             33
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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

  In 2001, proceeds from the sale of mortgage-backed securities available-
  for-sale were $21.2 million, resulting in gross and net gains of $314,000.

  There were no sales of mortgage-backed securities available-for-sale during
  the years ended December 31, 2000 and December 31, 1999.

  The contractual maturity of these securities is in excess of 10 years. The
  expected maturity will differ from the contractual maturity as borrowers
  may have the right to prepay obligations with or without call or prepayment
  penalties.

7. LOANS

  The following is a summary of loans as of December 31, 2001 and 2000 (in
  thousands):

<TABLE>
<CAPTION>
                                                                 2001     2000
                                                               -------- --------
   <S>                                                         <C>      <C>
   Conventional mortgages..................................... $420,780 $507,601
   Residential construction loans.............................    5,716   12,087
   Multi-family loans.........................................      241      399
   Second mortgage loans......................................   14,015   15,073
   Other loans................................................      778      969
                                                               -------- --------
                                                                441,530  536,129

   Less:
   Deferred net loan origination fees.........................    1,564    2,020
   Undisbursed portion of construction loans in process.......    2,568    5,373
   Allowance for loan losses..................................      925      925
                                                               -------- --------
                                                               $436,473 $527,811
                                                               ======== ========
</TABLE>

  Conventional mortgages consist of one-to four-family fixed and adjustable
  rate loans. The Company grants loans throughout the greater Pittsburgh,
  Pennsylvania metropolitan area. At December 31, 2001 and December 31, 2000
  the Company's borrowers ability to repay the loans outstanding is, there-
  fore, dependent on the economy of that area.

  Non-accrual loans totaled $1,056,000 and $565,000 at December 31, 2001 and
  2000, respectively. The Association does not accrue interest on loans past
  due 90 days or more. Uncollected interest on total non-accrual loans
  amounted to $50,000, $32,000 and $6,000 for the years ended December 31,
  2001, 2000 and 1999, respectively. Interest income recorded on non-accrual
  loans was $57,000, $33,000 and $8,000 for each of the years ended December
  31, 2001, 2000 and 1999, respectively.

  In February 2001 the Company sold approximately $20.2 million fixed rate
  mortgage loans for a gain of approximately $62,000. There were no loan
  sales for the years ended December 31, 2000 and 1999.

8. ALLOWANCE FOR LOAN LOSSES

  The following is an analysis of the changes in the allowance for loan
  losses for the years ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                 2001 2000 1999
                                                                 ---- ---- ----
   <S>                                                           <C>  <C>  <C>
   Balance, beginning of year................................... $925 $925 $805
   Provision for loan losses....................................   --   --  120
   Charge-offs..................................................   --   --   --
   Recovery of previous loan chargeoffs.........................   --   --   --
                                                                 ---- ---- ----
   Balance, end of year......................................... $925 $925 $925
                                                                 ==== ==== ====
</TABLE>

9. PREMISES AND EQUIPMENT

  The following is a summary of premises and equipment as of December 31 (in
  thousands):

<TABLE>
<CAPTION>
                                                                   2001   2000
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Land and land improvements.................................... $  529 $  529
   Office buildings and leasehold improvements...................  4,480  4,402
   Furniture, fixtures and equipment.............................  1,884  1,927
                                                                  ------ ------
                                                                   6,893  6,858
   Less accumulated depreciation and amortization................  3,476  3,176
                                                                  ------ ------
                                                                  $3,417 $3,682
                                                                  ====== ======
</TABLE>

  Depreciation expense for the years ended December 31, 2001, 2000, and 1999
  was $300,000, $294,000 and $291,000, respectively.
--------------------------------------------------------------------------------

34
<PAGE>


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

10. DEPOSITS

  The following is a summary of deposits and stated interest rates as of
  December 31 (in thousands):

<TABLE>
<CAPTION>
                                                Stated Rate     2001     2000
                                              --------------- -------- --------
   <S>                                        <C>             <C>      <C>
   Balance by interest rate:
   Passbook, club and other accounts......... 1.98%--3.68%    $ 85,318
                                                              --------
                                              3.00%--4.45%             $ 69,607
                                                                       --------
   Money market and NOW accounts............. 0.00%--2.47%      69,625
                                                              --------
                                              0.00%--3.21%               61,609
                                                                       --------
   Certificate accounts...................... Less than 3.00%   24,958       --
                                              3.00%--5.50%     236,570   30,631
                                              5.51%--6.00%      34,777   73,556
                                              6.01%--6.50%      22,819  110,565
                                              6.51%--7.50%      87,229  188,371
                                              7.51%--8.50%          56    2,346
                                                              -------- --------
                                                               406,409  405,469
                                                              -------- --------
                                                              $561,352 $536,685
                                                              ======== ========
</TABLE>

  The following is a summary of certificate accounts by contractual maturity
  at December 31, 2001 (in thousands):

<TABLE>
   <S>                                                                  <C>
   2002................................................................ $303,668
   2003................................................................   57,697
   2004................................................................   17,982
   2005................................................................   12,779
   2006................................................................    5,382
   2007 and thereafter.................................................    8,901
                                                                        --------
                                                                        $406,409
                                                                        ========
</TABLE>

  The Association maintains insurance on deposits through the Savings Associ-
  ation Insurance Fund ("SAIF"), which is under the supervision of the
  Federal Deposit Insurance Corporation ("FDIC").

  Deposits in excess of $100,000 are not insured by the SAIF. The aggregate
  amount of certificates of deposit with a minimum denomination of $100,000
  was $51,278,000 and $45,662,000 at December 31, 2001 and 2000, respective-
  ly.

11. BORROWINGS

  The following is a summary of borrowings as of December 31, 2001 and 2000
  (in thousands):

<TABLE>
<CAPTION>
                                                   Interest
   Decription                      Maturity          Rate        2001     2000
   ----------                  ----------------  ------------  -------- --------
   <S>                         <C>               <C>           <C>      <C>
   Commercial bank term loan.  January, 2003 (4) See below (5) $  6,250 $ 11,250
   FHLB Borrowing............    April, 2008 (1)        5.79%    40,000   40,000
   FHLB Borrowing............      May, 2008 (1)        5.66%    25,000   25,000
   FHLB Borrowing............     June, 2008 (1)        5.60%    45,000   45,000
   FHLB Borrowing............  January, 2009 (2)        4.99%    28,000   28,000
   FHLB Borrowing............     June, 2010 (3)        6.01%    25,000   25,000
   FHLB Borrowing............     June, 2010 (3)        6.12%    25,000   25,000
   FHLB Borrowing............     June, 2010 (3)        6.14%    20,000   20,000
                                                               -------- --------
   Balance, end of year......                                  $214,250 $219,250
                                                               ======== ========
</TABLE>

  Under terms of a blanket agreement, collateral for the FHLB borrowings must
  be secured by certain qualifying assets of the Company, which consist prin-
  cipally of first mortgage loans. Borrowings under the commercial bank term
  loan are secured by treasury shares of the Company.
-------
  (1)  The FHLB has the option to convert this interest rate to an adjustable
       rate based on the three month London Interbank Offerred Rate ("LIBOR")
       at the five-year anniversary date of the borrowings origination, which
       will occur in the second quarter of 2003.
  (2)  The FHLB has the option to convert this interest rate to an adjustable
       rate based on the three month LIBOR at the five-year anniversary date
       of the borrowings origination, which will occur in the first quarter
       of 2004.
  (3)  Every six months the FHLB has the option to convert this interest rate
       to an adjustable rate based on the three-month LIBOR.
  (4)  Quarterly payments of $1,250,000 are due on this term loan through the
       maturity date.
  (5)  The commercial bank term loan has a variable rate of interest. The
       interest rate was 3.77% and 8.26% on December 31, 2001 and December
       31, 2000, respectively.
--------------------------------------------------------------------------------

                                                                              35
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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

12.  REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS

  The Association is subject to various regulatory capital requirements
  administered by the federal banking agencies. Failure to meet minimum capi-
  tal requirements can initiate certain mandatory--and possibly additional
  discretionary--actions by regulators that, if undertaken, could have a
  direct material effect on the Association's financial statements. Under
  capital adequacy guidelines and the regulatory framework for prompt correc-
  tive action, the Association must meet specific capital guidelines that
  involve quantitative measures of the Association's assets, liabilities, and
  certain off-balance-sheet items as calculated under regulatory accounting
  practices. The Association's capital amounts and classification are also
  subject to qualitative judgments by the regulators about components, risk
  weightings, and other factors.

  Quantitative measures established by regulation to ensure capital adequacy
  require the Association to maintain minimum amounts and ratios (set forth
  in the table below) of Total and Tier I Capital to risk-weighted assets and
  of Tangible and Tier I Capital to total assets. As of December 31, 2001,
  the Association met all capital adequacy requirements to which it is sub-
  ject.

  The most recent notification from the Office of Thrift Supervision catego-
  rized the Association as well capitalized under the regulatory framework
  for prompt corrective action. To be categorized as well capitalized the
  Association must maintain minimum Total Capital to risk-weighted assets,
  Tier I Capital to risk-weighted assets and Tier I Capital to total assets
  ratios as set forth in the following table. There are no conditions or
  events since that notification that management believes have changed the
  institution's category.

  The Association had the following amounts of capital and capital ratios at
  December 31, 2001 and 2000 (in thousands):
<TABLE>
<CAPTION>
                                                                   To Be Well
                                                                   Capitalized
                                                                      Under
                                                                     Prompt
                                                    For Capital    Corrective
                                                     Adequacy        Action
                                       Actual        Purposes      Provisions
                                    -------------  -------------  -------------
                                    Amount  Ratio  Amount  Ratio  Amount  Ratio
                                    ------- -----  ------- -----  ------- -----
   <S>                              <C>     <C>    <C>     <C>    <C>     <C>
   As of December 31, 2001
     Total Capital (to risk-
      weighted assets)............. $80,160 23.69% $27,066 8.00%  $33,832 10.00%
     Tier I Capital (to risk-
      weighted assets)............. $79,235 23.42%     N/A 4.00%   20,299  6.00%
     Tier I Capital (to total
      assets)......................  79,235  9.15%  34,641 4.00%   43,299  5.00%
     Tangible Capital..............  79,235  9.15%  12,990 1.50%      N/A   N/A

   As of December 31, 2000:
     Total Capital (to risk-
      weighted assets)............. $80,327 23.11% $27,804 8.00%  $34,756 10.00%
     Tier I Capital (to risk-
      weighted assets)............. $79,402 22.85%     N/A 4.00%   20,853  6.00%
     Tier I Capital (to total
      assets)......................  79,402  9.41%  33,727 4.00%   42,172  5.00%
     Tangible Capital..............  79,402  9.41%  12,651 1.50%      N/A   N/A
</TABLE>

  Tangible Capital and Tier I Capital (to total assets) capital ratios are
  computed as a percentage of total assets. Total Capital and Tier I Capital
  (to risk-weighted assets) ratios are computed as a percentage of risk-
  weighted assets. Risk-weighted assets were $338,320,000 and $347,556,000 at
  December 31, 2001 and 2000, respectively.

  At the date of the conversion from a mutual to a stock organization, the
  Association established a liquidation account in an amount equal to its
  retained income as of June 30, 1995. The liquidation account is maintained
  for the benefit of eligible account holders and supplemental eligible
  account holders who continue to maintain their accounts at the Association
  after the conversion. The liquidation account is reduced annually to the
  extent that eligible account holders and supplemental eligible account
  holders have reduced their qualifying deposits as of each anniversary date.
  Subsequent increases in such balances will not restore an eligible account
  holder's or supplemental eligible account holder's interest in the liquida-
  tion account. In the event of a complete liquidation of the Association,
  each eligible account holder and supplemen-
-------------------------------------------------------------------------------
36
<PAGE>


--------------------------------------------------------------------------------
  tal eligible account holder will be entitled to receive a distribution from
  the liquidation account in an amount proportionate to the current adjusted
  qualifying balances for accounts then held.

  The Association may not declare or pay cash dividends on or repurchase any
  of its shares of common stock if the effect thereof would cause equity to
  be reduced below applicable regulatory capital maintenance requirements or
  if such declaration and payment would otherwise violate regulatory require-
  ments. At December 31, 2001, the maximum dividend the Association may
  declare and pay to First Bell is approximately $24.7 million.

13. EARNINGS PER SHARE

  There are no convertible securities which would affect the numerator in
  calculating basic and diluted earnings per share; therefore, net income as
  presented on the Consolidated Statement of Income will be used as the
  numerator.

  The following table sets forth the composition of the weighted-average com-
  mon shares (denominator) used in the basic and diluted earnings per share
  computation (in thousands).

<TABLE>
<CAPTION>
                                                         2001    2000    1999
                                                        ------  ------  ------
   <S>                                                  <C>     <C>     <C>
   Weighted-average common shares outstanding..........  8,596   8,596   8,596
   Average treasury stock shares....................... (3,838) (3,717) (3,006)
   Average unearned ESOP and MRP shares................   (662)   (726)   (789)
                                                        ------  ------  ------
   Weighted-average common shares and common stock
    equivalents used to calculate basic earnings per
    share..............................................  4,096   4,153   4,801
   Additional common stock equivalents used to
    calculate diluted earnings per share
    MRP shares.........................................     --      30      65
    Stock options......................................     96     101     138
                                                        ------  ------  ------
   Weighted-average common shares and common stock
    equivalents used to calculate diluted earnings per
    share..............................................  4,192   4,284   5,004
                                                        ======  ======  ======
</TABLE>

14. INCOME TAXES

  Deferred income taxes reflect the net effects of temporary differences
  between the carrying amounts of assets and liabilities for financial
  reporting purposes and the bases used for income tax purposes. The tax
  effects of significant items comprising the net deferred tax asset (liabil-
  ity) at December 31 as follows (in thousands):

<TABLE>
<CAPTION>
                                                               2001     2000
                                                             --------  -------
   <S>                                                       <C>       <C>
   Deferred Tax Assets:
    Unrealized loss on investment securities, available for
     sale................................................... $    828  $   684
    Minimum tax credits.....................................    2,728    1,678
    Other...................................................      246      221
                                                             --------  -------
     Total deferred tax assets..............................    3,802    2,583
                                                             --------  -------
   Deferred Tax Liabilities:
    Deferred loan origination fees..........................     (621)    (734)
    Allowance for loan losses...............................      (67)    (258)
    Depreciation on premises and equipment..................     (406)    (359)
                                                             --------  -------
   Total deferred tax liabilities...........................   (1,094)  (1,351)
                                                             --------  -------
     Net deferred tax asset................................. $  2,708  $ 1,232
                                                             ========  =======
</TABLE>

  The Company generated minimum tax credit carryovers in 2001 and 2000 of
  $1,050,000 and $994,000, respectively. These tax credits can be carried
  over indefinitely.

  No valuation allowance was established at December 31, 2001 and 2000 in
  view of certain tax strategies coupled with the anticipated future taxable
  income as evidenced by the Company's earnings potential.

  The provision for income taxes consists of the following components for the
  year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                        2001     2000     1999
                                                       -------  -------  ------
   <S>                                                 <C>      <C>      <C>
   Current:
    Federal........................................... $   452  $ 1,149  $1,609
    State.............................................     375      666     728
   Deferred (benefit) expense.........................  (1,332)  (1,229)   (988)
                                                       -------  -------  ------
     Total provision for income taxes................. $  (505) $   586  $1,349
                                                       =======  =======  ======
</TABLE>

  The reconciliation between the federal statutory tax rate and the Company's
  effective income tax rate for the year ended December 31 is as follows:

<TABLE>
<CAPTION>
                                                       2001     2000    1999
                                                       -----    -----   -----
   <S>                                                 <C>      <C>     <C>
   Statutory tax rate.................................  34.0  %  34.0 %  34.0 %
   State income taxes.................................   4.2      6.0     5.1
   Tax exempt interest income......................... (39.3)   (33.0)  (25.3)
   Earnings on bank owned life insurance..............  (5.9)      --      --
   Other--net.........................................  (1.6)     1.0     0.6
                                                       -----    -----   -----
     Effective tax rate...............................  (8.6)%    8.0 %  14.4 %
                                                       =====    =====   =====
</TABLE>
--------------------------------------------------------------------------------

                                                                              37
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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

  In accordance with SFAS No. 109, the Company has provided for deferred
  income taxes for the differences between the bad debt deduction for tax and
  financial statement purposes incurred after December 31, 1987. Deferred
  taxes have not been recognized with respect to pre-1988 tax basis bad debt
  reserves. In the event that the Company were to recapture these reserves
  into income, it would recognize tax expense of approximately $1.7 million.
  As a result of legislation enacted in 1996, however, this liability will
  not be recaptured if the Company were to change its depository institution
  charter.

15. EMPLOYEE BENEFIT PLANS

  Deferred Supplemental Compensation Plan--The Board of Directors maintains a
  supplemental deferred compensation plan for certain employees of the Asso-
  ciation. The plan provides that participants may receive deferred compensa-
  tion in an amount up to $90,000 per year based upon the return on assets of
  the Association for the year. The compensation will be paid to the employee
  upon retirement. Deferred compensation expense under this plan was $26,600,
  $45,000 and $60,000 for the years ended December 31, 2001, 2000 and 1999,
  respectively.

  401(k) Plan--The Association maintains a defined contribution 401(k) plan
  to provide benefits for substantially all employees. The plan provides for,
  but does not require, employees to make tax deferred payroll savings con-
  tributions. The Association is required to make a matching contribution
  based on the level of employee contribution. The total expense recorded
  under this plan for the years ended December 31, 2001, 2000 and 1999, was
  approximately $8,200, $9,200 and $9,900, respectively.

  Employee Stock Ownership Plan--The Association has established the Bell
  Federal Savings and Loan Association of Bellevue Employee Stock Ownership
  Plan ("ESOP"), which, covers substantially all employees. The shares for
  the ESOP plan were purchased with the proceeds of a loan from the Company,
  which will be repaid through the operations of the Association. Shares are
  allocated to employees, as principal and interest payments are made to the
  Company.

  Compensation expense related to the ESOP for 2001, 2000 and 1999, totaled
  $532,000, $480,000 and $511,000, respectively, based on the average fair
  value of shares committed to be released. The loan and related interest
  expense on the loan are eliminated in these consolidated financial state-
  ments.

  The following table presents the components of the ESOP shares (in thou-
  sands):

<TABLE>
<CAPTION>
                                                            2001   2000   1999
                                                           ------ ------ ------
   <S>                                                     <C>    <C>    <C>
   Allocated shares.......................................    192    159    126
   Shares released for allocation.........................     36     33     33
   Unreleased shares......................................    460    496    529
                                                           ------ ------ ------
   Total ESOP shares......................................    688    688    688
                                                           ====== ====== ======
   Fair value of unreleased shares........................ $6,417 $6,786 $8,063
                                                           ====== ====== ======
</TABLE>

  Stock Option Plan--The Company has a fixed option plan whereby options have
  been granted to certain officers and directors of the Company. The plan
  also permits options to be granted to employees at the Company's discre-
  tion. Under the plan, the total number of shares of common stock that may
  be granted is 859,625. Options are vested at a rate of 20% per year over a
  five-year period beginning at the initial date of grant. Terminated employ-
  ees forfeit any non-vested options and no option will be exercisable after
  ten years from the date of grant. The Company has adopted the disclosure-
  only provision of SFAS No. 123, "Accounting for Stock-Based Compensation,"
  and accordingly, no compensation cost has been recognized for the stock
  option plan. Had compensation cost for the Company's stock option plan been
  determined based on the fair value at the grant date for awards consistent
  with the provisions of SFAS No. 123, the Company's net earnings and earn-
  ings per share would have been reduced to the pro forma amounts indicated
  below as of December 31 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                Basic   Diluted
                                                               Earnings Earnings
                                                         Net     Per      Per
                                                        Income  Share    Share
   2001                                                 ------ -------- --------
   <S>                                                  <C>    <C>      <C>
   As reported......................................... $6,358  $1.55    $1.52
   Pro forma........................................... $6,272  $1.53    $1.50
<CAPTION>
   2000
   <S>                                                  <C>    <C>      <C>
   As reported......................................... $6,702  $1.61    $1.57
   Pro forma........................................... $6,616  $1.59    $1.54
<CAPTION>
   1999
   <S>                                                  <C>    <C>      <C>
   As reported......................................... $8,042  $1.68    $1.61
   Pro forma........................................... $7,867  $1.64    $1.57
</TABLE>
--------------------------------------------------------------------------------

38
<PAGE>


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

  The following summarizes the activity in the stock option plan for the year
  ended December 31:

<TABLE>
<CAPTION>
                                                         2001    2000    1999
                                                        ------- ------- -------
   <S>                                                  <C>     <C>     <C>
   Options outstanding, beginning of year.............. 380,486 380,486 380,486
   Options exercised...................................      --      --      --
   Options forfeited...................................      --      --      --
                                                        ------- ------- -------
   Options outstanding, end of year.................... 380,486 380,486 380,486
                                                        ======= ======= =======
   Weighted average exercise price, end of year........ $ 10.70 $ 10.70 $ 10.70
                                                        ======= ======= =======
   Options exercisable, end of year.................... 380,486 304,382 228,285
                                                        ======= ======= =======
   Options available for grant, end of year............ 465,208 465,208 465,208
                                                        ======= ======= =======
   Weighted-average fair value of options granted
    during the year.................................... $    -- $    -- $    --
                                                        ======= ======= =======
   Remaining contractual life of outstanding options... 5 Years 6 Years 7 Years
</TABLE>

  Master Stock Compensation Plan--The Company maintains a Master Stock Com-
  pensation Plan ("MRP"). Awards under this plan have been granted to certain
  officers, directors and management personnel of the Association. Under the
  MRP, a committee of the Board of Directors of the Company grants shares of
  common stock to employees and directors.

  The following summarizes activity in the MRP for the year ended December
  31:
<TABLE>
<CAPTION>
                                                       2001     2000     1999
                                                      -------  -------  -------
   <S>                                                <C>      <C>      <C>
   Awards outstanding, beginning of year.............  29,882   64,714   99,171
   Awards forfeited..................................      --   (3,175)  (1,400)
   Awards vested..................................... (29,882) (31,657) (33,057)
                                                      -------  -------  -------
   Awards outstanding, end of year...................      --   29,882   64,714
                                                      =======  =======  =======
   Total remaining MRP shares, end of year........... 180,845  210,727  242,384
                                                      =======  =======  =======
</TABLE>

  The cost of unearned shares related to these awards, included as a separate
  component of stockholders' equity, aggregated $2,521,000 and $2,937,000 at
  December 31, 2001 and 2000, respectively. Compensation cost is recorded
  over the vesting period as shares are earned based on the average fair mar-
  ket value of stock during the fiscal year. There was no MRP expense for the
  year-ended December 31, 2001. The expense for the years ended December 31,
  2000 and 1999 was $533,000 and $545,000 respectively. Terminated employees
  forfeit any non-vested awards.

16. COMMITMENTS AND CONTINGENCIES

  In the normal course of business, the Association originates loan commit-
  ments. Loan commitments generally have fixed expiration dates or other ter-
  mination clauses and may require payment of a fee. The Association evalu-
  ates each customer's credit worthiness on a case-by-case basis. The amount
  of collateral deemed necessary by the Association is based on management's
  credit evaluation and the Association's underwriting guidelines for the
  particular loan. The total commitments outstanding at December 31 are sum-
  marized as follows (in thousands):

<TABLE>
<CAPTION>
                                                   2001              2000
                                             ----------------- -----------------
                                             Notional Notional Notional Notional
                                              Amount    Rate    Amount    Rate
                                             -------- -------- -------- --------
   <S>                                       <C>      <C>      <C>      <C>
   Adjustable rate mortgages................ $    --      --    $   30   7.00%
   15 year fixed rate mortgages.............   3,184    6.18%       --      --
   30 year fixed rate mortgages.............   3,232    6.58%       87   7.54%
   Construction mortgages...................   2,568    8.00%    5,373   7.09%
   Home equity loans........................     141    6.89%      483   7.09%
   Available line of credit.................   3,844    6.60%    2,849   8.92%
                                             -------            ------
                                             $12,969            $8,822
                                             =======            ======
</TABLE>

  Additionally, the Company is also subject to certain asserted and unas-
  serted potential claims encountered in the normal course of business. In
  the opinion of management, neither the resolution of these claims nor the
  funding of credit commitments will have a material effect on the Associa-
  tion's financial position or results of operations.
-------------------------------------------------------------------------------

                                                                             39
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

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

  Credit related financial instruments have off-balance sheet credit risk
  because only origination fees (if any) are recognized in the balance sheet
  (as "other liabilities") for these instruments until the commitments are
  fulfilled or expire. The credit risk amounts are equal to the notional
  amounts of the contracts, assuming that all counterparties fail completely
  to meet their obligations and the collateral or other security is of no
  value.

17. FAIR VALUES OF FINANCIAL INSTRUMENTS

  The fair values of the Company's financial instruments as of December 31
  are as follows (in thousands):

<TABLE>
<CAPTION>
                                                    2001             2000
                                              ---------------- ----------------
                                              Carrying  Fair   Carrying  Fair
                                               Amount   Value   Amount   Value
                                              -------- ------- -------- -------
   <S>                                        <C>      <C>     <C>      <C>
   Assets:
     Cash and noninterest-bearing deposits... $ 3,402  $ 3,402 $ 3,101  $ 3,101
     Interest-bearing deposits...............  28,796   28,796  37,408   37,408
     Federal Funds sold......................   4,150    4,150   6,425    6,425
     Investment and mortgage-backed
      securities, available-for-sale......... 337,425  337,425 234,757  234,757
     Loans................................... 436,473  442,545 527,811  533,514
     Federal Home Loan Bank stock............  10,400   10,400  11,400   11,400
     Bank owned life insurance...............  21,012   21,012      --       --
     Accrued interest receivable.............   5,089    5,089   5,383    5,383
   Totals:                                    846,747  852,819 826,285  831,988
   Liabilities:
     Deposits................................ 561,352  568,131 536,685  538,488
     Borrowings.............................. 214,250  226,835 219,250  206,392
     Advances by borrowers for taxes and
      insurance..............................   9,471    9,471  10,993   10,993
     Accrued interest payable................   1,808    1,808   2,052    2,052
     Totals:                                  786,881  806,245 768,980  757,925
</TABLE>

  a.  Cash and noninterest-bearing deposits, Interest-bearing deposits, Fed-
      eral funds sold, Federal Home Loan Bank stock, Advances by borrowers
      for taxes and insurance, Accrued interest receivable, and Accrued
      interest payable--the fair value is estimated as the carrying amount.

  b.  Investment Securities Available-for-Sale and Mortgage-backed Securities
      Available-for-Sale--Fair values for these securities are based on
      quoted market prices or dealer quotes. If a quoted market price is not
      available, fair value is estimated using quoted market prices for simi-
      lar securities.

  c.  Loans--For loans, fair value is estimated by discounting estimated
      future cash flows using the current rates at which similar loans would
      be made to borrowers with similar credit ratings and for the same
      remaining maturities.

  d.  Bank owned life insurance--The fair value is equal to the cash surren-
      der value of the underlying life insurance policies.

  e.  Deposits--

      Passbook, Club, Money Market, NOW and Other Accounts--The fair value
      of these accounts is the amount payable on demand, or the carrying
      amount at the reporting date.

      Certificate Accounts--The fair value of fixed-maturity certificates
      of deposit is estimated by discounting future cash flows using the
      rates currently offered for deposits of similar remaining maturities.

  f.  Borrowings--The fair value of borrowings is estimated as the present
      value of the remaining payments of the borrowings using the year end
      FHLB interest rate for like borrowings.

  g.  Off-balance Sheet Commitments to Extend Credit--The fair value of off-
      balance sheet commitments to extend credit is estimated to equal the
      outstanding commitment amount. Management does not believe it is mean-
      ingful to provide an estimate of fair value that differs from the out-
      standing commitment amount as a result of the uncertainties involved in
      attempting to assess the likelihood and timing of the commitment being
      drawn upon, coupled with the lack of an established market and a wide
      diversity of fee structures.
--------------------------------------------------------------------------------
40
<PAGE>


--------------------------------------------------------------------------------
18. PARENT COMPANY ONLY FINANCIAL STATEMENTS

  The following are condensed financial statements for First Bell as of
  December 31, 2001 and 2000 and for the years ended December 31, 2001, 2000
  and 1999 (in thousands):

  BALANCE SHEET

<TABLE>
<CAPTION>
                                                                 2001    2000
   ASSETS                                                       ------- -------
   <S>                                                          <C>     <C>
   CASH AND INTEREST-BEARING DEPOSITS.......................... $   250 $   546
   FEDERAL FUNDS SOLD..........................................     750     750
   INVESTMENT IN AND ADVANCES TO BELL FEDERAL..................  77,597  78,334
   LOAN RECEIVABLE-ESOP........................................   4,072   4,207
   OTHER ASSETS................................................   1,379   1,006
                                                                ------- -------
     Total assets.............................................. $84,048 $84,843
                                                                ======= =======
   LIABILITIES AND STOCKHOLDERS' EQUITY
   BORROWINGS.................................................. $ 6,250 $11,250
   LOAN PAYABLE TO BELL FEDERAL................................   9,483  10,851
   OTHER LIABILITIES...........................................   1,874   1,122
                                                                ------- -------
     Total liabilities.........................................  17,607  23,223
                                                                ------- -------
     Total stockholders' equity................................  66,441  61,620
                                                                ------- -------
     Total liabilities and stockholders' equity................ $84,048 $84,843
                                                                ======= =======
</TABLE>

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

                                                                              41
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

--------------------------------------------------------------------------------
  STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                         2001     2000     1999
                                                        -------  -------  ------
   <S>                                                  <C>      <C>      <C>
   OPERATING INCOME...................................      387      475     396
                                                        -------  -------  ------
   OPERATING EXPENSES.................................    1,605    1,998   1,137
                                                        -------  -------  ------
   LOSS BEFORE PROVISION FOR INCOME TAXES.............   (1,218)  (1,523)   (741)
                                                        -------  -------  ------
   INCOME TAX BENEFIT.................................     (381)    (478)   (226)
                                                        -------  -------  ------
   LOSS BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF
    SUBSIDIARY........................................     (837)  (1,045)   (515)
     Equity in undistributed earnings of Bell Federal.    7,195    7,747   8,557
                                                        -------  -------  ------
   NET INCOME.........................................  $ 6,358  $ 6,702  $8,042
                                                        =======  =======  ======
</TABLE>

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

42
<PAGE>


--------------------------------------------------------------------------------
  STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                       Year Ended December
                                                               31,
                                                      -----------------------
                                                       2001    2000    1999
                                                      ------  ------  -------
   <S>                                                <C>     <C>     <C>
   OPERATING ACTIVITIES:
    Net income....................................... $6,358  $6,702  $ 8,042
    Adjustments to reconcile net income to net cash
     provided by operating activities:
     Equity in undistributed earnings of Bell
      Federal........................................ (7,195) (7,747)  (8,557)
     Other...........................................    378     506       66
                                                      ------  ------  -------
       Net cash used in operating activities.........   (459)   (539)    (449)
                                                      ------  ------  -------
   INVESTING ACTIVITIES:
    Net increase in federal funds sold...............     --    (150)    (600)
    Principal paydowns on ESOP loan receivable.......    135      97      105
    Dividend from Bell Federal.......................  8,000   4,000    8,000
    Investment in and advances to Bell Federal.......    359     160      405
                                                      ------  ------  -------
       Net cash provided by investing activities.....  8,494   4,107    7,910
                                                      ------  ------  -------
   FINANCING ACTIVITIES:
    Proceeds from borrowings.........................     --   5,000   10,000
    Repayments on borrowings......................... (5,000) (3,750)      --
    Dividends paid................................... (1,963) (1,932)  (1,938)
    Purchase of treasury stock.......................     --  (6,508) (16,604)
    Loan payable to Bell Federal.....................  8,372  12,889   14,377
    Principal payment on loan payable................ (9,740) (8,729) (13,290)
                                                      ------  ------  -------
       Net cash used in financing activities......... (8,331) (3,030)  (7,455)
                                                      ------  ------  -------
   NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS......................................   (296)    538        6
   CASH, BEGINNING OF YEAR...........................    546       8        2
                                                      ------  ------  -------
   CASH, END OF YEAR................................. $  250  $  546  $     8
                                                      ======  ======  =======
</TABLE>
--------------------------------------------------------------------------------

                                                                              43
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

--------------------------------------------------------------------------------
19. QUARTERLY EARNINGS SUMMARY (Unaudited)

  Quarterly earnings for the years ended December 31, 2001 and 2000 are as
  follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                         2001
                                       -----------------------------------------
                                        March
                                         31    June 30  September 30 December 31
                                       ------- -------  ------------ -----------
   <S>                                 <C>     <C>      <C>          <C>
   INTEREST AND DIVIDEND INCOME......  $12,954 $12,576    $12,257      $11,950
   INTEREST EXPENSE..................   10,713  10,529     10,268        9,638
                                       ------- -------    -------      -------
   NET INTEREST INCOME...............    2,241   2,047      1,989        2,312
   PROVISION FOR LOAN LOSSES.........       --      --         --           --
                                       ------- -------    -------      -------
   NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES........    2,241   2,047      1,989        2,312
   OTHER INCOME......................      851     484        551          548
   OTHER EXPENSES....................    1,237   1,306      1,279        1,348
                                       ------- -------    -------      -------
   INCOME BEFORE PROVISION FOR INCOME
    TAXES............................    1,855   1,225      1,261        1,512
   PROVISION (BENEFIT) FOR INCOME
    TAXES............................      180    (123)      (203)        (359)
                                       ------- -------    -------      -------
   NET INCOME........................    1,675   1,348      1,464        1,871
                                       ------- -------    -------      -------
   OTHER COMPREHENSIVE INCOME, NET OF
    TAX--Unrealized gain (loss) on
    investments......................    1,506    (878)     1,322       (2,491)
                                       ------- -------    -------      -------
   COMPREHENSIVE INCOME..............  $ 3,181 $   470    $ 2,786      $  (620)
                                       ======= =======    =======      =======
   BASIC EARNINGS PER SHARE (1)......  $  0.41 $  0.33    $  0.36      $  0.46
                                       ======= =======    =======      =======
   DILUTED EARNINGS PER SHARE........  $  0.40 $  0.32    $  0.35      $  0.45
                                       ======= =======    =======      =======

<CAPTION>
                                                         2000
                                       -----------------------------------------
                                        March
                                         31    June 30  September 30 December 31
                                       ------- -------  ------------ -----------
   <S>                                 <C>     <C>      <C>          <C>
   INTEREST AND DIVIDEND INCOME......  $12,995 $13,220    $13,218      $13,272
   INTEREST EXPENSE..................    9,672   9,981     10,366       10,658
                                       ------- -------    -------      -------
   NET INTEREST INCOME...............    3,323   3,239      2,852        2,614
   PROVISION FOR LOAN LOSSES.........       --      --         --           --
                                       ------- -------    -------      -------
   NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES........    3,323   3,239      2,852        2,614
   OTHER INCOME......................      246     291        164          157
   OTHER EXPENSES....................    1,338   1,347      1,446        1,467
                                       ------- -------    -------      -------
   INCOME BEFORE PROVISION FOR INCOME
    TAXES............................    2,231   2,183      1,570        1,304
   PROVISION (BENEFIT) FOR INCOME
    TAXES............................      262     266         79          (21)
                                       ------- -------    -------      -------
   NET INCOME........................    1,969   1,917      1,491        1,325
                                       ------- -------    -------      -------
   OTHER COMPREHENSIVE INCOME, NET OF
    TAX--Unrealized gain (loss) on
    investments......................    1,239   1,580      1,383        3,663
                                       ------- -------    -------      -------
   COMPREHENSIVE INCOME..............  $ 3,208 $ 3,497    $ 2,874      $ 4,988
                                       ======= =======    =======      =======
   BASIC EARNINGS PER SHARE (1)......  $  0.46 $  0.46    $  0.37      $  0.33
                                       ======= =======    =======      =======
   DILUTED EARNINGS PER SHARE (1)....  $  0.44 $  0.45    $  0.35      $  0.32
                                       ======= =======    =======      =======
</TABLE>
  -------
  (1)  Quarterly per share amounts do not add to the total for the years
       ended December 31, 2001 and 2000, due to rounding.
--------------------------------------------------------------------------------

44
<PAGE>


--------------------------------------------------------------------------------
First Bell Bancorp, Inc.
Executive Management

Albert H. Eckert, II                     Robert C. Baierl
 President and Chief Executive Officer     Secretary


Jeffrey M. Hinds                         William S. McMinn
 Executive Vice President and              Treasurer
 Chief Financial Officer

Directors

Albert H. Eckert, II                     Jeffrey M. Hinds
 President and Chief Executive Officer     Executive Vice President and
 First Bell Bancorp, Inc. and              Chief Financial Officer
  Bell Federal Savings and Loan            First Bell Bancorp, Inc. and
  Association                                Bell Federal Savings and Loan
                                             Association
Thomas J. Jackson, Jr.
 Retired Attorney-at-Law                 Jack W. Schweiger
 Houston Harbaugh                          President
                                           Schweiger Homes
Robert C. Baierl
 President                               Peter E. Reinert
 Wright Contract Interiors                 Partner
                                           Akerman, Senterfitt & Eidson, P.A.
William S. McMinn

 Senior Executive Vice President         Theodore R. Dixon
 Aon Risk Services, Inc. of Pennsylvania   President
                                           Dixon Agency
--------------------------------------------------------------------------------

                                                                              45
<PAGE>

FIRST BELL BANCORP, INC. 2001 ANNUAL REPORT

--------------------------------------------------------------------------------
Bell Federal Savings and Loan Association of Bellevue
Executive Management

Albert H. Eckert, II                     Thomas J. Jackson, Jr.
 President and Chief Executive Officer     Secretary


Jeffrey M. Hinds                         Margaret L. Gerber
 Executive Vice President and Chief        Assistant Vice President
 Financial Officer


                                         Ronald S. Boltey
William S. McMinn                          Assistant Vice President
 Treasurer

Directors

Albert H. Eckert, II                     Jeffrey M. Hinds
 President and Chief Executive Officer     Executive Vice President and
 First Bell Bancorp, Inc. and              Chief Financial Officer
  Bell Federal Savings and Loan            First Bell Bancorp, Inc. and
  Association                                Bell Federal Savings and Loan
                                             Association
Thomas J. Jackson, Jr.
 Retired Attorney-at-Law                 Jack W. Schweiger
 Houston Harbaugh                          President
                                           Schweiger Homes
Robert C. Baierl
 President                               Peter E. Reinert
 Wright Contract Interiors                 Partner
                                           Akerman, Senterfitt & Eidson, P.A.
William S. McMinn
 Senior Executive Vice President         Theodore R. Dixon
 Aon Risk Services, Inc. of Pennsylvania   President
                                           Dixon Agency
--------------------------------------------------------------------------------

46
<PAGE>


Shareholder Information
-------------------------------------------------------------------------------
Market Summary of Stock

 First Bell Bancorp, Inc.'s common stock trades on The NASDAQ National Market.
The following summary sets forth the range of prices for common stock over the
periods noted. The common stock of the Company began trading on June 29, 1995.
As of March 1, 2002, there were approximately 3,500 stockholders of record and
4,758,360 common shares outstanding.

<TABLE>
<CAPTION>
                                                                2001
                                                     ---------------------------
                                                       High     Low    Dividends
                                                     -------- -------- ---------
<S>                                                  <C>      <C>      <C>
1st Quarter.........................................  $15.313  $13.625   $0.12
2nd Quarter.........................................  $14.600  $13.880   $0.12
3rd Quarter.........................................  $15.500  $13.900   $0.12
4th Quarter.........................................  $14.700  $13.500   $0.12

<CAPTION>
                                                                2000
                                                     ---------------------------
                                                       High     Low    Dividends
                                                     -------- -------- ---------
<S>                                                  <C>      <C>      <C>
1st Quarter......................................... $16.50   $10.25     $0.12
2nd Quarter......................................... $16.625  $13.875    $0.12
3rd Quarter......................................... $16.375  $14.125    $0.12
4th Quarter......................................... $15.1875 $11.9375   $0.12
</TABLE>

Dividend Policy

 The management and Board of Directors of the Company continually review the
Company's dividend policy. The Company intends to continue its policy of pay-
ing quarterly dividends; however, the payment will depend upon a number of
factors, including capital requirements, regulatory limitations, the Company's
financial condition, results of operations and the Association's ability to
pay dividends to the Company. At present, the Company has no significant
source of income other than dividends from the Association and to a lesser
extent interest on short-term investments. Consequently, the Company depends
upon dividends from the Association to accumulate earnings for payment of cash
dividends to its shareholders. See Note 12 to the Consolidated Financial
Statements for a discussion of restrictions on the Association's ability to
pay dividends.

Nasdaq Listing

 Quotes on the common stock can be found on The Nasdaq stock market under the
symbol "FBBC".

Dividend Reinvestment

 First Bell Bancorp, Inc.'s registered shareholders may reinvest their divi-
dends in additional shares of the Company's common stock and, if desired, pur-
chase additional shares through a voluntary cash investment of $50 to $3,000
per quarter. Participants in the plan pay no broker fees. Purchases for the
plan are generally made on the third Friday of January, April, July and Octo-
ber. For more information on this service, call the Dividend Reinvestment
Department of Registrar and Transfer Company at 1-800-368-5948.

Annual Meeting

 The 2002 Annual Meeting of the Stockholders of First Bell Bancorp, Inc. will
be held at 3:00 P.M. on Monday, April 29, 2002 at 629 Lincoln Avenue, Belle-
vue, Pennsylvania 15202.

Annual Report on Form 10-K and Exhibits

 A copy of the Annual Report on Form 10-K (excluding exhibits) of the Company
for the year-ended December 31, 2001, as filed with the Securities and
Exchange Commission, will be furnished free of charge, upon written request to
stockholders who have not previously received a copy from the Company.

 Written requests may be directed to:

 Shareholder Relations
 First Bell Bancorp, Inc.
 c/o Bell Federal Savings and Loan Association of Bellevue
 532 Lincoln Avenue
 Pittsburgh, Pennsylvania 15202

 The Company will furnish any exhibit to its Annual Report on Form 10-K upon
payment of a reasonable fee.

Transfer Agent and Registrar
 Registrar and Transfer Company
 10 Commerce Drive
 Cranford, NJ 07016

Executive Offices
 First Bell Bancorp, Inc.
 300 Delaware Avenue, Suite 1704
 Wilmington, DE 19801

Special Counsel
 Muldoon Murphy and Faucette LLP
 5101 Wisconsin Avenue N.W.
 Washington, DC 20016

Independent Auditors
 S. R. Snodgrass, A.C.
 1000 Stonewood Drive, Suite 200
 Wexford, PA 15090
-------------------------------------------------------------------------------

                                                                             47
<PAGE>


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


Bell Federal Savings and Loan Association of Bellevue
Office Locations

<TABLE>
<S>                                      <C>
Bellevue Office                          Wood Street Office*
532 Lincoln Avenue                       Sixth & Wood Street
Bellevue, Pennsylvania 15202             Suite 100
(412) 734-2700                           Pittsburgh, Pennsylvania 15222


Wexford Office*                          Mt. Lebanon Office*
10533 Perry Highway                      300 Cochran Road
Wexford, Pennsylvania 15090              Pittsburgh, Pennsylvania 15228


McKnight Road Office*                    Craig Street Office*
7709 McKnight Road                       201 North Craig Street
Pittsburgh, Pennsylvania 15237           Pittsburgh, Pennsylvania 15213

Sewickley Office
414 Beaver Street
Sewickley, Pennsylvania 15143

</TABLE>
-------
*Bell Federal Savings maintains an Automated Teller Machine (ATM) at these
locations.

World Wide Web Address

www.bellfederalsavings.com

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

48
<PAGE>

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