<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-K

                  Annual report pursuant to Section 13 of the
                        Securities Exchange Act of 1934

                  For the fiscal year ended December 31, 1999

                         Commission File No,:  0-25172

                           FIRST BELL BANCORP, INC.
            (exact name of registrant as specified in its charter)


           DELAWARE                                25-1752651
(state or other jurisdiction of            (I.R.S. Employer I.D. No.)
incorporation or organization)

          Suite 1704, 300 Delaware Avenue, Wilmington, Delaware 19801
                   (Address of principal executive offices)

      Registrant's telephone number, including area code: (302) 427-7883
       Securities registered pursuant to Section 12(b) of the Act:  None
          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $0.01 per share
                               (Title of class)

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

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

  The aggregate market value of the voting stock held by non-affiliates of the
registrant, i.e.,  persons other than directors and executive officers of the
registrant is $74,887,904 and is based upon the last sales price as quoted on
The Nasdaq Stock Market for March 1, 2000.

As of March 1, 2000, the Registrant had 5,104,763 shares outstanding (excluding
treasury shares).

                      DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the Annual Report to Stockholders for the year ended December 31,
1999 are incorporated by reference into Part II of this Form 10-K.  Portions of
the Proxy Statement for the 2000 Annual Meeting of Stockholders are incorporated
by reference into Part III of this Form 10-K.
<PAGE>

                                        INDEX
                                                                           PAGE
                                                                           ----

PART I

Item 1.     Business.....................................................     1

Item 2.     Properties...................................................    29

Item 3.     Legal Proceedings............................................    29

Item 4.     Submission of Matters to a Vote of Security Holders..........    29

PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder
            Matters......................................................    29

Item 6.     Selected Financial Data......................................    29

Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations....................................    30

Item 7A.    Quantitative and Qualitative Disclosure about Market Risk....    30

Item 8.     Financial Statements and Supplementary Data..................    32

Item 9.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure.....................................    32

PART III

Item 10.    Directors and Executive Officers of the Registrant...........    32

Item 11.    Executive Compensation.......................................    32

Item 12.    Security Ownership of Certain Beneficial Owners and
            Management...................................................    32

Item 13.    Certain Relationships and Related Transactions...............    33

PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports
            on Form 8-K..................................................    33

SIGNATURES...............................................................    35

<PAGE>

PART 1

Item 1.  Business

General

  First Bell Bancorp, Inc (the "Company") was orgainzed by the Board of
Directors of Bell Federal Savings and Loan Association of Bellevue (the
"Association") for the purpose of acquiring all of the capital stock of the
Association issued in connection with the Association's conversion from a mutual
to stock form, which was consummated on June 29, 1995,(the "Conversion").  At
December 31, 1999, the Company had consolidated total assets of $816.1 million
and total equity of $54.5 million.  The Company is incorporated under Delaware
law and is a savings and loan holding company subject to regulations by the
Office of Thrift Supervision ("OTS"), the Federal Deposit Insurance Corporation
("FDIC") and the Securities and Exchange Commission ("SEC").  Currently, the
Company does not transact any material business other than through its
subsidiary, the Association.  All references to the Company include the
Association unless otherwise indicated, except that references to the Company
prior to June 29, 1995 are to the Association.

  Bell Federal Savings and Loan Association of Bellevue was originally founded
in 1891 as the Commercial Building and Loan Association, a state chartered
building and loan association.  In 1941, the Association converted to a
federally chartered mutual savings and loan association and changed its name to
First Federal Savings and Loan Association of Bellevue.  The Association again
changed its name in 1971 to Bell Federal Savings and Loan Association of
Bellevue.  The Association's deposits are insured up to applicable limits by the
Savings Association Insurance Fund ("SAIF").  The Association's business is
conducted through six branch offices located thoughout the suburban Pittsburgh,
Pennsylvania area and its principal office in the borough of Bellevue.  The
Company's principal executive office is located at Suite 1704, 300 Delaware
Avenue, Wilmington, Delaware 19801 and its executive office telephone number is
(302) 427-7883.

  The principal business of the Company is to operate a traditional customer
oriented savings and loan association.  The Company attracts retail deposits
from the general public and invests those funds primarily in fixed and
adjustable-rate, owner-occupied, single family conventional mortgage loans and,
to much lesser extent, residential construction loans, multi-family loans, home
equity loans and consumer loans.  The Company's revenues are derived principally
from interest on conventional mortgage loans, interest and dividends on
investment securities and short-term investments and other fees and service
charges.  The Company's primary sources of funds are deposits and borrowings.

  The Association is subject to extensive regulation, supervision and
examination by the OTS, its primary regulator and the FDIC, which insures its
deposits.  The Association is a member of the FHLB ("Federal Home Loan Bank").

                                       1
<PAGE>

Private Securities Litigation Reform Act Safe Harbor Statement

  In addition to historical information, this 10-K 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
allowance for losses discussion and certain sections of the 1999 Annual Report
incorporated herein.  The Company's actual results could differ materially from
those of management's 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
rates, deposit flows, the cost of funds, demand for loan products, demand for
financial services, competition, changes in the quality or composition of the
Company's loan and investment portfolios, changes in accounting principles,
policies or guidelines, and other economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices.

Market Area and Competition

  The Association has been, and continues to be, a community-oriented savings
institution offering a variety of financial services to meet the needs of the
community it serves.  Its primary market area is in the areas surrounding its
offices, while its lending activities extend throughout Allegheny County and
parts of Beaver, Butler, Washington and Westmoreland Counties, in Pennsylvania.
In addition to its principal office in Bellevue, the Association operates six
other retail offices, all of which are located in Allegheny County.

  The communities in Allegheny County are composed mostly of stable, residential
neighborhoods of predominantly one and two-family residences and middle-to-
upper-income families.  Management believes that, to a large degree, the
economic vitality of these communities depends on the economic vitality of the
City of Pittsburgh.

  The Greater Pittsburgh area has been in the process of restructuring over the
past decade.  Once centered on heavy manufacturing, primarily steel, its
economic base is now more diverse, including technology, health and business
services.  Several "Fortune 500" industrial firms are headquartered in the
Greater Pittsburgh area, including USX Corp. and Aluminum Company of America.
The largest employers in Pittsburgh, by the number of local employees, include
University of Pittsburgh Medical Center, USAirways, the University of Pittsburgh
and Mellon Bank Corp.  Seven colleges and universities are located in the
Greater Pittsburgh area.

  The Association serves its market area with a wide selection of residential
loans and other retail financial services.  Management considers the
Association's reputation for customer service as its major competitive advantage
in attracting and retaining customers in its market area.  The Association also
believes it benefits from its community orientation, as well as its established
deposit base and level of core deposits.

                                       2
<PAGE>

Lending Activities

  Loan and Mortgage-Backed Securities Portfolio Composition.  The loan portfolio
consists primarily of conventional mortgage loans secured by one- to four-
family, owner-occupied residences, and, to a much lesser extent, residential
construction loans, multi-family loans, home equity loans and consumer loans.
Mortgage loans are originated to be held in the portfolio.  At December 31,
1999, total loans receivable were $545.2 million, of which $516.5 million, or
94.7%, were conventional mortgage loans.  Of the conventional mortgage loans
outstanding at that date, 95.6% were fixed-rate loans.  At December 31, 1999,
the loan portfolio also included $16.2 million of residential construction
loans; $500,000 of multi-family loans; $11.0 million of residential home equity
loans; and $967,000 of other consumer loans.  The Association also offers FHA/VA
qualifying one- to four-family residential mortgage loans.

  The types of loans originated are regulated by federal law and regulations.
Interest rates charged on loans are affected principally by the demand for such
loans and the supply of money available for lending purposes.  These factors
are, in turn, affected by general and economic conditions, monetary policies of
the federal government, legislative and tax policies and governmental budgetary
matters.

Set forth below is a table showing loan origination, purchase and sales activity
for the periods indicated.

<TABLE>
<CAPTION>
                                                                         For the Year Ended December 31,
                                                                         -------------------------------
                                                                   1999                1998                1997
                                                            ------------------  ------------------  ------------------
                                                                                  (in thousands)
<S>                                                         <C>                 <C>                 <C>
Loan receivable at beginning of period                                $559,846           $596,003             $547,210

Additions:
      Originations of conventional mortgages                            82,564             66,825              129,043

Reductions:
       Transfer of mortgage loans to foreclosed real                       459                201                  104
        estate
       Repayments                                                       96,729            102,781               50,157
       Loan sales                                                            -                  -               29,989
                                                                      --------           --------             --------

           Total reductions                                             97,188            102,982               80,250
                                                                      --------           --------             --------

           Total loans receivable at end of period                    $545,222           $559,846             $596,003
                                                                      ========           ========             ========

Mortgage-backed securities at beginning of period                     $      -           $ 31,885             $      -

       Purchases                                                             -                  -               92,528
       Sales                                                                 -             30,255               46,676
       Repayments                                                            -              1,402               14,000
       Premium amortization                                                  -                228                  197
       Unrealized gain or loss                                               -                  -                  230
                                                                      --------           --------             --------

Mortgage-backed securities at end of period                           $      -           $      -             $ 31,885
                                                                      ========           ========             ========
</TABLE>
(1)  Includes conventional mortgages, residential construction loans and home
     equity mortgage loans.
(2)  The Association originated no multi-family loans during the periods shown.

                                       3
<PAGE>

  The following table sets forth the composition of the loan portfolio and the
mortgage-backed securities portfolio in dollar amounts and in percentages of the
portfolio at the dates indicated.

<TABLE>
<CAPTION>

                                                          1999                      1998                   1997
                                                          ----                      ----                   ----
                                                                      Percent of             Percent of             Percent of
                                                          Amount      Total         Amount   Total         Amount   Total
                                                          ------      -----         ------   -----         ------   -----
<S>                                                   <C>             <C>          <C>       <C>          <C>       <C>
Real estate loans:
        Conventional mortgages                             $516,514        94.73%  $535,864       95.72%  $568,405       95.37%
        Residential construction loans                       16,229         2.98     17,924        3.20     25,563        4.29
        Multi family loans                                      500         0.09        651        0.12        860        0.14
        Second mortgage loans                                11,012         2.02      4,508        0.81        268        0.05
                                                           --------       ------   --------      ------   --------      ------
           Total real estate loans                          544,255        99.82    558,947       99.85    595,096       99.85

Consumer loans:
        Loans on deposit accounts                               967         0.18        895        0.15        899        0.15
        Home improvement loans                                    -            -          4           -          8           -
                                                           --------       ------   --------      ------   --------      ------
           Total consumer loans                                 967         0.18        899        0.15        907        0.15
                                                           --------       ------   --------      ------   --------      ------
Total loans receivable                                      545,222       100.00%   559,846      100.00%   596,003      100.00%
                                                                          ======                 ======                 ======

Less:
        Undisbursed portion of loans in process               8,652                  10,354                 12,072
        Deferred net loan origination fees                    2,386                   3,153                  3,822
        Allowance for loan losses                               925                     805                    715
                                                           --------                --------               --------
           Loans receivable, net                           $533,259                $545,534               $579,394
                                                           ========                ========               ========

Morrtage-backed securities
        GNMA                                               $      -            -%  $      _           -%  $ 26,958       84.55%
        FHLMC                                                     -            -          -           -          -           -
        FNMA                                                      -            -          -           -      4,927      1 5.45
                                                           --------       ------   --------      ------   --------      ------
           Total mortgage-backed securities                $      -            -%  $      -           -%  $ 31,885      100.00%
                                                           ========       ======   ========      ======   ========      ======

<CAPTION>

                                                  At December 31, (in thousands)
                                                       1996                  1995
                                                       ----                  ----
                                                                  Percent of            Percent of
                                                       Amount     Total      Amount     Total
                                                       ------     -----      ------     -----
<S>                                                   <C>       <C>          <C>       <C>
Real estate loans:
        Conventional mortgages                        $524,867       95.92%  $409,807       94.67%
        Residential construction loans                  19,877        3.63     19,692        4.55
        Multi family loans                               1,220        0.22      2,075        0.48
        Second mortgage loans                              297        0.06        330        0.08
                                                      --------      ------   --------      ------
           Total real estate loans                     546,261       99.83    431,904       99.78

Consumer loans:
        Loans on deposit accounts                          938        0.17        937        0.22
        Home improvement loans                              11           -         22           -
                                                      --------      ------   --------      ------
           Total consumer loans                            949        0.17        959        0.22
                                                      --------      ------   --------      ------
Total loans receivable                                 547,210      100.00%   432,863      100.00%
                                                                    ======                 ======

Less:
        Undisbursed portion of loans in process         11,120                 11,182
        Deferred net loan origination fees               4,610                  5,537
        Allowance for loan losses                          665                    575
                                                      --------               --------
           Loans receivable, net                      $530,815               $415,569
                                                      ========               ========

Morrtage-backed securities
        GNMA                                          $      -           -%  $                  -%
        FHLMC                                                -           -          -           -
        FNMA                                                 -           -          -           -
                                                      --------      ------   --------      ------
           Total mortgage-backed securities           $      -           -%  $      -           -%
                                                      ========      ======   ========      ======
</TABLE>

                                       4
<PAGE>

Loan Maturity Schedule.  The following table sets forth certain information at
December 31, 1999 regarding the dollar amount of loans maturing in the portfolio
based on their remaining contractual terms to maturity.  The table does not
include the effect of prepayments or scheduled principal amortization.
Prepayments and scheduled principal amortization on loans totalled $96.7
million, $102.8 million and $50.2 million for the years ended December 31, 1999,
1998 and 1997, respectively.

<TABLE>
<CAPTION>
                                                                                At December 31, 1999  (in thousands)
                                               -------------------------------------------------------------------------------------

                                                                              More Than            More Than Six      More Than One
                                                    Three Months             Three Months             Months to       Year to Three
                                                       or Less              to Six Months          Twelve Months          Years
                                               -------------------------------------------------------------------------------------

<S>                                            <C>                          <C>                    <C>                <C>
Interest-earning Assets:
   Real estate loans:
      One-to-four-family adjustable-
         rate loans........................               $   --                  $--                   $--                 $ 27
      One-to-four-family fixed-rate
         loans.............................                   39                    1                    11                  643
      Residential construction loans                          --                   --                    --                   --
      Multi family.........................                    1                   --                    --                   27
     Second mortgage loans.................                1,650                   65                    71                  119
                                                          ------                  ---                   ---                 ----
         Total Real Estate Loans                           1,690                   66                    82                  816
Consumer Loans                                               967                   --                    --                    -
                                                          ------                  ---                   ---                 ----
         Total loans.......................               $2,657                  $66                   $82                 $816
                                                          ======                  ===                   ===                 ====
<CAPTION>
                                                        More Than          More Than
                                                     Three Years to      Five Years to      More Than Ten
                                                        Five Years         Ten Years             Years         Total
                                                     -----------------------------------------------------------------
<S>                                                  <C>                 <C>               <C>              <C>
Interest-earning Assets:
   Real estate loans:
      One-to-four-family adjustable-
         rate loans........................              $   179            $   275           $ 22,031       $ 22,512
      One-to-four-family fixed-rate
         loans.............................                2,182             42,128            448,998        494,002
      Residential construction loans                          --                 --             16,229         16,229
      Multi family.........................                  127                168                177            500
     Second mortgage loans.................                7,980              1,101                 26         11,012
                                                         -------            -------           --------       --------
         Total Real Estate Loans                          10,468             43,672            487,461        544,255
Consumer Loans                                                --                 --                 --            967
                                                         -------            -------           --------       --------
         Total loans.......................              $10,468            $43,672           $487,461       $545,222
                                                         =======            =======           ========       ========
</TABLE>

                                       5
<PAGE>

     The following table sets forth the dollar amount of all loans and
mortgage-backed securities at December 31, 1999 which have fixed or adjustable
interest rates, and which are due after December 31, 2000.

<TABLE>
<CAPTION>
                                                         Due After December 31, 2000
                                              --------------------------------------------------
                                                  Fixed           Adjustable          Total
                                              --------------  ------------------  --------------
                                                                (In thousands)
<S>                                           <C>             <C>                 <C>
Real estate loans:
  Conventional mortgages....................        $493,951            $22,512         $516,463
  Residential construction..................          12,293              3,936           16,229
  Multi-family..............................             500                  -              500
  Second mortgage...........................           8,299                927            9,226
Consumer loans..............................               -                  -                -
                                                    --------            -------         --------
     Total loans............................
                                                    $515,043            $27,375         $542,418
                                                    ========            =======         ========
</TABLE>

     One- to Four-Family Residential Mortgage Lending.  The residential
mortgage loans are primarily secured by owner-occupied, one- to four-family
residences.  Loan originations are generally obtained from existing or past
customers, members of the local communities served, or referrals from local real
estate agents, attorneys and builders.  The Association originates fixed-rate
loans and adjustable rate mortgage ("ARM") loans.  At December 31, 1999,
conventional mortgage loans totalled $516.5 million, or 94.7%, of total loans at
such date.  Of the Association's conventional mortgage loans secured by one- to
four-family residences, $494.0 million, or 95.6%, were fixed-rate loans.

     Originated mortgage loans are held in the loan portfolio and are
secured by properties located within the Association's primary market area.
Historically, the market interest rates of mortgage loans in the Pittsburgh area
have been below national averages.  The mortgage loan portfolio has increased
from $431.9 million at December 31, 1995 to $544.2 million at December 31, 1999.

     The Association from time to time purchases one- to four-family mortgage
loans and loan participations. A number of these loans are secured by properties
located outside the Association's market area, such as other regions of
Pennsylvania, California, Illinois, Maryland, New York, Texas, Virginia, Utah,
North Carolina, Tennessee and Georgia. The Association did not purchase any
mortgage loans or participations in 1999. At December 31, 1999, the Association
had $13.6 million in purchased mortgage loans and loan participations serviced
by others, totalling 2.5% of the total loan portfolio at that date, primarily
secured by one- to four-family residences. The Association intends to continue
purchasing loans to supplement reduced loan demand as needed. Loans purchased
generally must meet the same underwriting criteria as loans originated by the
Association.

                                       6
<PAGE>

     In 1999 and 1998, the Association did not participate in any sales of
conventional mortgage loans. During 1997, the Association sold $30.0 million in
conventional mortgages. Most of the loan portfolio is underwritten in conformity
with Federal National Mortgage Association ("FNMA") secondary market
requirements. Although the Association has been approved by FNMA to sell loans
in the secondary market, there is no assurance that the Association will be able
to originate loans for sale in the secondary market or, that if originated, such
loans will be sold in the secondary market in the future. Should the Association
decide to sell mortgage loans in the future, the lower interest rates on such
loans, characteristic of the Pittsburgh market, may tend to diminish the demand
for such loans in the secondary market.

     With the exception of Community Reinvestment Act ("CRA") loans, the
maximum loan-to-value ratio on conventional mortgage loans is 80%. As a result,
a majority of borrowers are previous homeowners, whom the Association believes
to be relatively stable borrowers. The Association also offers FHA/VA qualifying
one-to four-family residential mortgage loans. One-to four-family residential
mortgage loans do not provide for negative amortization. Mortgage loans in the
portfolio generally include due-on-sale clauses, which provide the Association
with the contractual right to demand the loan immediately due and payable in the
event that the borrower transfers ownership of the property that is subject to
the mortgage. It is the Association's policy to enforce due-on-sale clauses. The
residential mortgage loans originated are generally for terms to maturity from
15 to 30 years. At December 31, 1999, the maximum one-to four-family loan amount
is $600,000, unless otherwise approved by the Board of Directors.

     Presently, four ARM loans are offered; a one-year, three-year, five-year
and 7/1 ARM loan. The one-year ARM loan has an interest rate that adjusts
annually based on a spread of 2.50 percentage points above the rate on one-year
United States Treasury securities. The one-year ARM loan is subject to a
limitation on interest rate increases and decreases of 2.0% per year, a lifetime
ceiling on interest rate increases of 6.0% above the origination rate, and a
floor rate equal to the origination interest rate. This mortgage can convert to
a fixed-rate loan at specified times during the first five years. The three-year
ARM loan has an interest rate that adjusts every three years based on a spread
of 2.75 percentage points above the rate on the three year United States
Treasury securities. The three-year ARM is subject to a limitation on interest
rate increases and decreases of 2% per change, a lifetime ceiling on the
interest rate of 6.0% above the origination rate and a floor rate equal to the
origination interest rate. The five-year ARM loan has an interest rate that
adjusts every five years based on a spread of 2.75 percentage points above the
rate on five-year United States Treasury securities. The five-year ARM loan is
subject to a limitation on interest rate increases and decreases of 3.0% per
change, a lifetime ceiling on the interest rate of 6.0% above the origination
rate, and a floor rate equal to the origination interest rate. The 7/1 ARM loan
has an interest rate that remains constant for the first seven years and then
the interest rate adjusts annually based on a spread of 2.50 percentage points
above the rate on one-year United States Treasury securities. After the initial
seven years, this ARM loan is subject to a limitation on interest rate increases
and decreases of 2.0% per year, a lifetime ceiling on interest rate increases of
6.0% above the origination rate, and a floor equal to the origination interest
rate. The mortgage can convert to a fixed-rate loan at the first change date.

                                       7
<PAGE>

     The volume and types of ARM loans originated are affected by such market
factors as the level of interest rates, competition, consumer preferences and
the availability of funds. In recent years, demand for ARM loans has been weak
due to the low interest rate environment and consumer preference for fixed rate
loans. In 1999, only $5.1 million of the $74.1 million, or 6.8%, of conventional
mortgage loans originated, excluding home equity loans, were adjustable
mortgages. Although ARM loans will continue to be offered, there can be no
assurance that in the future ARM loans will be originated in sufficient volume
to constitute a significant portion of the loan portfolio.

     In an effort to provide financing for low and moderate income home buyers,
additional single family residential mortgage loans are offered to moderate
income borrowers and residents of CRA neighborhoods, with terms of up to 30
years. Such loans must be secured by a single family, owner-occupied unit. These
loans are originated using modified underwriting guidelines with reduced down
payments and expenses. Private mortgage insurance is normally required. Because
the Association typically charges a lower rate of interest, lower mortgage
origination fees and a discount on closing costs on its CRA loans, a lower rate
of return is expected on such loans, as compared to other residential mortgage
loans. For the years ended December 31, 1999, 1998 and 1997, the Association
originated 47, 43 and 24 loans under the CRA loan program, with aggregate dollar
amounts of $2.8 million, $2.0 million and $1.2 million, respectively.

     Residential Construction Loans.  The Association originates loans for
the construction of one-to four-family residential properties. Such loans are
made on contract directly to the home buyer. Residential construction loans are
subject to the same maximum loan amounts as conventional mortgage loans.
Residential construction loans are made for terms of up to one year, at which
time the loans convert to permanent conventional mortgage financing. Residential
construction loans are generally offered at the Association's prevailing
interest rate. An additional fee may be charged for construction servicing.
Advances are made to builders as phases of construction of the property are
completed. As of December 31, 1999, the Association's residential construction
loans totaled $16.2 million, or 3.0% of the total loan portfolio. Of these
construction loans, $8.6 million had been committed but were undisbursed as of
that date.

     Construction lending involves greater risks than other loans due the
fact that loan funds are advanced upon the security of the project under
construction and are predicated on the future value of the property upon
completion of construction. Moreover, because of the uncertainties inherent in
estimating construction costs, delays resulting from labor problems, material
shortages or weather conditions and other unpredictable contingencies, it is
relatively difficult to evaluate accurately the total funds required to complete
a project and to establish the related loan-to-value ratio. Because of these
factors, the analysis of prospective construction loan projects requires an
expertise that is different in significant respects from that which is required
for residential mortgage lending.

                                       8
<PAGE>

     Multi-Family Loans. In prior years, the Association also originated
multi-family loans. As of December 31, 1999, the Association's total loan
portfolio contained 12 multi-family loans, totalling $500,000, or 0.1%, of total
loans. Since 1991, the Association has not originated any multi-family mortgage
loans. In the future, the Association may originate a limited number of multi-
family loans on a case-by-case basis.

     The multi-family loans in the Association's portfolio consist of
fixed-rate rate loans which were originated at prevailing market rates. The
Association's policy has been to originate multi-family loans only in its market
area. In making multi-family loans, the Association considers primarily the
ability of net operating income generated by the real estate to support the debt
service, the financial resources and income level and managerial expertise of
the borrower, the marketability of the property, and the Association's lending
experience with the borrower.

     Second Mortgage Loans.  During 1998, the Association began offering home
equity installment and line of credit loans to homeowners in its lending
territory. Home equity installment loans are underwritten for a fixed rate with
a five year term or an adjustable rate ten year term in which the rate adjusts
after the fifth year based on the prime rate. Line of credit loans can be drawn
on for ten years and paid back in twenty years and are based on the prime rate.
The Association offers second mortgage loans with maximum combined loan-to-value
ratios of up to 80%. During 1999 the Association originated $7.1 million in
installment loans and had made disbursements of $1.1 million for line of credit
loans. At December 31, 1999, the Association had $11.0 million or 2.0% of total
loans in second mortgage loans.

     Consumer Loans. The Association also offers secured consumer loans.
At December 31, 1999, the Association's consumer loans totalled $967,000, or
0.2% of the Association's total loan portfolio, all of which were secured by
deposit accounts.

     Loan Servicing and Loan Fees.  Servicing on all loans that have been
sold has been retained. Fees are received for these servicing activities, which
include collecting and remitting loan payments, inspecting the properties and
making certain insurance and tax payments on behalf of the borrowers. At
December 31, 1999, the Association was servicing $19.1 million of loans for
others. Loan servicing income was $7,000, $9,000 and $37,000 for the years ended
December 31, 1999, 1998 and 1997, respectively. The Association also receives
income in the form of service charges and other fees on loans. For the years
ended December 31, 1999, 1998 and 1997, the Association earned $149,000,
$198,000 and $214,000, respectively, in service charges and other fees.

     Mortgage-backed Securities. At December 31, 1999 and 1998, the Association
had no mortgage-backed securities. During the first quarter of 1998, the
remaining balance of the mortgage-backed securities portfolio was sold which
resulted in a gain of $97,000. In 1997, the Association purchased $92.5 million
in adjustable rate mortgage-backed securities. These securities were classified
as available-for-sale. Subsequently, in 1997, the Association sold $46.7 million
of these securities. At December 31, 1997, mortgage-backed securities totaled
$31.9 million. The Association may invest in

                                       9
<PAGE>

mortgage-backed securities in the future to offset any significant decrease in
demand for one-to four-family loans.

     Loan Approval Procedures and Authority. Loan approval authority has been
granted by the Board of Directors to the Association's Loan Committee. All
mortgage loans must be approved by the Loan Committee. As of December 31, 1999,
any loan application over $600,000 must be approved by the Board of Directors.

     Upon receipt of a completed loan application from a prospective borrower,
the Association generally orders a credit report, verifies employment, income
and other information, and, if necessary, obtains additional financial or credit
related information. An appraisal of the real estate used for collateral is also
obtained. All appraisals are performed by licensed certified appraisers. The
Board of Directors annually approves the independent appraisers used by the
Association and reviews the Association's appraisal policy. When the credit
information is obtained and an appraisal is completed, loans are presented for
approval to the Association's Loan Committee. The Loan Committee must approve
all one-to four-family mortgage loans originated by the Association.

     The Association's policy is to require either title insurance or an
attorney's opinion of title, and hazard insurance on all real estate loans.
Borrowers are required to advance funds together with each payment of principal
and interest to a mortgage escrow account from which the Association makes
disbursements for items such as real estate taxes, hazard insurance premiums and
private mortgage insurance premiums, if required.

Asset Quality

     Loan Collection.  When a borrower fails to make a required payment on
a loan, the Association takes a number of steps to induce the borrower to cure
the delinquency and restore the loan to a current status. The borrower is sent a
written notice of non-payment when the loan is 15 days past due. In the event
payment is not then received, additional letters and phone calls generally are
made. If the loan is still not brought current and it becomes necessary to take
legal action, which typically occurs after a loan is delinquent 120 days or
more, the Association may commence foreclosure proceedings against the real
property that secures the loan. Decisions as to when to commence foreclosure
actions are made on a case by case basis. If a foreclosure action is instituted
and the loan is not brought current, paid in full, or refinanced within 30 days
of delivery of the notice of default and intent to foreclose, the real property
securing the loan is generally sold at foreclosure or by the Association as soon
thereafter as practicable.

     On purchased mortgage loans or loan participations, monthly reports
are received form loan servicers in order to monitor the loan portfolio. Based
upon servicing agreements with the servicers of the loans, the Association
relies upon the servicer to contact delinquent borrowers, collect delinquent
amounts and to initiate foreclosure proceedings, when necessary, all in
accordance with applicable laws, regulations and the terms of the servicing
agreements between the Association and its servicing agents.

                                       10
<PAGE>

Delinquent Loans. At December 31, 1999, 1998 and 1997, delinquencies in the
loan portfolio were as follows:

<TABLE>
<CAPTION>
                                             At December 31, 1999                               At December 31, 1998
                              --------------------------------------------------  ----------------------------------------------
                                    60 - 89 Days             90 Days or More          60 - 89 Days             90 Days or More
                              ------------------------- ------------------------  ------------------------ ---------------------
                                             Principal                 Principal               Principal               Principal
                                Number of   Balance of  Number of     Balance of  Number of    Balance of  Number of  Balance of
                                  Loans       Loans       Loans          Loans      Loans        Loans       Loans      Loans
                                  -----       -----       -----          -----      -----        -----       ----       -----
                                          (Dollars in  thousands)                             (Dollars in thousands)
<S>                             <C>         <C>         <C>           <C>         <C>          <C>         <C>        <C>
Conventional mortgage loans...         2     $ 127            7          $ 269           3       $ 156         7        $ 498
Multi-family loans............        --        --           --             --          --          --        --           --
Consumer loans................        --        --           --             --          --          --        --           --
                                --------     -----     --------          -----     -------    --------      ----      -------
     Total loans..............         2     $ 127            7          $ 269           3       $ 156         7        $ 498
                                ========     =====     ========          =====     =======    ========      ====      =======

Delinquent to total loans.....                0.02%                       0.05%                   0.03%                  0.09%
                                             =====                       =====                ========                =======

</TABLE>

<TABLE>
<CAPTION>
                                                                           At December 31, 1997
                                             --------------------------------------------------------------------------------
                                                     60 - 89 Days                                     90 Days or More
                                             ------------------------------                  --------------------------------
                                                                 Principal                                          Principal
                                                Number of        Balance of                   Number of            Balance of
                                                  Loans            Loans                        Loans                 Loans
                                             ---------------  -------------                  ------------          ----------
                                                                           (Dollars in thousands)
<S>                                          <C>              <C>                            <C>                   <C>
Conventional mortgage loans...                             8        $    436                         13                $  634
Multi-family loans............                            --             --                          --                    --
Consumer loans................                             -             --                          --                    --
                                                         ---        --------                     ------                ------
     Total loans..............                             8        $    436                         13                $  634
                                                         ===        ========                     ======                ======

Delinquent loans to total loans                                         0.07%                                            0.11%
                                                                      =====                                            ======
</TABLE>

                                       11
<PAGE>

     Non-Performing Loans and Real Estate Owned.  The following table sets
forth information regarding non-accrual mortgage and other loans and real estate
owned ("REO"). Interest is not accrued on loans past due 90 days or more. The
Association had $390,000 in real estate owned and no in substance foreclosures
at December 31, 1999. During the years ended December 31, 1999, 1998 and 1997,
the amounts of interest income that would have been recorded on non-accrual
loans, had they been current, totalled $6,000, $32,000 and $29,000,
respectively. Interest income recorded on non-accrual loans was $8,000, $18,000
and $36,000 for each of the years ended December 31, 1999, 1998 and 1997,
respectively.

<TABLE>
<CAPTION>
                                                                         At December 31,
                                                      -------------------------------------------------
                                                       1999         1998      1997      1996      1995
                                                      -------------------------------------------------
                                                                      (Dollars in Thousands)
<S>                                                   <C>          <C>       <C>       <C>       <C>
Non-accrual delinquent mortgage loans                    $ 269     $ 498     $ 634     $ 400     $ 333
Non-accrual delinquent other loans..............            --        --        --        --        --
                                                         -----     -----     -----     -----     -----
  Total non-performing loans....................           269       498       634       400       333
Real estate owned...............................           390        82        --       229       178
                                                         -----     -----     -----     -----     -----
   Total non-performing assets..................         $ 659     $ 580     $ 634     $ 629     $ 511
                                                         =====     =====     =====     =====     =====
Total non-performing loans to total loans.......          0.05%     0.10%     0.11%     0.08%     0.08%
Total non-performing assets to total assets.....          0.08%     0.08%     0.09%     0.10%     0.10%
</TABLE>


     Classified Assets.  Federal regulations and the Association's policy
require the classification of loans and other assets, such as debt and equity
securities considered to be of lesser quality, as "Substandard," "Doubtful" or
"Loss" assets. An asset is considered "Substandard" if it is inadequately
protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any. "Substandard" assets include those characterized by
the distinct possibility that the institution will sustain some loss if the
deficiencies are not corrected. Assets classified as "Doubtful" have all of the
weaknesses inherent in those classified "Substandard," with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, conditions, and values, highly
questionable and improbable.

     At December 31, 1999 classified assets totaled $659,000, or 0.08% of total
assets, and consisted of real estate owned property and seven conventional
mortgage loans classifed as "Substandard".

     Allowance for Loan Losses, Investments in Real Estate and Real Estate
Owned. The allowance for loan losses is established and maintained through a
provision for loan losses based on management's evaluation of the risk inherent
in the loan portfolio and the condition of the local economy in the Company's
market area. Such evaluation, which includes a review of all loans on which full
collectibility is not reasonably assured, considers among other matters, the
estimated fair value of the underlying collateral, economic and regulatory
conditions, and other factors that warrant recognition of an adequate loan loss
allowance. Management believes that the allowance for loan losses is adequate to
cover losses inherent in the portfolio as of December 31, 1999. Although
management believes it uses the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary if economic and other conditions differ substantially from the
economic and other conditions in the assumptions used in making the initial
determinations, such as a material increase in the balance of the loan
portfolio.

                                       12
<PAGE>

     In addition, the OTS and FDIC, as an integral part of their examination
process, periodically review the allowance for loan losses and real estate owned
and investments in real estate valuations.  Such agencies may require the
recognition of  additions to the allowance or additional write-downs based on
their judgments about information available to them at the time of their
examination.  The OTS, in conjunction with the other federal banking agencies,
adopted an interagency policy statement on the allowance for loan and lease
losses.  The policy statement provides guidance for financial institutions on
both the responsibilities of management for the assessment and establishment of
adequate allowances and guidance for banking agency examiners to use in
determining the adequacy of general valuation guidelines.  Generally, the policy
statement recommends that institutions have effective systems and controls to
identify, monitor and address asset quality problems; that management analyze
all significant factors that affect the collectibility of the portfolio in a
reasonable manner; and that management establish acceptable allowance evaluation
processes that meet the objectives set forth in the policy statement.  As a
result of the declines in local and regional real estate market values and the
significant losses experienced by many financial institutions, there has been a
greater level of scrutiny by regulatory authorities of the loan portfolios of
financial institutions undertaken as part of the examination of institutions by
the OTS and the FDIC.  While management believes that it has established an
adequate allowance for loan losses, there can be no assurance that regulators,
in reviewing the loan portfolio, will not request a material increase at that
time in the allowance for loan losses, thereby negatively affecting the
financial condition and earnings at such time.

The following table sets forth the allowance for loan losses at the dates
indicated.

<TABLE>
<CAPTION>

                                                                           For the Years Ended December 31,
                                                         ------------------------------------------------------------------------
                                                          1999            1998             1997             1996           1995
                                                         --------        -------         -------           -------        -------
                                                                                       (in thousands)
<S>                                                      <C>             <C>             <C>               <C>            <C>
Allowance for loan losses:
Balance at beginning of period.................            $ 805           $ 715            $ 665            $ 575         $ 575
Charge-offs:
    Conventional mortgages.....................               --              --               --               --            --
    Residential construction...................               --              --               --               --            --
    Multi-family...............................               --              --               --               --            --
    Consumer...................................               --              --               --               --            --
                                                           -----           -----            -----            -----         -----
      Total charge-offs........................               --              --               --               --            --
Total recoveries...............................               --              --                5               --            --


Provision for (recovery of) loan losses........              120              90               45               90            --
                                                           -----           -----            -----            -----         -----
Balance at end of period(1)....................            $ 925           $ 805            $ 715            $ 665         $ 575
                                                           =====           =====            =====            =====         =====
Ratio of net charge-offs during the period to
 average loans outstanding during the period...              --%              --%              --%              --%           --%

Ratio of allowance for loan losses to total
 loans at the end of  the period...............            0.17%            0.14%            0.12%            0.12%         0.13%

Ratio of allowance for loan losses to
 non-performing assets at the
 end of the period.............................            1.40x           1.39x            1.13x            1.06x         1.13x

</TABLE>
____________________________
(1)  The total amount of the allowance for loan losses for each of the periods
     shown was allocated to mortgage loans.  At the end of each reported period,
     mortgage loans represented in excess of 99.8% of total loans.

                                       13
<PAGE>

Investment Activities

  As a member of the FHLB System, the Association is required to maintain liquid
assets at minimum levels which vary from time to time. The Association increases
or decreases its liquid investments depending on the availability of funds, the
comparative yields on liquid investments in relation to the return on loans and
in response to its interest rate risk management. To meet liquidity obligations,
federally chartered savings institutions have authority to invest in various
types of assets, including U.S. Treasury obligations, securities of various
federal agencies, mortgage-backed and mortgage-related securities, certain
certificates of deposit of insured banks and savings institutions, certain
bankers acceptances, repurchase agreements, loans of federal funds and, subject
to certain limits, corporate securities, commercial paper and mutual funds. The
Association's liquid investments primarily consist of federal funds sold, U.S.
Government securities, federal agency securities and interest-bearing deposits.
Historically, the Association has maintained its liquid assets at levels well
above the minimum regulatory requirements. At December 31, 1999, $74.5 million,
or 9.1%, of the Association's total assets were invested in liquid assets.

  The Company's Investment Committee, which is appointed by the Chief Executive
Officer, formulates the investment policy of the Company. The Company's
Investment Committee reports all purchases and sales of investments to the Board
of Directors. The policy of the Association is to invest funds among various
categories of investments and maturities to meet the day-to-day, cyclical and
long-term changes in assets and liabilities. In establishing its investment
strategies, the Company considers its cash position, the condition of its loans,
the stability of deposits, its capital position, its interest rate risk and
other factors.

  Investment Securities.  OTS guidelines regarding investment portfolio policy
and accounting require insured institutions to categorize securities and certain
other assets as held for "investment," "sale," or "trading." The Association's
investment policy provides for "held for investment" and "available for sale"
portfolios. Although the Association's investment policy allows that some
investments and loans will qualify to be held-to-maturity, the policy allows the
sale of investments in certain specific instances, such as when the quality of
an asset deteriorates, or when regulatory changes require that an asset be
disposed. At December 31, 1999, the Association had total investments of $233.4
million, of which $228.4 million was classified as available-for-sale and $5.0
million was classified as held to maturity. The $228.4 million investment
classified as available-for-sale consisted of $199.1 million in municipal
securities, $12.9 million in collateralized mortgage obligations ("CMO's"),
$11.4 in FHLB stock and $5.0 in a FHLB bond. The $5.0 million investment
classified as held to maturity consists of a U.S. government security which has
a maximum term to maturity up to five years and Federal National Mortgage
Association ("FNMA") stock.

                                       14
<PAGE>

  The following table sets forth certain information regarding the carrying and
market values of the portfolio of investment securities available-for-sale and
held-to-maturity at the dates indicated:

<TABLE>
<CAPTION>
                                                                                  At December 31,
                                                -----------------------------------------------------------------------------------
                                                             1999                       1998                      1997
                                                -----------------------------------------------------------------------------------
                                                    Carrying         Market     Carrying     Market       Carrying     Market Value
                                                      Value          Value       Value        Value         Value
                                                ----------------  ------------ -----------  ---------     ----------    -----------
<S>                                             <C>               <C>          <C>         <C>            <C>           <C>
                                                                                     (In thousands)
Investment securities:
   Municipal securities.........................        $199,141     $184,768    $118,986    $118,986       $    --         $    --
   U.S. Treasury securities.....................           4,985        5,167       9,976      10,677         9,969          10,485
   Collateralized mortgage obligations..........          12,902       12,761      17,691      17,691        15,902          15,902
   FHLB bond....................................           5,000        4,853          --          --            --              --
   Other investments............................               4           75           4          89             4              68
   FHLB Stock...................................          11,400       11,400       9,000       9,000         5,148           5,148
                                                        --------     --------    --------    --------       -------         -------
     Total investments..........................        $233,432     $219,024    $155,657    $156,443       $31,023         $31,603
                                                        ========     ========    ========    ========       =======         =======
</TABLE>

  The following table sets forth the carrying values, market values and average
yields for the Association's available for sale and held to maturity investment
portfolio (excluding $11.4 million in FHLB stock and $4,000 in FNMA stock) by
maturity, call date or repricing date, whichever is first, at December 31, 1999,
(dollars in thousand).

<TABLE>
<CAPTION>
                              One Year or Less     One to Five Years    Five to Ten Years         Total Securities
                             -------------------  -------------------  -------------------  -----------------------------
                                       Weighted             Weighted             Weighted                       Weighted
                             Carrying   Average   Carrying   Average   Carrying   Average   Carrying   Market    Average
                              Value      Yield     Value      Yield     Value      Yield     Value     Value      Yield
                             --------  ---------  --------  ---------  --------  ---------  --------  --------  ---------
<S>                          <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>       <C>
Investment Securities:
    Muncipal securties       $      -         -%  $185,081      6.93%   $14,060      7.07%  $199,141  $184,768      6.94%
    U.S. treasury                   -         -      4,985      7.25          -         -          -         -
     securities
    Collateralized mortgage
      obligations               5,847      7.70      3,287      6.63      3,768      6.25     12,902    12,761      7.01
    FHLB bond                   5,000      8.00          -         -          -         -      5,000     4,853      8.00

</TABLE>

                                       15
<PAGE>

Sources of Funds

  General.  The lending and investment activities are predominantly funded by
savings deposits, borrowings, interest and principal payments on loans and other
investments and loan origination fees.

  Deposits.  Deposits serve as the predominant source of funds. The Association
offers interest rates on deposits that are competitive in the Greater Pittsburgh
market area to maintain a strong depositor base. Deposits consist of savings and
club accounts, interest-bearing and non-interest-bearing demand deposit
accounts, money market deposit accounts and certificates of deposit. The
Association relies on its competitive pricing policies and customer service to
maintain deposit growth. The Association has produced an overall increase in
total deposits of 30.8%, from $391.4 million at December 31, 1995 to $511.9
million at December 31, 1999. The flow of deposits is influenced significantly
by general economic conditions, changes in money market and prevailing interest
rates and competition.

  The following table presents the deposit activity for the periods indicated.

<TABLE>
<CAPTION>
                                                                          For the Years Ended December 31,
                                                       ----------------------------------------------------------------
                                                                1999                  1998                    1997
                                                       -----------------     ------------------      ------------------
<S>                                                      <C>                   <C>                     <C>
                                                                                (In thousands)

Deposits...........................................             $740,561               $701,925                $720,943
Withdrawals........................................              737,891                716,621                 725,033
                                                                --------               --------                --------
Net increase (decrease) before interest credited...                2,670                (14,696)                 (4,090)
Interest credited..................................               14,133                 14,769                  15,204
                                                                --------               --------                --------
Net increase in deposits...........................             $ 16,803               $     73                $ 11,114
                                                                ========               ========                ========
</TABLE>


     The following table indicates the amount of the certificates of deposit of
$100,000 or more by the time remaining until maturity as of December 31, 1999.

<TABLE>
<CAPTION>
                                                             Amount
                                                   ------------------------
                                                         (In thousands)
Maturity Period:
<S>                                                  <C>
   Three months or less............................                 $ 6,740
   Over three through six months...................                   5,267
   Over six through 12 months......................                  15,045
   Over 12 months..................................                  16,680
                                                                    -------
      Total........................................                 $43,732
                                                                    =======
</TABLE>


                                       16
<PAGE>

     The following table sets forth the distribution of the average daily
balance of deposit accounts and borrowings for the periods indicated and the
weighted average nominal interest rates on each category of deposits presented.

<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                  --------------------------------------------------------------------------------------------------
                                                 1999                               1998                            1997
                                  -----------------------------------  -------------------------------  ----------------------------

                                                            Weighted                        Weighted                       Weighted
                                                            Average                          Average                        Average
                                       Average              Nominal    Average               Nominal    Average             Nominal
                                       Balance     Interest   Rate     Balance     Interest    Rate     Balance    Interest   Rate
                                  -------------  ---------- --------  ---------   --------- ---------  --------   --------- -------
<S>                                <C>            <C>       <C>        <C>         <C>       <C>        <C>        <C>     <C>
                                                                           (in Thousands)
Money market and NOW
 deposits.........................    $ 53,508     $ 1,404    2.62%    $ 47,945     $ 1,147    2.39%    $ 46,634    $1,092    2.34%

Savings deposits..................      85,151       3,021    3.55       82,136       2,480    3.02       78,316     2,288    2.92

Certificates of deposit...........     356,439      19,751    5.54      362,720      21,186    5.84      387,557    23,306    6.01

Borrowings........................     230,335      12,886    5.59      142,481       8,031    5.64      102,649     5,643    5.50
                                      --------     -------    ----     --------     -------    ----     --------    ------    ----
  Total interest-bearing
   liabilities....................    $725,433     $37,062    5.11%    $635,282     $32,844    5.17%    $615,156   $32,329    5.26%
                                      ========     =======             ========     =======             ========   =======


</TABLE>

     The following table presents the amount of certificate accounts
outstanding based upon original contractual periods to maturity, at December 31,
1999, and based upon contracted rates, at December 31, 1998 and 1997.

<TABLE>
<CAPTION>
                                          Period to Maturity from December 31, 1999                              At December 31,
                       ------------------------------------------------------------------------------------   ---------------------
                          Less Than     One to        Two to    Three to     Four to  Five to     Total
                           One Year      Two          Three       Four        Five      Ten      December
                                        Years         Years       Years       Years    Years     31, 1999       1998          1997
                       ------------------------------------------------------------------------------------   ---------------------
<S>                    <C>             <C>           <C>        <C>           <C>     <C>       <C>            <C>             <C>
                                                                      (In thousands)
Certificate Accounts:
  3.00% to 5.50%.......       $61,745    $124,221     $16,052     $ 9,821       $172    $ 5,740    $217,751    $175,279    $ 74,933
  5.501% to 6.00%......        26,225      33,803      16,763      20,602        208     22,106     119,707     123,361     156,885
  6.001% to 6.50%......            93          66         763       9,046         94     19,711      29,773      47,976     115,491
  6.501% to 7.50%......            --          --          --          34         --     14,316      14,350      16,779      26,200
  7.501% to 8.50%......            --          --          --          --         --      2,750       2,750       2,806       2,855
  8.501% to 9.50%......            --          --          --          --         --      2,031       2,031       2,887       3,559
  9.501% to 10.50%.....            --          --          --          --         --          2           2         298         281
                              -------    --------     -------     -------       ----    -------    --------    --------    --------
                              $88,063    $158,090     $33,578     $39,503       $474    $66,656    $386,364    $369,386    $380,204
                              =======    ========     =======     =======       ====    =======    ========    ========    ========
</TABLE>



                                       17
<PAGE>




Borrowings

    Borrowings are used in conjunction with deposits in funding the operating
and investment activity of the Company. At December 31, 1999, the Company had
borrowings of $238.0 million. Of these borrowings, $228.0 million are held at
the Association level and the remaining $10.0 is held at the Company level. Of
the Association's borrowings, $70.0 million have a contractual maturity of five
years at an interest rate of 5.61%. However, every six months the FHLB has the
option to convert these borrowings to an adjustable rate based on the three
month libor. If the FHLB elects to convert the borrowings to an adjustable rate,
the borrowings can be repaid without penalty. In addition, $138.0 million in
borrowings had a original contractual maturity of ten years. These borrowings
carry a fixed interest rate for the first five years. On the fifth anniversary
date the FHLB has the option to convert these borrowings to an adjustable rate
base on three month libor. Again, if the FHLB elects to convert the borrowings
to adjustable rates, the borrowing can be repaid without penalty. If the
borrowings are not converted to an adjustable rate, the rate remains fixed at
the current contractual rate for the remaining five years of the borrowings. The
weighted average rate on these borrowings is 5.54%. The Association also has
short-term borrowing of $20,000 with the FHLB which matures in January 2000 at a
rate of 5.83%. The borrowings are secured by the assets of the Association. The
Company has short-term borrowings of $10.0 million that matures in January 2000
at a weighted average rate of 6.94%. These borrowings are secured by the assets
of the Company.

Subsidiary Activities

    The Association does not maintain any subsidiaries.

                                       18

<PAGE>



                          REGULATION AND SUPERVISION

General

    As a savings and loan holding company, the Company is required by federal
law to file reports with, and otherwise comply with, the rules and regulations
of the OTS. The Association is subject to extensive regulation, examination and
supervision by the OTS, as its primary federal regulator, and the FDIC, as the
deposit insurer. The Association is a member of the FHLB System and its deposit
accounts are insured up to applicable limits by the SAIF managed by the FDIC.
The Association must file reports with the OTS and the FDIC concerning its
activities and financial condition in addition to obtaining regulatory approvals
prior to entering into certain transactions such as mergers with, or
acquisitions of, other savings institutions. The OTS and/or the FDIC conduct
periodic examinations to test the Association's safety and soundness and
compliance with various regulatory requirements. This regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the insurance fund and
depositors. The regulatory structure also gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities and examination policies, including policies with respect to the
classification of assets and the establishment of adequate loan loss reserves
for regulatory purposes. Any change in such regulatory requirements and
policies, whether by the OTS, the FDIC or the United States Congress, could have
a material adverse impact on the Company, the Association and their operations.
Certain of the regulatory requirements applicable to the Association and to the
Company are referred to below or elsewhere herein. The description of statutory
provisions and regulations applicable to savings institutions and their holding
companies set forth in this Form 10-K does not purport to be a complete
description of such statutes and regulations and their effects on the
Association and the Company.

Holding Company Regulation

    The Company is a non-diversified unitary savings and loan holding company
within the meaning of federal law. Under prior law, a unitary savings and loan
holding company, such as the Company was not generally restricted as to the
types of business activities in which it may engage, provided that the
Association continued to be a qualified thrift lender. See "Federal Savings
Institution Regulation-QTL Test." The Gramm-Leach-Bliley Act of 1999 provides
that no company may acquire control of a savings association after May 4, 1999
unless it engages only in the financial activities permitted for financial
holding companies under the law or for multiple savings and loan holding
companies as described below. Further, the Gramm-Leach Bliley Act specifies that
existing savings and loan holding companies may only engage in such activities.
The Gramm-Leach-Bliley Act, however, grandfathered the unrestricted authority
for activities with respect to unitary savings and loan holding companies
existing prior to May 4, 1999, such as the Company, so long as the Association
continues to comply with the QTL Test. Upon any nonsupervisory acquisition by
the Company of another savings institution or savings bank that meets the
qualified thrift lender test and is deemed to be a savings institution by the
OTS, the Company would become a multiple savings and loan holding company (if
the acquired institution is held as a separtate subsidiary) and would generally
be limited to activities permissible for bank holding companies under


                                     19
<PAGE>


Section 4(c)(8) of the Association Holding Company Act, subject to the prior
approval of the OTS, and certain activities authorized by OTS regulation.

  A savings and loan holding company is prohibited from, directly or indirectly,
acquiring more than 5% of the voting stock of another savings institution or
savings and loan holding company, without prior written approval of the OTS and
from acquiring or retaining control of a depository institution that is not
insured by the FDIC. In evaluating applications by holding companies to acquire
savings institutions, the OTS considers the financial and managerial resources
and future prospects of the company and institution involved, the effect of the
acquisition on the risk to the deposit insurance funds, the convenience and
needs of the community and competitive factors.

    The OTS may not approve any acquisition that would result in a multiple
savings and loan holding company controlling savings institutions in more than
one state, subject to two exceptions: (i) the approval of interstate supervisory
acquisitions by savings and loan holding companies; and (ii) the acquisition of
a savings institution in another state if the laws of the state of the target
savings institution specifically permit such acquisitions. The states vary in
the extent to which they permit interstate savings and loan holding company
acquisitions.

    Although savings and loan holding companies are not subject to specific
capital requirements or specific restrictions on the payment of dividends or
other capital distributions, federal regulations do prescribe such restrictions
on subsidiary savings institutions as described below. The Association must
notify the OTS 30 days before declaring any dividend to the Company. In
addition, the financial impact of a holding company on its subsidiary
institution is a matter that is evaluated by the OTS and the agency has
authority to order cessation of activities or divestiture of subsidiaries deemed
to pose a threat to the safety and soundness of the institution.

Federal Savings Institution Regulation

    Business Activities.  The activities of federal savings institutions are
governed by federal law and regulations. These laws and regulations delineate
the nature and extent of the activities in which federal associations may
engage. In particular, many types of lending authority for federal association,
e.g., commercial, non-residential real property loans and consumer loans, are
limited to a specified percentage of the institution's capital or assets.

    Capital Requirements.  The OTS capital regulations require savings
institutions to meet three minimum capital standards: a 1.5% tangible capital
ratio, a 4% leverage ratio (3% for institutions receiving the highest rating on
the CAMELS rating system) and an 8% risk-based capital ratio. In addition, the
prompt corrective action standards discussed below also establish, in effect, a
minimum 2% tangible capital standard, a 4% leverage ratio (3% for institutions
receiving the highest rating on the CAMELS financial institution rating system),
and, together with the risk-based capital standard itself, a 4% Tier I risk-
based capital standard. The OTS regulations also require that, in meeting the
tangible, leverage and risk-based capital standards, institutions must generally
deduct investments in and loans to subsidiaries engaged in activities not
permissible for a national bank.

                                       20

<PAGE>


    The risk-based capital standard for savings institutions requires the
maintenance of Tier I (core) and total capital (which is defined as core capital
and supplementary capital) to risk-weighted assets of 4% and 8%, respectively.
In determining the amount of risk-weighted assets, all assets, including certain
off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%,
assigned by the OTS capital regulation based on the risks OTS believed are
inherent in the type of asset. Core (Tier 1) capital is defined as common
stockholders' equity (including retained earnings), certain noncumulative
perpetual preferred stock and related surplus, and minority interests in equity
accounts of consolidated subsidiaries less intangibles other than certain
mortgage servicing rights and credit card relationships. The components of
supplementary capital currently include cumulative preferred stock, long-term
perpetual preferred stock, mandatory convertible securities, subordinated debt
and intermediate preferred stock, the allowance for loan and lease losses
limited to a maximum of 1.25% risk-weighted assets and up to 45% of unrealized
gains on available-for-sale equity securities with readily determinable fair
values. Overall, the amount of supplementary capital included as part of total
capital cannot exceed 100% of core capital.

    The capital regulations also incorporate an interest rate risk component.
Savings institutions with "above normal" interest rate risk exposure are subject
to a deduction from total capital for purposes of calculating their risk-based
capital requirements. For the present time, the OTS has deferred implementation
of the interest rate risk component. At December 31, 1999, the Association met
each of its capital requirements.

    The following table presents the Association's capital position at December
31, 1999.

<TABLE>
<CAPTION>
                                                       Excess                    Capital
                    Actual          Required        (Deficiency)         Actual           Required
                ---------------  ---------------  ----------------  ----------------  ----------------
<S>             <C>              <C>              <C>               <C>               <C>
Tangible             $74,838          $12,614          $62,224              8.90%             1.50%
Core                  74,838           33,638           41,200              8.90              4.00
(Leverage)
Risk-based            75,763           28,176           47,587             21.51              8.00
</TABLE>

    Liquidation Account.  In accordance with OTS conversion regulations, a
liquidation account was established in an amount equal to the retained earnings
of the Association as of June 30, 1995, which approximated $37.4 million. At
December 31, 1999, the balance of the liquidation account was $10.2 million. In
the unlikely event of a liquidation of the Association, eligible account holders
would be entitled to receive distributions of any assets remaining after payment
of all creditors' claims, but before any distributions are made to the
Association's stockholders, equal to their proportionate interests at that time
in the liquidation account.

    Prompt Corrective Regulatory Action.  The OTS is required to take certain
supervisory actions against undercapitalized institutions, the severity of which
depends upon the institution's degree of undercapitalization. Generally, a
savings institution that has a ratio of total capital to risk weighted assets of
less than 8%, a ratio of Tier 1 (core) capital to risk-weighted assets of less
than 4% or a ratio of

                                       21

<PAGE>


core capital to total assets of less than 4% (3% or less for instituitions with
highest examination rating) is considered to be "undercapitalized." A savings
institution that has a total risk-based capital ratio less than 6%, a tier 1
capital ratio of less than 3% or a leverage ratio that is less than 3% is
considered to be "significantly undercapitalized" and a savings instituition
that has a tangible capital to asset ratio equal to or less than 2% is deemed bo
be "critically undercapitalized." Subject to a narrow exception, the OTS is
required to appoint a receiver or conservator for an institution that is
"critically undercapitalized." The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the date a savings
institution receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." Compliance with the plan
must be guaranteed by any parent holding company. In addition, numerous
mandatory supervisory actions become immediately applicable to an
undercapitalized institution, including, but not limited to, increased
monitoring by regulators and restrictions on growth, capital distributions and
expansion. The OTS could also take any one of a number of discretionary
supervisory actions, including the issuance of a capital directive and the
replacement of senior executive officers and directors.

    Insurance of Deposit Accounts.  Deposits of the Association are presently
insured by the SAIF. The FDIC maintains a risk-based assessment system by which
institutions are assigned to one of three categories based on their
capitalization and one of three subcategories based on examination ratings and
other supervisory information. An institution's assessment rate depends upon the
categories to which it is assigned. Assessment rates for SAIF member
institutions are determined semiannually by the FDIC and currently range from
zero basis points for the healthiest institutions to 27 basis points for the
riskiest.

    In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980's by the Financing
Corporation ("FICO") to recapitalized the predecessor to the SAIF. During 1999,
FICO payments for SAIF members approximated 6.10 basis points, while Bank
Insurance Fund ("BIF") members paid 1.2 basis points. By law, there will be
equal showing of FICO payments between SAIF and BIF members on the earlier of
January 1, 2000 or the date the SAIF and BIF are merged.

    The Association's assessment rate for fiscal 1999 was 6.5 basis points and
the premium paid for this period was $300,000. The FDIC has authority to
increase insurance assessments. A significant increase in SAIF insurance
premiums would likely have an adverse effect on the operating expenses and
results of operations of the Association. Management cannot predict what
insurance assessment rates will be in the future.

    Insurance of deposits may be terminated by the FDIC upon a finding that the
institution has engaged in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC or the OTS. The
management of the Association does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

    Loans to One Borrower.  Federal law provides that savings institutions are
generally subject to the limits on loans to one borrower applicable to national
banks. A savings institution may not make a loan

                                       22

<PAGE>


or extend credit to a single or related group of borrowers in excess of 15% of
its unimpaired capital and surplus. An additional amount may be lent, equal to
10% of unimpaired capital and surplus, if secured by readily-marketable
collateral. At December 31, 1999, the Association's limit on loans to one
borrower was $10.8 million and the Association's largest aggregate outstanding
balance of loans to one borrower was $417,000.

    QTL Test.  The HOLA requires savings institutions to meet a QTL test.  Under
the QTL test, a savings association is required to maintain at least 65% of its
"portfolio assets" (total assets less: (i) specified liquid assets up to 20% of
total assets; (ii) intangibles, including goodwill; and (iii) the value of
property used to conduct business) in certain "qualified thrift investments"
(primarily residential mortgages and related investments, including certain
mortgage-backed securities) in at least 9 months out of each 12 month period.

    A savings institution that fails the QTL test is subject to certain
operating restrictions and may be required to convert to a bank charter. As of
December 31, 1999, the Association maintained 75.6% of its portfolio assets in
qualified thrift investments and, therefore, met the QTL test. Recent
legislation has expanded the extent to which education loans, credit card loans
and small business loans may be considered "qualified thrift investments."

    Limitation on Capital Distributions.  OTS regulations impose limitations
upon all capital distributions by a savings institution, such as cash dividends,
payments to repurchase its shares and payments to shareholders of another
institution in a cash-out merger. The rule, effective in 1998, establishes three
tiers of institutions based primarily on an institution's capital level. An
institution that exceeded all capital requirements before and after a proposed
capital distribution ("Tier 1 Association") and has not been advised by the OTS
that it is in need of more than normal supervision, could, after prior notice
but without obtaining approval of the OTS, make capital distributions during a
calendar year equal to the greater of (i) 100% of its net earnings to date
during the calendar year plus the amount that would reduce by one-half the
excess capital over its capital requirements at the beginning of the calendar
year, or (ii) 75% of its net income for the previous four quarters. Any
additional capital distributions would require prior regulatory approval. At
December 31, 1999, the Association was a Tier I Association. Effective April 1,
1999, the OTS's capital distribution regulation was changed. Under the new
regulation, an application to and the prior approval of the OTS will be required
prior to any capital distribution if the institution does not meet the criteria
for "expedited treatment" of applications under OTS regulations (e.g.,
generally, examination ratings in the two top categories), the total capital
distributions for the calendar year exceed net income for that year plus the
amount of retained net income for the preceding two years, the institution would
be undercapitalized following the distribution or the distribution would
otherwise be contrary to a statute, regulation or agreement with OTS. If an
application is not required, the institution must still provide prior notice to
OTS of the capital distribution. In the event the Association's capital fell
below its regulatory requirements or the OTS notified it that it was in need of
more than normal supervision, the Association's ability to make capital
distributions could be restricted. In addition, the OTS could prohibit a
proposed capital distribution by any institution, which would otherwise be
permitted by the regulation, if the OTS determines that such distribution would
constitute an unsafe or unsound practice.

                                       23

<PAGE>


    Liquidity.  The Association is required to maintain an average daily balance
of specified liquid assets equal to a monthly average of not less than a
specified percentage of its net withdrawable deposit accounts plus short-term
borrowings. This liquidity requirement is currently 4%, but may be changed from
time to time by the OTS to any amount within the range of 4% to 10%. Monetary
penalties may be imposed for failure to meet these liquidity requirements. The
Association's liquidity ratio for 1999 was 8.8%, which exceeded the applicable
requirements. The Association has never been subject to monetary penalties for
failure to meet its liquidity requirements.

    Assessments.  Savings institutions are required to pay assessments to the
OTS to fund the agency's operations. The general assessments, paid on a semi-
annual basis, are computed upon the savings institution's total assets,
including consolidated subsidiaries, as reported in the Association's latest
quarterly thrift financial report. The assessments paid by the Association for
the fiscal year ended December 31, 1999 totalled $145,000.

    Transactions with Related Parties.  The Association's authority to engage in
transactions with related parties or "affiliates" (e.g., any company that
controls or is under common control with an institution, including the Company
and its non-savings institution subsidiaries) is limited by federal law. The
aggregate amount of covered transactions with any individual affiliate is
limited to 10% of the capital and surplus of the savings institution. The
aggregate amount of covered transactions with all affiliates is limited to 20%
of the savings institution's capital and surplus. Certain transactions with
affiliates are required to be secured by collateral in an amount and of a type
described in federal law. Transactions with affiliates must be on terms and
under circumstances that are at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. In addition, savings institutions are prohibited from lending to any
affiliate that is engaged in activities that are not permissible for bank
holding companies and no savings institution may purchase the securities of any
affiliate other than a subsidiary.

    The Association's authority to extend credit to executive officers,
directors and 10% shareholders ("insiders"), as well as entities such persons
control, is governed by federal law. Such loans are required to be made on terms
substantially the same as those offered to unaffiliated individuals and not
involve more than the normal risk of repayment. Recent legislation created an
exception for loans made pursuant to a benefit or compensation program that is
widely available to all employees of the institution and does not give
preference to insiders over other employees. The law also limits both the
individual and aggregate amount of loans the Association may make to insiders
based, in part, on the Association's capital position and requires certain board
approval procedures to be followed.

                                       24

<PAGE>


    Enforcement.  The OTS has primary enforcement responsibility over savings
institutions and has the authority to bring actions against the institution and
all institution-affiliated parties, including stockholders, and any attorneys,
appraisers and accountants who knowingly or recklessly participate in wrongful
action likely to have an adverse effect on an insured institution. Formal
enforcement action may range from the issuance of a capital directive or cease
and desist order to removal of officers and/or directors to institution of
receivership, conservatorship or termination of deposit insurance. Civil
penalties cover a wide range of violations and can amount to $25,000 per day, or
even $1 million per day in especially egregious cases. The FDIC has the
authority to recommend to the Director of the OTS enforcement action to be taken
with respect to a particular savings institution. If action is not taken by the
Director, the FDIC has authority to take such action under certain
circumstances. Federal law also establishes criminal penalties for certain
violations.

    Standards for Safety and Soundness.  The federal banking agencies have
adopted Interagency Guidelines Prescribing Standards for Safety and Soundness.
The guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. If the OTS determines that an
institution fails to meet any standard prescribed by the guidelines, the OTS may
require the institution to submit an acceptable plan to achieve compliance with
the standard.

Federal Home Loan Bank System

    The Association is a member of the Federal Home Loan Bank System, which
consists of twelve regional Federal Home Loan Banks. The Federal Home Loan Bank
provides a central credit facility primarily for member institutions. The
Association, as a member of the Federal Home Loan Bank, is required to acquire
and hold shares of capital stock in that Federal Home Loan Bank in an amount at
least equal to 1.0% of the aggregate principal amount of its unpaid residential
mortgage loans and similar obligations at the beginning of each year, or 1/20 of
its advances (borrowings) from the Federal Home Loan Bank, whichever is greater.
The Association was in compliance with this requirement with an investment in
Federal Home Loan Bank stock at December 31, 1999 of $11.4 million.

    The Federal Home Loan Banks are required to provide funds for the resolution
of insolvent thrifts from the late 1980's and to contribute funds for affordable
housing programs. These requirements could reduce the amount of dividends that
the Federal Home Loan Banks pay to their members and could also result in the
Federal Home Loan Banks imposing a higher rate of interest on advances to their
members. If dividends were reduced, or interest on future Federal Home Loan Bank
advances increased, the Association's net interest income would likely also be
reduced. Recent legislation has changed the structure of the Federal Home Loan
Banks funding obligations for insolvent thrifts, revised the capital structure
of the Federal Home Loan Banks and implemented entirely voluntary membership for
Federal Home Loan Banks. Management cannot predict the effect that these changes
may have with respect to its Federal Home Loan Bank membership.

                                       25

<PAGE>


Federal Reserve System

    The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The regulations generally provide
that reserves be maintained against aggregate transaction accounts as follows:
for accounts aggregating $44.3 million or less (subject to adjustment by the
Federal Reserve Board) the reserve requirement is 3%; and for accounts
aggregating greater than $44.3 million, the reserve requirement is $1.329
million plus 10% (subject to adjustment by the Federal Reserve Board between 8%
and 14%) against that portion of total transaction accounts in excess of $44.3
million. The first $5.0 million of otherwise reservable balances (subject to
adjustments by the Federal Reserve Board) are exempted from the reserve
requirements. The Association complies with the foregoing requirements.

                          FEDERAL AND STATE TAXATION

Federal Taxation

    General.  The Company and the Association report their income on a
consolidated basis and the accrual method of accounting, and are subject to
federal income taxation in the same manner as other corporations with some
exceptions, including particularly the Association's reserve for bad debts
discussed below. The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax rules
applicable to the Association or the Company. The Association has not been
audited by the IRS during the last five years. For its 1999 taxable year, the
Company is subject to a maximum federal income tax rate of 34%.

    Bad Debt Reserves.  For fiscal years beginning prior to December 31, 1995,
thrift institutions which qualified under certain definitional tests and other
conditions of the Internal Revenue Code of 1986 (the "Code") were permitted to
use certain favorable provisions to calculate their deductions from taxable
income for annual additions to their bad debt reserve. A reserve could be
established for bad debts on qualifying real property loans (generally secured
by interests in real property improved or to be improved) under (i) the
Percentage of Taxable Income Method (the "PTI Method") or (ii) the Experience
Method. The reserve for non-qualifying loans was computed using the Experience
Method.

    The Small Business Job Protection Act of 1996 (the "1996 Act"), which was
enacted on August 20, 1996, requires savings institutions to recapture (i.e.,
take into income) certain portions of their accumulated bad debt reserves. The
1996 Act repeals the reserve method of accounting for bad debts effective for
tax years beginning after 1995. Thrift institutions that would be treated as
small banks are allowed to utilize the Experience Method applicable to such
institutions, while thrift institutions that are treated as large banks (those
generally exceeding $500 million in assets) are required to use only the
specific charge-off method. Thus, the PTI method of accounting for bad debts is
no longer available for any financial institution.

                                       26

<PAGE>


    A thrift institution required to change its method of computing reserves for
bad debts will treat such change as a change in method of accounting, initiated
by the taxpayer, and having been made with the consent of the IRS. Any Section
481(a) adjustment required to be taken into income with respect to such change
generally will be taken into income ratably over a six-taxable period beginning
with the first taxable year after 1995, subject to a two-year suspension if the
"residential loan requirement" is satisfied.

    Under the residential loan requirement provision, the recapture required by
the 1996 Act will be suspended for each of two successive taxable years,
beginning with the Association's taxable year of 1998, in which the Association
originates a minimum of certain residential loans based upon the average of the
principal amounts of such loans made by the Association during its six taxable
years preceding its current taxable year.

    Under the 1996 Act, for its current and future taxable years, the
Association is not permitted to make additions to its tax bad debt reserves. In
addition, the Association is required to recapture (i.e., take into income) over
a six year period the excess of the balance of its tax bad debt reserves as of
December 31, 1995 over the balance of such reserves as of December 31, 1987. As
a result of such recapture, the Association will incur an additional tax
liability of approximately $1.2 million over six years beginning with the 1998
tax year.


    Distributions.  Under the 1996 Act, if the Association makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Association's unrecaptured tax bad debt reserves (including
the balance of its reserves as of December 31, 1987) to the extent thereof, and
then from the Association's supplemental reserve for losses on loans, to the
extent thereof, and an amount based on the amount distributed (but not in excess
of the amount of such reserves) will be included in the Association's income.
Non-dividend distributions include distributions in excess of the Association's
current and accumulated earnings and profits, as calculated for federal income
tax purposes, distributions in redemption of stock, and distributions in partial
or complete liquidation. Dividends paid out of the Association's current or
accumulated earnings and profits will not be so included in the Association's
income.

    The amount of additional taxable income triggered by a non-dividend is an
amount that, when reduced by the tax attributable to the income, is equal to the
amount of the distribution. Thus, if the Association makes a non-dividend
distribution to the Company, approximately one and one-half times the amount of
such distribution (but not in excess of the amount of such reserves) would be
includable in income for federal income tax purposes, assuming a 35% federal
corporate income tax rate. The Association does not intend to pay dividends that
would result in a recapture of any portion of its bad debt reserves.

    Corporate Alternative Minimum Tax.  The Internal Revenue Code (the "Code")
imposes a tax on alternative minimum taxable income ("AMTI") at a rate of 20%.
The excess of the tax bad debt reserve deduction using the percentage of taxable
income method over the deduction that would have been allowable under the
Experience Method is treated as a preference item for purposes of computing the
AMTI. Only 90% of AMTI can be offset by net operating loss carryovers. AMTI is
increased by an

                                       27

<PAGE>


amount equal to 75% of the amount by which the Association's adjusted current
earnings exceeds its AMTI (determined without regard to this preference and
prior to reduction for net operating losses).

    Dividends Received Deduction and Other Matters.  The Company may exclude
from its income 100% of dividends received from the Association as a member of
the same affiliated group of corporations. The corporate dividends received
deduction is generally 70% in the case of dividends received from unaffiliated
corporations with which the Company and the Association will not file a
consolidated tax return, except that if the Company owns more than 20% of the
stock of a corporation distributing a dividend, 80% of any dividends received
may be deducted.

State and Local Taxation

    The Association is subject to the Mutual Thrift Institutions Tax of the
Commonwealth of Pennsylvania based on the Association's financial net income
determined in accordance with generally accepted accounting principles with
certain adjustments. The tax rate under the Mutual Thrift Institutions Tax is
11.5%. Interest on state and federal obligations is excluded from net income. An
allocable portion of net interest expense incurred to carry the obligations is
disallowed as a deduction. Three year carryforwards of losses are allowed. The
Company is subject to the Capital Stock Tax of the Commonwealth of Pennsylvania
and the Franchise Tax of the state of Delaware.

Personnel

     As of December 31, 1999, the Association had 52 full-time employees and 10
part-time employees. The employees are not represented by a collective
bargaining unit, and the Association considers its relationship with its
employees to be good.

Year 2000 Compliance

     As of March 1, 2000, the Company has experienced no disruptions or problems
regarding the Year 2000 rollover. As part of the Company's Year 2000 plan, on
January 1, 2000, the Company tested and sampled internal systems, including it
primary third-party processor, telecommunications systems, automated teller
machines and related third party vendors supporting these machines, various
third party software applications and the Company's ability to interface with
its corespondent banks, such as the FHLB. All testing completed on January 1,
2000 indicated all systems were operating as normal. Through March 1, 2000, all
of the Company's internal hardware and software continue to operate as normal,
and to date, to the Company's knowledge, all vendors utilized by the company in
its daily operations are operating normally and have not indicated any Y2K
related problems.

     The Company will continue to monitor and oversee all internal operations
and be in contact with its vendors regarding Y2K related issues. Based on the
successful transition through the January 2000 rollover period and the
previously conducted testing, the Company does not anticipate any significant
Y2K problems to arise. The Company's expenditures for the Y2K effort total
approximately $50,000.

                                       28

<PAGE>


Item 2. Properties

     The Company conducts its business by maintaining an office at 300 Delaware
Avenue, Suite 1704, Wilmington, Delaware 19801.  The Association conducts its
business through its main office located at 532 Lincoln Avenue, Pittsburgh,
Pennsylvania 15202 and six full-service branch offices, all of which are located
in Allegheny County.  Three of the Association's branch offices are leased.
Loan originations are processed at the administrative office.  The Association
believes that its current facilities are adequate to meet the present and
immediately foreseeable needs of the Association and the Company.

Item 3.  Legal Proceedings

     Neither the Company nor its subsidiary are involved in any pending legal
proceedings other than routine legal proceedings occurring in the ordinary
course of business, which in the aggregate involve amounts which are believed by
management to be immaterial to the financial condition and results of the
operations of the Association.

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

     See the proxy for submission of matters to a vote of security holders.


                                 PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

          Information relating to the market for Registrant's common equity and
related stockholder matters appears under "Shareholder Information" on page 48
in the Registrant's 1999 Annual Report to Stockholders and is incorporated
herein by reference.  Information relating to the dividend restrictions for
Registrant's common stock appears under Note 12 to the "Notes to Consolidated
Financial Statements Years Ended December 31, 1999, 1998 and 1997" on pages 33
and 34  in the Registrant's 1999 Annual Report to stockholders and is
incorporated herein by reference.

Item 6.  Selected Financial Data

          The above-captioned information appears under "Selected Financial and
Other Data of the Company" in the Registrant's 1999 Annual Report to
Stockholders on pages 2 and 3 is incorporated herein by reference.

                                       29

<PAGE>

Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

      The above-captioned information appears under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Registrant's
1999 Annual Report to Stockholders on pages 8 through 19 and is incorporated
herein by reference.

Item 7.a. Quantitative and Qualitative Disclosure About Market Risks

       The above-captioned information appears under the heading "Interest Rate
Sensitivity" in the registrant's 1999 Annual Report to Stockholders on pages 10
and 11 is incorporated herein by reference. For 1998, it is as follows:

Interest Rate Sensitivity Analysis

  The matching of assets and liabilities may be 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."  An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that same time period.  The interest rate
sensitivity gap is defined as the difference between the amount of interest-
earning assets anticipated, based upon certain assumptions, to mature or reprice
within a specific time period and the amount of interest-bearing liabilities
anticipated, based upon certain assumptions, to mature or reprice within that
same time period.  A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities.  A
gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets.  Accordingly,
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 of its net interest
income.

  The following table sets forth the amount of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 1998 which are
anticipated to reprice or mature in each of the future time periods shown.  The
amounts of assets and liabilities shown which reprice 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
historical prepayment rates.  The prepayment rates utilized are based on the
historical prepayment rates experienced by the Company, which management
believes to be reasonable.  While a conventional gap measure may be useful, it
is limited in its ability to predict trends in future earnings.  It 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 the method of analysis presented in the
foregoing table.  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 interest 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.

                                      30
<PAGE>
<TABLE>
<CAPTION>
                                                                               AT DECEMBER 31, 1998
                                          ----------------------------------------------------------------------------------------
                                                                      More Than           More Than Six            More Than One
                                             Three Months            Three Months           Months to              Year to Three
                                               or Less               to Six Months         Twelve Months              Years
                                           ----------------------------------------------------------------------------------------
                                                                              (Dollars in thousands)
<S>                                          <C>                     <C>                  <C>                     <C>
INTEREST EARNING ASSETS:
  Real Estate Loans:
      ARM Loans                               $   2,246              $     371              $   1,541              $  13,706
      Fixed Rates Loans                           7,853                  7,685                 15,370                 58,062
      Residential Construction Loans                  -                      -                      -                      -
      Multi-Family                                    1                      -                      -                     57
      Second Mortgage Loans                       1,047                      -                      -                      -
  Consumer Loans                                    895                      -                      -                      4
  Investment securities                          60,840                      -                      -                      -
  FHLB Stock                                          -                    175                  5,348                  2,560
                                              ---------                      -                      -                      -
                                                                     ---------              ---------              ---------
     Total Interest Earning Assets               72,882                  8,231                 22,259                 74,389
INTEREST BEARING LIABILITIES:
  Passbook, Club and Other Accounts               2,575                  2,575                  5,150                 16,478
  Money Market and NOW Accounts                   2,737                  2,737                  5,474                 15,004
  Certificate Accounts                           72,172                 73,154                 91,132                 89,252
  Borrowings                                          -                      -                      -                      -
  Advances by Borrowers for Taxes
   and Insurance                                 11,354                      -                      -                      -
                                              ---------              ---------             ----------              ---------
Total Interest Bearing Liabilities               88,838                 78,466                101,756                120,734
                                              ---------              ---------             ----------              ---------
Interest Sensitivity Gap                      $ (15,956)             $ (70,235)             $ (79,497)             $ (46,345)
                                              =========              =========             ==========              =========
Cumulative Interest Sensitivity Gap           $ (15,956)             $ (86,191)             $(165,688)             $(212,033)
                                              =========              =========             ==========              =========
Cumulative Interest Sensitivity Gap
   as a Percentage of Total Assets                (2.08%)               (11.23%)               (21.58%)               (27.62%)

Cumulative Net Interest Earning Assets
   as a Percentage of Cumulative
   Interest Bearing Liabilities                   82.04%                 48.48%                 38.42%                 45.60%
<CAPTION>
                                                                            AT DECEMBER 31, 1998
                                          ----------------------------------------------------------------------------------------
                                                     More Than                More Than
                                                  Three Years to             Five Years to        More Than Ten
                                                    Five Years                Ten Years              Years              Total
                                          ----------------------------------------------------------------------------------------
                                                                                (Dollars in thousands)
<S>                                                    <C>                    <C>                    <C>                <C>
INTEREST EARNING ASSETS:
  Real Estate Loans:
      ARM Loans                                       $    1,793             $        -              $      -           $  19,657
      Fixed Rates Loans                                   53,177                154,013               216,089             512,249
      Residential Construction Loans                           -                      -                 7,570               7,570
      Multi-Family                                           136                    261                   196                 651
      Second Mortgage Loans                                2,681                    780                     -               4,508
  Consumer Loans                                               -                      -                     -                 899
  Investment securities                                        -                      -                     -                   -
  FHLB Stock                                              97,717                 34,690                     4             201,334
                                                               -                      -                 9,000               9,000
                                                      ----------             ----------              --------           ---------
     Total Interest Earning Assets                       155,504                189,744               232,859             755,868
INTEREST BEARING LIABILITIES:
  Passbook, Club and Other Accounts                       12,187                 18,330                16,283              73,578
  Money Market and NOW Accounts                            9,193                 10,866                 6,153              52,164
  Certificate Accounts                                    26,498                 17,178                     -             369,386
  Borrowings                                              70,000                110,000                     -             180,000
  Advances by Borrowers for Taxes
   and Insurance                                               -                      -                     -              11,354
                                                      ----------             ----------              --------           ---------
Total Interest Bearing Liabilities                       117,878                156,374                22,436             686,482
                                                      ----------             ----------              --------           ---------

Interest Sensitivity Gap                              $  37,626              $  33,370               $210,423            $ 69,386
                                                      ==========             ==========              ========            ========

Cumulative Interest Sensitivity Gap                   $(174,407)             $(141,037)              $ 69,386            $ 69,386
                                                      ==========             ==========              ========            ========
Cumulative Interest Sensitivity Gap
   as a Percentage of Total Assets                       (22.72%)               (18.37%)                9.04%               9.04%

Cumulative Net Interest Earning Assets
   as a Percentage of Cumulative
   Interest Bearing Liabilities                           65.65%                 78.76%               110.11%             110.11%
</TABLE>



                                       31

<PAGE>


  Net Portfolio Value.  The Company's interest rate sensitivity is monitored by
management through selected interest rate risk measures produced internally and
by the OTS.  Using data from the Association's quarterly Thrift Financial
Reports, the OTS measures the Association's interest rate risk by modeling the
change in net portfolio value ("NPV") over a variety of interest rate scenarios.
NPV is the present value of expected cash flows from assets, liabilities and
off-balance sheet contracts.  A NPV ratio, in any interest rate scenario, is
defined as the NPV in that rate scenario divided by the market value of assets
in the same scenario.

  The interest rate risk measures used by the OTS include an interest rate risk
"Exposure Measure" or "post-shock" NPV ratio and a "Sensitivity Measure."  A low
"post-shock" NPV ratio indicates greater exposure to interest rate risk.
Greater exposure can result from a low initial NPV ratio or high sensitivity to
changes in interest rates.  The Sensitivity Measure is the decline in the NPV
ratio, in basis points, caused by a 200 basis point increase or decrease in
rates, whichever produces a larger decline.

  As of December 31, 1998, the Association's NPV, as measured by the OTS, was
$83.6 million or 10.56% 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 point decrease, was $68.9 million, or 8.37%
of the market value of assets.  The change in the NPV ratio or the Association's
Sensitivity Measure was -219 basis points.  Under OTS capital requirements which
have not yet been fully implemented, the decline in the NPV ratio at December
31, 1998 would reflect an above average interest rate risk.  If the regulations
are finalized as proposed, the Company would remain in compliance with the fully
phased in capital requirements.  Management reviews the quarterly OTS
measurements 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 above-captioned information appears under the heading "Interest Rate
Sensitivity" in the registrant's 1999 Annual Report to Stockholders on pages 10
and 11 is incorporated herein by reference. For 1998, it is as follows:

Item 8.  Financial Statements and Supplementary Data

     The Consolidated Financial Statements of First Bell Bancorp, Inc. and its
subsidiary, together with the report thereon by Deloitte & Touche LLP appears in
the Registrant's 1999 Annual Report to Stockholders on pages 21 through 45 and
are incorporated herein by reference.

Item 9.   Change in and Disagreements with Accountants on Accounting and
          Financial Disclosure

     None.

                                 PART III

Item 10.  Directors and Executive Officers of the Registrant

     The information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 24, 2000,
at pages 4 through 6.

Item 11.  Executive Compensation

     The information relating to directors' compensation and executives'
compensation is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 24, 2000,
at pages 7 through 14 (excluding the Compensation Committee Report and Stock
Performance Graph).

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The information relating to security ownership of certain beneficial owners
and management is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 24, 2000,
at pages 4 through 6.




                                       32

<PAGE>


Item 13.  Certain Relationships and Related Transactions

     The information relating to certain relationships and related transactions
is incorporated herein by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held on April 24, 2000, at page 14.

                                 PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as a part of this report:

(1) Consolidated Financial Statements of the Company are incorporated by
    reference to the following indicated pages of the 1999 Annual Report to
    Stockholders.

<TABLE>
<CAPTION>

                                                                    PAGE
<S>                                                                 <C>

    Independent Auditors Report....................................    21

    Consolidated Balance Sheets for the
     December 31, 1999 and 1998...................................     22

    Consolidated Statements of Income for the
     Years Ended December 31, 1999, 1998 and 1997.................     23

    Consolidated Statements of Comprehensive Income (Loss) for the
     Years Ended December 31, 1999, 1998 and 1997.................     24

    Consolidated Statements of Changes in Stockholders' Equity
     for the Years Ended December 31, 1999, 1998 and 1997.........     25

    Consolidated Statements of Cash Flows for the
     Years Ended December 31, 1999, 1998 and 1997.................     26

    Notes to Consolidated Financial Statements for the
     Years Ended December 31, 1999, 1998 and 1997.................  27-45
</TABLE>
   The remaining information appearing in the 1999 Annual Report to Stockholders
is not deemed to be filed as part of this report, except as expressly provided
herein.

(2)  All schedules are omitted because they are not required or applicable, or
the required information is shown in the consolidated financial statements or
the notes thereto.






                                       33

<PAGE>

(3)  Exhibits

     (a) The following exhibits are filed as part of this report.

         3.1  Certificate of Incorporation of First Bell Bancorp, Inc.*
         3.2  Bylaws of First Bell Bancorp, Inc.*
         4.0  Stock Certificate of First Bell Bancorp, Inc.*
         __________________________________
         *    Incorporated herein by reference into this document from the
              Exhibits to the Form S-1, Registration Statement, originally filed
              on November 9, 1994, as amended and declared effective on May 9,
              1995, Registration No. 33-86160.

         10.1 First Bell Bancorp, Inc. 1995 Master Stock Option Plan**
         10.2 Bell Federal Savings and Loan Association of Bellevue Master Stock
              Compensation Plan**
         10.5 Form of Bell Federal Savings and Loan Association of Bellevue
              Supplemental Executive Retirement Plan*
         10.6 Employment Agreement between First Bell Bancorp, Inc. and certain
              executive officers, including Messrs. Eckert and Hinds (filed
              herewith)
         10.7 Employment Agreement between Bell Federal Savings and Loan
              Association of Bellevue and certain executive officers, including
              Messrs. Eckert and Hinds (filed herewith)
         11.0 Computation of earnings per share (filed herewith)
         13.0 Portions of the 1999 Annual Report to Stockholders (filed
              herewith)
         23.0 Consent of Independent Accountant (filed herewith)
         27.0 Financial Data Schedule (filed herewith)
         99.0 Proxy Statement for 2000 Annual Meeting of Stockholders to be held
              on April 24, 2000 and previously filed on March 17, 2000 is herein
              incorporated by reference

         __________________________________

         ** Incorporated herein by reference into this document from the
            Exhibits to the Form S-1 Registration Statement originally filed on
            November 9, 1994 as amended and declared effective on May 9, 1999,
            Registration No. 33-86160.

    (b)     Reports on Form 8-K

            None.

                                       34

<PAGE>

                                  SIGNATURES

          Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Date:       March 30, 2000        By:  /s/ Albert H. Eckert II
       ------------------------        ----------------------------------------
                                  Albert H. Eckert II,
                                  President, Chief Executive Officer
                                  and Director

Date:        March 30, 2000       By: /s/ Jeffrey M. Hinds
       ------------------------       -----------------------------------------
                                  Jeffrey M. Hinds
                                  Executive Vice President, Chief Financial
                                  Officer and Director


    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

/s/ Albert H. Eckert, II      President, Chief Executive  March 30, 2000
--------------------------    Officer and Director        --------------
Albert H. Eckert, II


/s/ Jeffrey M. Hinds          Executive Vice President,   March 30, 2000
--------------------------    Chief Financial Officer     --------------
Jeffrey M. Hinds              and Director


/s/ David F. Figgins          Vice President and          March 30, 2000
--------------------------    Director                    --------------
David F. Figgins


/s/ Thomas J. Jackson, Jr.    Director                    March 30, 2000
--------------------------                                --------------
Thomas J. Jackson, Jr.


/s/ Robert C. Baierl          Secretary and Director      March 30, 2000
--------------------------                                --------------
Robert C. Baierl


/s/ William S. McMinn         Vice President and          March 30, 2000
-------------------------     Director                    --------------
William S. McMinn


                                      35
<PAGE>

/s/ Peter E. Reinert              Director         March 30, 2000
---------------------------                        --------------
Peter E. Reinert


/s/ Jack W. Schweiger             Director         March 30, 2000
---------------------------                        --------------
Jack W. Schweiger


/s/ Theodore R. Dixon             Director         March 30, 2000
---------------------------                        --------------
Theodore R. Dixon



                                      36