<PAGE>

                               2002 ANNUAL REPORT









                                     [LOGO]
                                   First Bell
                                    Bancorp,
                                      Inc.

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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Table of Contents
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<TABLE>
              <S>                                              <C>

              SELECTED FINANCIAL AND OTHER DATA OF THE COMPANY  1
              ----------------------------------------------------

              LETTER TO OUR SHAREHOLDERS                        3
              ----------------------------------------------------

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS     9
              ----------------------------------------------------

              MANAGEMENT'S REPORT ON INTERNAL CONTROL AND
              COMPLIANCE WITH LAWS AND REGULATIONS             24
              ----------------------------------------------------

              INDEPENDENT AUDITORS' REPORT                     25
              ----------------------------------------------------

              CONSOLIDATED FINANCIAL STATEMENTS                26
              ----------------------------------------------------

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS       31
              ----------------------------------------------------

              EXECUTIVE MANAGEMENT AND DIRECTORS               50
              ----------------------------------------------------

              SHAREHOLDER INFORMATION                          52
              ----------------------------------------------------

              OFFICE LOCATIONS                                 53
              ----------------------------------------------------
</TABLE>

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<PAGE>


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

<TABLE>
<CAPTION>
                                                                     December 31,
                                                     ---------------------------------------------
                                                       2002     2001      2000     1999     1998
                                                     -------- --------  -------- -------- --------
                                                                    (in thousands)
<S>                                                  <C>      <C>       <C>      <C>      <C>
Financial Condition Data:
Total assets........................................ $892,885 $855,203  $832,680 $821,171 $767,606
Investments, held to maturity.......................       --       --        --    4,989    9,980
Investments, available for sale.....................  309,108  281,430   213,234  202,382  136,677
Cash and cash equivalents...........................   35,414   32,198    40,509   20,468   21,543
Total loans receivable, net.........................  333,672  436,473   527,811  533,259  545,535
Mortgage-backed securities, available for sale......  158,637   55,995    21,523       --       --
Deposits............................................  586,686  561,352   536,685  511,931  495,128
Borrowings..........................................  221,750  214,250   219,250  238,000  180,000
Stockholders' equity................................   73,706   66,441    61,620   54,518   73,902

                                                                Year Ended December 31,
                                                     ---------------------------------------------
                                                       2002     2001      2000     1999     1998
                                                     -------- --------  -------- -------- --------
                                                         (in thousands, except per share data)
Selected Operating Data:
Interest income..................................... $ 44,369 $ 49,737  $ 52,705 $ 52,090 $ 49,649
Interest expense....................................   32,612   41,148    40,677   37,061   32,843
                                                     -------- --------  -------- -------- --------
 Net interest income................................   11,757    8,589    12,028   15,029   16,806
 Provision for loan losses..........................       --       --        --      120       90
                                                     -------- --------  -------- -------- --------
 Net interest income after provision for loan losses   11,757    8,589    12,028   14,909   16,716
Total other income..................................    3,086    2,434       858      598      643
Total other expenses................................    5,319    5,170     5,598    6,116    5,643
                                                     -------- --------  -------- -------- --------
Income before provision for income taxes............    9,524    5,853     7,288    9,391   11,716
Provision for income taxes..........................      948     (505)      586    1,349    3,878
                                                     -------- --------  -------- -------- --------
Net income.......................................... $  8,576 $  6,358  $  6,702 $  8,042 $  7,838
                                                     ======== ========  ======== ======== ========
Earnings per share
 Basic.............................................. $   2.09 $   1.55  $   1.61 $   1.68 $   1.41
                                                     ======== ========  ======== ======== ========
 Diluted............................................ $   2.02 $   1.52  $   1.57 $   1.61 $   1.35
                                                     ======== ========  ======== ======== ========
Dividends declared per common shares................ $   0.54 $   0.48  $   0.48 $   0.40 $   0.40
                                                     ======== ========  ======== ======== ========
</TABLE>

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                                                                             1

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FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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<TABLE>
<CAPTION>
                                                                      At or For the Year Ended December 31,
                                                                   -------------------------------------------
                                                                     2002     2001     2000     1999     1998
                                                                   -------  -------  -------  -------  -------
<S>                                                                <C>      <C>      <C>      <C>      <C>
Selected Financial Ratios and Other Data:
Book value per share.............................................. $ 16.25  $ 13.96  $ 12.95  $ 10.51  $ 12.11
Stockholders' equity to assets at period end......................    8.25%    7.77%    7.40%    6.64%    9.63%
Return on average assets (net income divided by average total
  assets).........................................................    0.98     0.75     0.82     0.99     1.09
Return on average equity (net income divided by average
  equity).........................................................   11.88     9.40    12.28    12.50    10.36
Stockholders' equity to assets ratio (average stockholders' equity
  divided by average total assets)................................    8.27     7.95     6.68     7.96    10.50
Dividend payout ratio.............................................   26.73    30.84    29.38    23.04    28.48
Average interest rate spread (1)(4)...............................    1.56     1.17     1.57     1.73     1.93
Net interest margin (2)(4)........................................    1.75     1.40     1.89     2.19     2.47
Other income to average assets....................................    0.35     0.29     0.10     0.07     0.09
Other expenses to average assets..................................    0.61     0.61     0.69     0.76     0.78
Non-performing assets to total assets.............................    0.20     0.12     0.07     0.08     0.08
Non-performing loans to total loans...............................    0.54     0.24     0.11     0.05     0.09
Allowance for loan losses to total loans..........................    0.28     0.21     0.18     0.17     0.15
Allowance for loan losses to non-performing assets................    .51x     .88x    1.56x    1.40x    1.39x
Efficiency ratio (3)..............................................   35.84    46.90    43.44    39.44    32.51
Net interest income to other expenses.............................   2.21x    2.30x    2.76x    3.08x    3.18x
Net interest income after provision for loan losses to total other
  expenses........................................................   2.21x    2.30x    2.76x    3.06x    3.17x
Average interest-earning assets to average interest--bearing
  liabilities.....................................................   1.05x    1.05x    1.06x    1.09x    1.12x
Number of:
 Depositor accounts...............................................  51,247   55,128   56,581   54,257   53,579
 Full-service customer service facilities.........................       7        7        7        7        7
</TABLE>
--------
(1) The interest rate spread represents the difference between the
    weighted-average yield on interest-earning assets and the weighted-average
    cost of interest-bearing liabilities.
(2) The net interest margin represents net interest income as a percentage of
    average interest-earning assets.
(3) The efficiency ratio represents the ratio of recurring other expenses to
    recurring other income and net interest income.
(4) Ratios are based on net interest income determined with tax equivalent
    rates of return for non-taxable investment securities.

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2

<PAGE>

To Our Shareholders
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                                  In view of the challenging financial
                                conditions of 2002, we are unusually proud of
                                the performance of First Bell Bancorp, Inc.,
                                the parent corporation of Bell Federal Savings
                                and Loan Association of Bellevue. While the
                                United States economy seemed stalled between
                                outright recession and decisive recovery, and
                                political uncertainties clouded the outlook for
                                the future, we were able to register a solidly
                                profitable year for our shareholders.

                                  Our net income for the year ended December
                                31, 2002, was $8.6 million, compared to $6.4
                                million for the previous year. Earnings per
                                diluted share for the year were $2.02, in
                                comparison with $1.52 per diluted share in
                                2001. As a result, we were able to post the
                                leading improvement in stock price of any
                                financial institution in the Pittsburgh region.
                                Our stock closed the year at $21.26 per share,
                                up from the December 31, 2001, price of $13.95.
                                At year's end, our Board of Directors declared
                                a regular quarterly dividend of $0.15 per share
                                to stockholders, up from $0.12.

                                  This is also a good place to mention two
                                important ratios in the financial services
                                industry which are widely used to gauge how
                                well an institution is employing the resources
                                at its disposal. In 2002, we showed clear
                                improvements in both ratios. First Bell
                                Bancorp's return on average equity, or ROE,
                                improved to 11.88% for 2002, as opposed to
                                9.40% a year earlier. Our return on average
                                assets, or ROA, last year was 0.98%, up from
                                0.75% in 2001.

                                  We attribute this gratifying performance
                                first of all to the favorable interest rate
                                environment. Although lower interest rates have
                                yet to stimulate the national economy into
                                robust recovery, they have improved our margins
                                by reducing interest rates on our certificates
                                of deposit. We also counted important income
                                from sales of investment securities and from an
                                increase in our loan fees and service charges.
                                The reduction of our mortgage portfolio helped
                                us improve our position with respect to
                                interest rate risk. The portfolio dropped by
                                $102.8 million in 2002, to a new balance of
                                $333.7 million. Largely as a consequence of
                                this reduction in the balance of our loan
                                portfolio, our interest rate risk improved,
                                with rate sensitivity falling to 211 basis
                                points from 419 basis points.

                                  In addition, our traditionally strong
                                efficiency ratio once again reflected our
                                ability to manage costs; the productivity of
                                our staff pays

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FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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                                off in substantial savings that go directly
                                into our improved share price. Last year, our
                                efficiency ratio improved to 35.84% from 46.90%
                                in 2001. In October 2002, we announced our
                                ninth stock repurchase program, conducted
                                through registered broker-dealers in open
                                market transactions.

                                  When it was completed, we had repurchased
                                238,722 shares, or 5% of shares outstanding, an
                                average cost of $18.80 per share.

                                  The capital foundation of First Bell Bancorp
                                remains healthy. Total consolidated assets were
                                $892.9 million at the end of 2002, up from
                                $855.2 million twelve months earlier. Savings
                                deposits advanced to $586.6 million over $561.3
                                million in 2001. Core deposits increased in
                                2002 to $205.1 million from $154.9 million the
                                previous year, a growth of 32.4%. Total
                                consolidated stockholders' equity also improved
                                markedly, to $73.7 million for last year over
                                $66.4 million in 2001; in the same period, book
                                value per share grew to $16.25 per share from
                                $13.96.

                                  The continuing hesitancy of economic recovery
                                in our country may also be seen in the progress
                                of our non-performing assets. At year's end
                                2002, non-performing assets were $1.8 million,
                                which is 0.20% of total assets; those figures
                                are up from $1.1 million and 0.12%,
                                respectively, from the prior year. Our
                                non-performing assets have always been
                                controlled by a rigorous and systematic credit
                                culture which remains at the core of our
                                management philosophy. The effectiveness of
                                that culture is dramatized by our loan losses.
                                Our current loan loss reserve is $925,000, or
                                51.4% of non-performing assets as of this
                                writing.

                                  Low interest rates generally attract mortgage
                                customers looking to take advantage of the
                                lower rates by refinancing their mortgage. As
                                long-term rates began to decline after a
                                surprisingly long delay, we have become an
                                extremely active player in the regional
                                refinancing market, both for our own customers
                                but also on behalf of other Pittsburgh
                                financial institutions. We anticipate that this
                                activity will continue to generate fees that
                                should help offset lost income from lower rates.

                                  We are proud of our record in 2002 and expect
                                to build on it for a successful 2003. We are
                                even prouder of our record of stability and

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4

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                                reliability, serving the Pittsburgh region for
                                more than one hundred years. Our roots are deep
                                in this community, and our commitment to its
                                growth a matter of record. Like the community
                                itself, of course, we have changed over the
                                years, and on the following two pages there is
                                a brief sketch of our history, with some
                                illustrations of the old and the new Bell
                                Federal Savings.

                                                   Sincerely,

                                                   Albert H. Eckert II
                                                   President and Chief
                                                   Executive Officer

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                                                                             5

<PAGE>

Serving Our Community
In Three Centuries
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                                  Our institution was founded at the end of the
                                nineteenth century, became a regional fixture
                                in the twentieth, and now moves into the
                                twenty-first century with a solid record of
                                achievement and stability.

                                  The present Bell Federal Savings and Loan
                                Association of Bellevue was born in 1891 as the
                                Commercial Building and Loan Association of
                                Allegheny City, Pennsylvania. At that time, the
                                present North Side of the City of Pittsburgh
                                was a separate city, Allegheny. In 1907
                                Allegheny City was annexed by the City of
                                Pittsburgh.

                                  The Commercial Building and Loan Association
                                was located in a working class neighborhood of
                                Allegheny near the steel mills which made
                                Pittsburgh famous. As the steel mills
                                flourished and provided jobs for workers the
                                Building and Loan grew. Commercial Building and
                                Loan provided homes to the newly arrived
                                immigrants by providing home mortgages.

                                  Major transformation took place in 1941: The
                                Association moved its office to the Borough of
                                Bellevue, received a Federal charter and was
                                renamed First Federal Savings and Loan
                                Association of Bellevue. Its new home was
                                located at 577 Lincoln Avenue, Bellevue and met
                                with much success. The Association at this time
                                became a member of the Federal Savings and Loan
                                Insurance Corporation, an agency of the Federal
                                government, which insured all savings at it and
                                other member institutions to a maximum of
                                $10,000.

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6

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                                  The Company continued to grow and, as a
                                result in 1952, built a modern office building
                                at 532 Lincoln Avenue, pictured here. The World
                                War II years and immediate postwar years were a
                                period of remarkable growth: from 1941 to 1956,
                                assets grew at an average annual rate of
                                $740,000 per year, and we played a significant
                                role in the growth of home ownership throughout
                                our region.

                                  During the second half of the twentieth
                                century, we continued to grow, assets
                                multiplying to $892.9 million in 2002 from that
                                $11 million base in 1956. We are now the
                                largest Savings and Loan Association in the
                                Pittsburgh area. We were fortunate enough to
                                weather the savings and loan crisis of the late
                                1980s and strong enough a decade later to
                                demutualize the institution, now known as Bell
                                Federal Savings and Loan under the First Bell
                                Bancorp holding company. As a publicly traded
                                institution from 1995, we have remained firmly
                                committed to our historic mission of providing
                                mortgages and savings products to our clients
                                and profitable returns to our shareholders.
                                During these years, we also undertook a major
                                expansion of our headquarters building, as also
                                pictured here, and added six other branches
                                throughout metropolitan Pittsburgh. These
                                branches have proven to be very successful
                                having an average savings balance in excess of
                                $67 million each.

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FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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                                  [GRAPHIC]

                                  Although there are always new challenges, and
                                while the economy may include both booms and
                                slumps, we are confident that our well-proven
                                philosophy of a strong credit culture and
                                efficient management will continue to be
                                fruitful. This approach is also supplemented by
                                the dedication and professionalism of our
                                staff, for which we give a special thanks.

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8

<PAGE>

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

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

  The Company's long-term policy of originating loans secured by one- to
four-family, owner-occupied, primary residences has resulted in the maintenance
of high quality assets. The balance of non-performing loans may fluctuate based
on unusual circumstances, which affect our borrowers. With active management of
the loan portfolio, however, the Company, again in 2002, did not have a loan
charge-off. The Company has not had a loan charge-off since 1994.

  Continued prudent management of non-interest expenses has contributed to the
production of consistent returns for the Company's shareholders. The Company
consistently ranks as one of the most efficient savings and loan associations
in the country. The ratio of other expenses to average assets was 0.61%, 0.61%
and 0.69% for the years ended December 31, 2002, 2001, and 2000, respectively.
Low operating costs are maintained by managing and monitoring overhead costs,
primarily through controlling the growth in personnel. At December 31, 2002,
the Company's seven offices and $892.9 million in assets were operated by a
total of fifty-five full-time equivalent employees, resulting in an average of
$16.23 million in assets per employee.

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

  Deposit growth has been the integral source of funds and the means of growth
for the Company. In this regard, management has emphasized providing an
increased level of service to its customers in its local market areas in order
to retain and develop deposit relationships with such customers. In 2002 and
2001, First Bell placed considerable emphasis on core deposit relationships,
consisting of money market, NOW, passbook, club and statement savings accounts.
These accounts tend to be stable and lower cost than other types of deposits.
Certificates of deposit are offered with terms ranging from three months to ten
years and are priced at competitive rates.

  The Company utilizes borrowings from the Federal Home Loan Bank of Pittsburgh
("FHLB") to augment its retail deposits and to manage its interest rate risk
position, fund the investment portfolio and to help manage the Company's equity
position. As of December 31, 2002 the Company had borrowings from the FHLB of
$208.0 million and a bank term loan of $13.7 million.

Acquisition of the Company

  On March 11, 2002, the Company and the Association entered into an Agreement
and Plan of Merger (the "Agreement") with Northwest Bancorp, MHC, Northwest
Bancorp, Inc. ("Northwest Bancorp"), a majority-owned subsidiary of Northwest
Bancorp, Northwest Savings Bank, a wholly-owned subsidiary of Northwest
Bancorp, and Northwest Merger Subsidiary, Inc., a wholly-owned subsidiary of
Northwest Bancorp. The Agreement sets forth the terms and conditions pursuant
to which, among other things, Northwest Merger Subsidiary, Inc. shall merge
with and into the Company, with the Company as the surviving entity (the
"Merger"), and, subsequent to consummation of the Merger, the Association shall
merge with and into Northwest Savings Bank, with Northwest Savings Bank as the
surviving entity. The Agreement provides, among other things, that as a result
of the Merger each outstanding share of common stock of the Company (subject to
certain exceptions) will be automatically converted into the right to receive
an amount equal to $26.25 in cash, without interest.

  Consummation of the Merger is subject to a number of customary conditions,
including, but not limited to, the approval of the Agreement by the
stockholders of the

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                                                                             9

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FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
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Company and the receipt of requisite regulatory approvals of the Merger. All of
the directors of the Company, who own in the aggregate approximately 12.7% of
the outstanding shares of common stock of the Company (including unexercised
vested stock options), have entered into Letter Agreements with Northwest
Bancorp, pursuant to which these directors have agreed to vote their shares of
Company common stock in favor of approval of the Agreement.

Private Securities Litigation Reform Act of 1995 Safe Harbor Statement

  In addition to historical information, this Annual Report includes certain
forward-looking statements based on current management expectations. Examples
of this forward looking information can be found in, but are not limited to,
the: President's "Letter to Shareholders", "Management's Discussion and
Analysis of Financial Condition and Results of Operations", "Asset Quality",
"Interest Rate Sensitivity Analysis. The Company's actual results could differ
materially from those management expectations. Factors that could cause future
results to vary from current management expectations include, but are not
limited to, general economic conditions, legislative and regulatory changes,
monetary and fiscal policies of the federal government, changes in tax
policies, rates and regulations of federal, state and local tax authorities,
changes in interest rate, deposit flows, the cost of funds, demand for loan
products, demand for financial services, competition, changes in the quality or
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. Further description of the risks and
uncertainties to the business are included in detail in Item 1, "Business" of
the Company's 2002 Annual Report on Form10-K.

Critical Accounting Policies

  The Company's accounting policies are integral to understanding the results
reported. The accounting policies are described in detail in Note 2 of the
consolidated financial statements. Our most complex accounting policies require
management's judgment to ascertain the valuation of assets, liabilities,
commitments and contingencies. We have established detailed policies and
control procedures that are intended to ensure valuation methods are well
controlled and applied consistently from period to period . In addition, the
policies and procedures are intended to ensure that the process for changing
methodologies occurs in an appropriate manner. The following is a brief
description of our current accounting policies involving significant management
valuation judgments.

Allowance for Loan Losses

  Arriving at an appropriate level of allowance for loan losses involves a high
degree of judgment. The Company's allowance for loan losses provides for
probable losses based upon evaluations of known, and inherent risks in the loan
portfolio.

  Management uses historical information to assess the adequacy of the
allowance for loan losses as well as the prevailing business environment; as it
is affected by changing economic conditions and various external factors, which
may impact the portfolio in ways currently unforeseen. The allowance is
increased by provisions for loan losses and by recoveries of loans previously
charged-off and reduced by loans charged-off. For a full discussion of the
Company's methodology of assessing the adequacy of the reserve for loan losses,
refer to Note 1 of "Notes to Consolidated Financial Statements".

Mortgage Servicing Rights

  The Bank originates residential mortgages that are sold on the secondary
market and it is the Bank's normal practice to retain the servicing of these
loans. This means that the customers whose loans have been sold to the
secondary market still make their monthly payments to the Bank. As a result of
these mortgage loan sales, the Bank capitalizes a value allocated to the
servicing rights in other assets and recognizes other income from the mortgage
banking activity. The capitalized servicing rights are amortized against
non-interest income in proportion to, and over the periods of, the estimated
net servicing income of the underlying financial assets.

  Capitalized servicing rights are evaluated for impairment periodically based
upon the fair value of the rights as compared to amortized cost. The rights are
deemed to be impaired when the fair value of the rights is less than the
amortized cost. The fair value of the servicing rights is determined using
quoted prices for similar assets with similar characteristics, when available,
or estimated based on projected discounted cash flows using market based
assumptions. The Bank primarily uses the discounted cash flow method.

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10

<PAGE>



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Deferred Tax Assets

  We use an estimate of future earnings to support our position that the
benefit of our deferred tax assets will be realized. If future income should
prove non-existent or less than the amount of the deferred tax assets within
the tax years to which they may be applied, the asset may not be realized and
our net income will be reduced. Our deferred tax assets are described further
in Note 13 of the consolidated financial statements.

Financial Condition

  The following table sets forth information concerning the composition of the
Company's assets, (in thousands).

<TABLE>
<CAPTION>
                                  December 31, 2002   December 31, 2001
                                 ------------------  ------------------
                                          Percent of          Percent of
                                  Amount    Total     Amount    Total
                                 -------- ---------- -------- ----------
       <S>                       <C>      <C>        <C>      <C>
       ASSETS...................
       Cash and cash equivalents $ 35,414     3.97%  $ 32,198     3.76%
       Federal funds sold.......   10,750     1.20      4,150     0.49
       Investment securities....  467,745    52.39    337,425    39.46
       Loans, net...............  333,672    37.37    436,473    51.03
       FHLB stock...............   11,752     1.32     10,400     1.22
       Bank-owned life insurance   22,096     2.47     21,012     2.46
       Deferred tax asset.......    1,624     0.18      2,708     0.32
       Other assets.............    9,832     1.10     10,837     1.26
                                 --------   ------   --------   ------
          Total Assets.......... $892,885   100.00%  $855,203   100.00%
                                 ========   ======   ========   ======
</TABLE>

Total Assets

  Total assets increased by $37.7 million or 4.4% to $892.9 million at December
31, 2002 from $855.2 million at December 31, 2001. The increase in total assets
was the result of increases in investment securities, mortgage-backed
securities, cash and cash equivalents and federal funds sold. Offsetting these
increases were decreases in conventional mortgages, net, and other assets. In
2001, the Company purchased $20 million in bank owned life insurance. This
investment was purchased as a means to offset employee benefit costs and earned
$1.1 million and $1.0 million in the years ended December 31, 2002 and 2001,
respectively.

Conventional Mortgage Loans

  The Company emphasizes the origination of conventional one- to four-family
residential mortgage loans for its portfolio in its primary market, the greater
Pittsburgh Metropolitan area. The Company originates primarily 15 and 30 year,
fixed-rate and adjustable-rate mortgage loans. The Company also originates
residential construction loans and home equity installment and line of credit
loans on one- to four-family properties. Conventional mortgage loans, net
decreased by $102.8 million, or 23.6%, to $333.7 million at December 31, 2002
from $436.5 million at December 31, 2001. The decrease was primarily the result
of principal repayments of $174.6 million offset by the funding of conventional
mortgage loans of $60.1 million and the purchase of $6.6 million whole loans
qualified under the Community Reinvestment Act. The Company has reduced its
volume of loan originated, in relation to loan repayments, over the last two
years due to the interest rate risk associated with the inclusion of these low
interest rate loans in the Company's loan portfolio. Conventional mortgage
loans are comprised of residential mortgages, residential construction loans,
home equity installment and line of credit loans and Multi-family loans. At
December 31, 2002, residential mortgage loans totaled $324.7 million or 96.3%
of the total loan portfolio. At December 31, 2002, $318.1 million or 94.3% of
the loan portfolio consisted of fixed-rate mortgage loans in comparison to
$398.6 million or 90.3% as of the prior year-end date. The Company emphasizes
the origination of adjustable rate mortgages to reduce the susceptibility to
interest rate risk when market conditions permit. Residential construction
mortgage loans totaled $3.9 million or 1.2% of total loans and home equity
loans totaled $8.0 million or 2.4% of total loans.


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

                                                                             11

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------

Investment Securities and Other Interest Earning Investments

  The Company has placed more emphasis on its investment portfolio to support
the Company's continued growth due to the ability to reduce interest rate risk
by purchasing adjustable rate or short-term securities. The investment
portfolio is comprised of mortgage-backed securities, Bank Qualified Municipal
Securities, Collateralized Mortgage Obligations ("CMO's"), Treasury Securities,
Small Business Administration securities, and FHLB bonds. Investment securities
and mortgage-backed securities increased by $130.3 million, or 38.6%, to $467.7
million at December 31, 2002 from $337.4 million at December 31, 2001. The
increase was the result of the purchase of $121.0 million of mortgage-backed
securities, $34.6 million of CMO's, $42.1 million of FHLB bonds and $111.5
million of municipal securities. These purchases were offset by the sale of
$106.5 million in municipal securities, and principal payments on investment
securities of $59.3 million and repayments on mortgage-backed securities of
$19.1 million. The net unrealized gain on securities available for sale
increased from a loss of $2.4 million at December 31, 2001 to a gain of $4.7
million at December 31, 2002. The balance invested in FHLB stock increased $1.4
million from $10.4 million at December 31, 2001 to $11.8 million at December
31, 2002. The investment required by the FHLB is based on the balance of
borrowings from the FHLB and the balance of the Company's investment in
mortgages and securities collateralized by mortgages. Federal funds sold
increased by $6.6 million to $10.8 million at December 31, 2002 from $4.2
million at December 31, 2001. This increase was the result of a higher average
rate earned on Federal funds in relation to the funds being invested in
interest bearing accounts.

Asset Quality

  In 2002, the Company's assets continued to be comprised of quality
investments. For the eighth consecutive year the Company has not experienced a
loan charge-off. Prudent underwriting, conservative lending policies and active
management of the mortgage loan portfolio have enabled the Company to minimize
losses inherent in the operation of a savings and loan. However, at December
31, 2002, total non-performing assets increased from $1.1 million to $1.8
million or 0.20% of total assets. The non-performing assets consisted of 25
first mortgage loans. These 25 loans have an average loan to value, (based on
the original appraisal) ratio of 54.1%. The Company has established a reserve
for probable loan losses inherent in the loan portfolio of $925,000, which is
equal to 51.2% of non-performing assets as of December 31, 2002. While every
effort is made to originate quality assets, management cannot guarantee that
problem loans will not occur. The allowance is based on management's assessment
of prospective national and local economic conditions, the regulatory
environment and inherent risks in the portfolio, not to specific problem loans
existing in the portfolio. Management believes that the current level of
reserves is adequate. However, the balance of reserves necessary can be greatly
influenced by regulatory changes and economic conditions. Therefore, the level
of future reserves and the related effect on net income cannot be assured.

Liquidity and Capital Resources

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

  The primary source of cash flow for the Company is dividend payments from the
Association, sales and maturities of investment securities and, to a lesser
extent, earnings on deposits held by the Company. The ability of the
Association to pay dividends and other capital distributions to the Company is
generally limited by the regulations of the Office of Thrift Supervision,
("OTS"). Additionally, the OTS may prohibit the payment of dividends which are
otherwise permissible by regulation for safety and soundness reasons. As of
December 31, 2002, the Association had approximately $138,000 of dividends it
could pay to the Company subject to notice to the OTS and the Company
(unconsolidated) had $1.5 million in cash or cash equivalents and Federal funds
sold.

  Any dividend by the Association beyond its current year-to-date net income
combined with retained net income of the preceding two years would require
approval of the OTS. To the extent the Association was to apply for a dividend
distribution to the Company in excess of the regulatory permitted dividend
amounts, no assurances can be made such application would be approved by the
regulatory authorities.

  The Association's sources of funds are deposits, borrowings and principal and
interest payments on loans and investment securities. While maturities and
scheduled amortization of loans are predictable sources of

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

12

<PAGE>


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

funds, deposit flows and mortgage prepayments are strongly influenced by
changes in general interest rates, economic conditions and competition.

  At December 31, 2002, loan commitments were $20.6 million. The Association
anticipates that it will have sufficient funds available to meet its current
loan origination commitments. Certificates of deposit, which are scheduled to
mature in one year or less from December 31, 2002, totaled $245.3 million.
Management believes that a significant portion of such deposits will remain
with the Association. As a member of the FHLB, the Association has the ability
to borrow from the FHLB, if necessary. As of December 31, 2002, the Association
had $208.0 million in outstanding borrowings from the FHLB. The most recent
FHLB report had the Association's additional borrowing capacity from the FHLB
at $270.4 million.

Impact of Inflation and Changing Prices

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

Interest Rate Sensitivity / Net Portfolio Value Analysis

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

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

  As of December 31, 2002, the Association's NPV, as measured by the OTS, was
$71.7 million or 7.80% of the market value of assets. Following a 200 basis
point increase in interest rates, the Association's "post-shock" NPV, which
provides a larger decline than a 200 basis point decrease, was $49.8 million,
or 5.69% of the market value of assets. The change in the NPV ratio or the
Association's Sensitivity Measure was -211 basis points.

  Under OTS capital requirements, which have not been fully implemented, the
decline in the NPV ratio at December 31, 2002 would reflect an above average
interest rate risk. If the regulations were implemented as proposed, the
Association would be subject to a deduction from total capital for purposes of
determining compliance with regulatory capital requirements, but would still
comply with the fully phased in capital requirements. Management reviews the
quarterly OTS 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.

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

                                                                             13

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------


  The following analysis sets forth the Association's NPV as of December 31,
2002, as calculated by the Office of Thrift Supervision, which are consistent
with internal calculations, for instantaneous and sustained changes in interest
rates relative to the NPV in an unchanging interest rate environment.

<TABLE>
<CAPTION>

Change in Interest Rates Net Portfolio Value      Net Change       Projected Percentage
   (in basis points)       (in thousands)       (in thousands)       Change to Base
<S>                      <C>                  <C>                  <C>
         +200                  $49,810             $(21,918)              (31%)
         +100                  65,361               (6,367)               (9%)
           --                  71,728                          --           --
         -100                  62,886               (8,841)               (12%)
</TABLE>

Interest Rate Sensitivity / GAP Analysis

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

  The following table sets forth the amount of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2002, which are
anticipated to re-price or mature in each of the future time periods shown. The
amounts of assets and liabilities shown which re-price or mature during a
particular period were determined in accordance with the earlier of term to (i)
repricing or (ii) the contractual terms of the asset or liability adjusted for
prepayment rates. The prepayment rates for fixed-rate mortgage loans on one- to
four-family residences are assumed to prepay at a rate of 9% per year and are
net of deferred loan origination fees and the allowance for loan losses. Decay
rates of 14% for passbook accounts, 17% for NOW accounts and 31% for money
market deposit accounts are assumed. In addition, it is assumed that fixed
maturity deposits are not withdrawn prior to maturity. Although management
believes the assumptions are reasonable, they should not be regarded as
necessarily indicative of the actual decay rates that may be experienced in the
future. While a conventional gap measure may be useful, it is limited in its
ability to predict trends in future earnings. A gap presentation makes no
presumptions about changes in prepayment tendencies, deposit or loan maturity
preferences or repricing time lags that may occur in response to a change in
the interest rate environment.

  Certain shortcomings are inherent in this method of analysis. For example,
although certain assets and liabilities may have similar maturities or periods
to repricing, they may react in different degrees to changes in market 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.

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

14

<PAGE>


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


<TABLE>
<CAPTION>
                                                             At December 31, 2002
                                -----------------------------------------------------------------------------
                                            More                           More
                                            Than                 More      Than
                                           Three    More Than  Than One   Three     More
                                  Three    Months   Six Months Year to   Years to Than Five   More
                                 Months    to Six   to Twelve   Three      Five   Years to  Than Ten
                                 or Less   Months     Months    Years     Years   Ten Years  Years     Total
                                --------  --------  ---------- --------  -------- --------- -------- --------
                                                                (in thousands)
<S>                             <C>       <C>       <C>        <C>       <C>      <C>       <C>      <C>
INTEREST EARNING ASSETS:
 Real Estate Loans:
   ARM Loans................... $  1,494  $  1,189   $  2,578  $ 10,602  $ 2,816  $     --  $   487  $ 19,166
   Fixed Rates Loans...........   10,957    10,805     21,657    64,363   47,549   118,624   29,627   303,582
   Residential Construction
     Loans.....................       --        --         --        --       --        --    2,231     2,231
   Multi-Family................       --         7         18        --       --       151       --       176
   Second Mortgage Loans.......    2,244        29         88     2,153    2,244     1,266       --     8,024
 Consumer Loans................      493        --         --        --       --        --       --       493
 Mortgage-backed securities....  150,400        --         --     8,237       --        --       --   158,637
 Investment securities.........  131,890    26,123     12,487    45,185   11,037   120,341    3,664   350,727
 FHLB Stock....................       --        --         --        --       --        --   11,752    11,752
                                --------  --------   --------  --------  -------  --------  -------  --------
Total Interest Earning Assets..  297,477    38,153     36,828   130,540   63,646   240,382   47,761   854,787
INTEREST BEARING LIABILITIES:
 Passbook, Club and Other
   Accounts....................    4,602     4,602      9,205    29,448   21,779    32,759   29,102   131,497
 Money Market and NOW
   Accounts....................    3,838     3,838      7,675    21,101   12,980    15,417    8,779    73,628
 Certificate Accounts..........   86,240    95,133     63,950   106,492   20,232     9,514       --   381,561
 Borrowings....................    1,250     1,250      2,500     8,750       --   208,000       --   221,750
 Advances by Borrowers for
   Taxes and Insurance.........    6,995        --         --        --       --        --       --     6,995
                                --------  --------   --------  --------  -------  --------  -------  --------
Total Interest Bearing
  Liabilities..................  102,925   104,823     83,330   165,791   54,991   265,690   37,880   815,430
                                --------  --------   --------  --------  -------  --------  -------  --------
Interest Sensitivity Gap....... $194,552  $(66,670)  $(46,502) $(35,251) $ 8,655  $(25,308) $ 9,881  $ 39,357
                                ========  ========   ========  ========  =======  ========  =======  ========
Cumulative Interest Sensitivity
  Gap.......................... $194,552  $127,882   $ 81,382  $ 46,131  $54,787  $ 29,479  $39,357  $ 39,357
                                ========  ========   ========  ========  =======  ========  =======  ========
Cumulative Interest Sensitivity
  Gap as a Percentage of Total
  Assets.......................    21.79%    14.32%      9.11%     5.17%    6.14%     3.30%    4.41%     4.41%
Cumulative Net Interest Earning
  Assets as a Percentage of
  Cumulative Interest Bearing
  Liabilities..................   289.02%   161.56%    127.96%   100.10%  110.70%   103.79%  104.83%   104.83%
</TABLE>

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

                                                                             15

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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


Average Balances, Interest and Average Yields

  The following table sets forth certain information relating to the Company's
balance sheet at December 31, 2002, and average balance sheets and statements
of income for the years ended December 31, 2002, 2001 and 2000, and reflect the
tax equivalent average yield on assets and average cost of liabilities for the
periods indicated. Such yields and costs are derived by dividing income or
expense by the average monthly balance of assets or liabilities, respectively,
for the years presented. Average balances are based on average daily balances.
The yields and costs include fees, which are considered adjustments to yields.
Interest income for investment securities shown in the chart below is the tax
equivalent interest income. Tax equivalent interest income is being used
because interest on investment securities includes tax-exempt securities.
Tax-exempt securities carry pre-tax yields lower than comparable taxable
assets. Therefore, it is more meaningful to analyze interest income on a
tax-equivalent basis. Tax equivalent adjustments of $2.8 million, $2.8 million
and $3.1 million were made to interest income on investment securities in 2002,
2001 and 2000, respectively. The tax equivalent adjustments for each year were
calculated by adjusting the interest income on tax-exempt securities by the
Company's federal income tax rate of 34%.

<TABLE>
<CAPTION>
                                                        At December 31, 2002 Year Ended December 31, 2002
                                                        ------------------   ---------------------------
                                                                             Average            Average
                                                        Balance   Yield/Cost Balance  Interest Yield/Cost
                                                        --------  ---------- -------- -------- ----------
                                                                         (in thousands)
<S>                                                     <C>       <C>        <C>      <C>      <C>
Interest-earning Assets:
   Investment securities (1)........................... $351,729     5.02%   $354,591 $16,737     4.72%
   Conventional loans (2)..............................  333,672     6.85     395,466  27,349     6.92
   Mortgage-backed securities..........................  158,637     4.19      75,526   2,999     3.97
   Federal funds sold..................................   10,750     1.01       8,227     133     1.62
                                                        --------             -------- -------
       Total interest-earning assets...................  854,788     5.53%    833,810  47,218     5.66%
                                                                                      -------
       Non-interest earning assets.....................   38,097               38,367
                                                        --------             --------
          TOTAL ASSETS................................. $892,885             $872,177
                                                        ========             ========
Interest-bearing Liabilities:
   Passbook, club and other accounts (5)............... $138,492     2.56%   $117,908 $ 2,630     2.23%
   Money market and NOW accounts.......................   73,628     1.50      70,595   1,214     1.72
   Certificate accounts................................  381,561     3.67     392,370  16,496     4.20
   Borrowings..........................................  221,750     5.56     214,061  12,272     5.73
                                                        --------             -------- -------
       Total interest-bearing liabilities..............  815,431     3.80%    794,934  32,612     4.10%
                                                                                      -------
       Non-interest-bearing liabilities................    3,748                5,082
                                                        --------             --------
          TOTAL LIABILITIES............................  819,179              800,016
   Stockholders' equity................................   73,706               72,161
                                                        --------             --------
   Total liabilities and stockholders' equity.......... $892,885             $872,177
                                                        ========             ========
Net tax equivalent interest income/net interest rate
  spread (3)...........................................                               $14,606     1.56%
                                                                                      =======
Net tax equivalent yield on interest-earning assets (4)              1.73%                        1.75%
Ratio of interest-earning assets to interest-bearing
  liabilities..........................................              1.05                         1.05
</TABLE>
--------
(1) Includes interest-bearing deposits in other financial institutions and FHLB
    stock.
(2) Includes non-accrual loans, net deferred loan origination fees, loans in
    process disbursed, and allowance for loan losses.
(3) Net interest rate spread represents the difference between the average
    yield on interest-earning assets, and the average cost of interest-bearing
    liabilities.
(4) Net interest margin represents net interest income as a percentage of
    interest-earning assets.
(5) Includes advances by borrowers for taxes and insurance.

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

16

<PAGE>

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


<TABLE>
<CAPTION>
                                                     Year Ended December 31, 2001 Year Ended December 31, 2000
                                                     ---------------------------  ---------------------------
                                                     Average            Average   Average            Average
                                                     Balance  Interest Yield/Cost Balance  Interest Yield/Cost
                                                     -------- -------- ---------- -------- -------- ----------
                                                                          (in thousands)
<S>                                                  <C>      <C>      <C>        <C>      <C>      <C>
Interest-earning Assets:
   Investment securities (1)........................ $285,546 $16,035     5.62%   $238,737 $15,550     6.51%
   Conventional loans (2)...........................  481,423  34,250     7.11     533,982  38,445     7.20
   Mortgage-backed securities.......................   39,123   1,956     5.00      13,567     977     7.20
   Federal funds sold...............................    7,141     307     4.30      13,200     800     6.06
                                                     -------- -------             -------- -------
       Total interest-earning assets................  813,233  52,548     6.46%    799,486  55,772     6.98%
                                                              -------                      -------
       Non-interest earning assets..................   38,096                       17,201
                                                     --------                     --------
          TOTAL ASSETS.............................. $851,329                     $816,687
                                                     ========                     ========
Interest-bearing Liabilities:
   Passbook, club and other accounts (5)............ $ 73,756 $ 2,437     3.30%   $ 59,000 $ 2,737     4.64%
   Money market and NOW accounts....................   76,970   1,601     2.08      83,044   1,637     1.97
   Certificate accounts.............................  410,250  24,475     5.97     389,054  23,256     5.98
   Borrowings.......................................  216,552  12,635     5.83     221,960  13,047     5.88
                                                     -------- -------             -------- -------
       Total interest-bearing liabilities...........  777,528  41,148     5.29%    753,058  40,677     5.40%
                                                              -------                      -------
       Non-interest-bearing liabilities.............    6,143                        9,071
                                                     --------                     --------
          TOTAL LIABILITIES.........................  783,671                      762,129
   Stockholders' equity.............................   67,658                       54,558
                                                     --------                     --------
   Total liabilities and stockholders' equity....... $851,329                     $816,687
                                                     ========                     ========
Net tax equivalent interest income/net interest
  rate spread (3)...................................          $11,400     1.17%            $15,095     1.58%
                                                              =======                      =======
Net tax equivalent yield on interest-earning
  assets (4)........................................                      1.40%                        1.89%
Ratio of interest-earning assets to interest-bearing
  liabilities.......................................                      1.05                         1.06
</TABLE>

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                                                                             17

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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


Rate/Volume Analysis

  The following table presents the extent to which changes in interest rates
and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the years indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate
(changes in rate multiplied by current volume) and (iii) the changes
attributable to the combined impact of volume and rate. The change in interest
due to both rate and volume in the rate/volume analysis table has been
allocated to changes due to rate. The average rates for investment securities
used to calculate the variances in the following table, for 2002, 2001 and
2000, are tax equivalent rates.

<TABLE>
<CAPTION>
                                                 Year Ended December 31,      Year Ended December 31,
                                                      2002 vs. 2001                2001 vs. 2000
                                                  Increase (Decrease) in       Increase (Decrease) in
                                                Net Interest Income Due to   Net Interest Income Due to
                                               ---------------------------  ---------------------------
                                                                   Total                        Total
                                                                  Increase                     Increase
                                                Volume    Rate   (Decrease)  Volume    Rate   (Decrease)
                                               -------  -------  ---------- -------  -------  ----------
                                                                    (In thousands)
<S>                                            <C>      <C>      <C>        <C>      <C>      <C>
Interest-earning assets:
   Investment securities (1).................. $ 3,877  $(3,175)  $   702   $ 3,049  $(2,564)  $   485
   Conventional loans.........................  (6,115)    (786)   (6,901)   (3,784)    (411)   (4,195)
   Mortgage-backed securities.................   1,820     (777)    1,043     1,840     (861)      979
   Federal funds sold.........................      47     (221)     (174)     (367)    (126)     (493)
                                               -------  -------   -------   -------  -------   -------
       Total interest-earning assets..........    (371)  (4,959)   (5,330)      738   (3,962)   (3,224)
                                               -------  -------   -------   -------  -------   -------
Interest-bearing liabilities:
   Passbook, club and other accounts..........   1,459   (1,266)      193       685     (985)     (300)
   Money Market and NOW accounts..............    (133)    (254)     (387)     (120)      84       (36)
   Certificate accounts.......................  (1,067)  (6,912)   (7,979)    1,267      (48)    1,219
   Borrowings.................................    (145)    (218)     (363)     (318)     (94)     (412)
                                               -------  -------   -------   -------  -------   -------
       Total interest-bearing liabilities.....     114   (8,650)   (8,536)    1,514   (1,043)      471
                                               -------  -------   -------   -------  -------   -------
Net change in net interest income............. $  (486) $ 3,692   $ 3,206   $  (776) $(2,919)  $(3,695)
                                               =======  =======   =======   =======  =======   =======
</TABLE>
--------
(1) Calculated using tax equivalent interest income.

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

18

<PAGE>

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


Sources of Funding

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

  As of December 31, 2002, the Company had outstanding borrowings from the FHLB
in the amount of $208.0 million and a bank line of credit balance outstanding
of $13.7 million. These borrowings were used to fund the investment portfolio
and to help manage the Company's equity and the interest rate risk position.

  The following table sets forth information concerning the Company's
liabilities and stockholders' equity, (in thousands).

<TABLE>
<CAPTION>
                                            December 31, 2002   December 31, 2001
                                           ------------------  ------------------
                                                    Percent of          Percent of
                                            Amount    Total     Amount    Total
                                           -------- ---------- -------- ----------
<S>                                        <C>      <C>        <C>      <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits.................................. $586,686    65.71%  $561,352    65.64%
Borrowings................................  221,750    24.84%   214,250    25.05%
Other liabilities.........................   10,743     1.20%    13,160     1.54%
Stockholders' equity......................   73,706     8.25%    66,441     7.77%
                                           --------   ------   --------   ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $892,885   100.00%  $855,203   100.00%
                                           ========   ======   ========   ======
</TABLE>

Liabilities

  Total liabilities increased to $819.2 million at December 31, 2002 from
$788.8 million at December 31, 2001. The $30.4 million or 3.9% increase was the
result of increases in deposits and borrowings, offset by decreases in advances
by borrowers for taxes and insurance. Borrowings increased by $7.5 million or
3.5% to $221.8 million at December 31, 2002 from $214.3 million at December 31,
2001. Total deposits increased by $25.3 million or 4.5% to $586.7 million at
December 31, 2002 from $561.4 million at December 31, 2001. The increase was
the result of a net increase in core savings accounts of $50.2 million or 32.4%
and certificate accounts decreasing by $24.8 million or 6.1%.

Capital

  Total stockholders' equity increased by $7.3 million or 10.9% to $73.7
million at December 31, 2002, from $66.4 million at December 31, 2001. The
primarily factors contributing to the increase in total stockholders' equity
were net income of $8.6 million, and increases in unrealized gains on
securities, net of taxes of $4.7 million. This increase was offset by dividends
paid of $2.3 million and the purchase of treasury stock of $4.5 million.
--------------------------------------------------------------------------------

                                                                             19

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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


December 31, 2002 Operating Results

  The following table presents selected components of net income, (in
thousands).

<TABLE>
<CAPTION>
                                                For the Years Ended December 31,
                                                --------------------------------
                                                 2002       2001       2000
                                                 -------    -------    -------
         <S>                                    <C>        <C>        <C>
         Tax Equivalent Interest income........ $47,218    $52,548    $55,772
         Interest expense......................  32,612     41,148     40,677
                                                 -------    -------    -------
         Net interest income...................  14,606     11,400     15,095
         Provision for loan loss...............      --         --         --
         Other income..........................   3,086      2,434        858
         Other expenses........................   5,319      5,170      5,598
         Income taxes on a tax equivalent basis   3,797      2,306      3,653
                                                 -------    -------    -------
         Net Income............................ $ 8,576    $ 6,358    $ 6,702
                                                 =======    =======    =======
</TABLE>
  Net income for the year ended December 31, 2002 increased by $2.2 million or
34.9% to $8.6 million from $6.4 million for the year ended December 31, 2001.
The increase was primarily the result of an increase in net interest income and
other income offset by a increase in tax equivalent income taxes.

Interest Income

  Interest income discussed in this section is tax equivalent interest income.
Tax equivalent interest income is being used because interest on investment
securities includes tax-exempt securities. Tax exempt securities carry pre-tax
yields lower than comparable taxable assets. Therefore, it is more meaningful
to analyze interest income on a tax equivalent basis. Tax equivalent
adjustments of $2.8 million, $2.8 million and $3.1 million were made for the
years ended December 31, 2002, 2001 and 2000, respectively. Interest income
decreased by $5.3 million or 10.1% to $47.2 million for the year ended December
31, 2002 from $52.5 million for the year ended December 31, 2001. The decrease
was primarily due to a decrease in interest earned on conventional mortgages
offset by an increase in interest earned on investment securities and
mortgage-backed securities. Interest on investment securities and
mortgage-backed securities increased by $702,000 and $1.0 million,
respectively, for the year ended December 31, 2002 in comparison to the
year-ended December 31, 2001. The increase was the result of the average
balance of the investment portfolio increasing from $285.5 million to $354.6
million and the average balance of the mortgage-backed securities portfolio
increasing from $39.1 million to $75.5 million. Interest on conventional
mortgage loans decreased by $6.9 million or 20.1% to $27.3 million for the year
ended December 31, 2002 from $34.2 million for the year ended December 31,
2001. The decrease was the result of the average balance for conventional
mortgage loans decreasing by $86.0 million to $395.4 million for the year ended
December 31, 2002 from $481.4 million for the comparable 2001 period. Also
contributing to the decrease was a 19 basis points decline in the average rate
earned on conventional mortgage loans. The average rate earned on conventional
mortgage loans for 2002 was 6.92% compared to 7.11% for 2001.

Interest Expense

  Interest expense decreased to $32.6 million for the year ended December 31,
2002 from $41.1 million for the year ended December 31, 2001. The $8.5 million
or 20.7% decrease was the result of a decrease in the average cost of interest
bearing liabilities from 5.29% to 4.10% for the years ended December 31, 2002
and 2001. The average balance of interest bearing liabilities at December 31,
2002 was $794.9 million in comparison to $777.5 million at the end of the prior
year. Interest expense on certificates of deposit decreased by $7.9 million as
the average rate and the average balance decreased from 5.97% and $410.3
million to 4.20% and $392.4 million for the twelve month periods ended December
31, 2001 and 2002, respectively. Interest expense on borrowings decreased
$363,000 as the average balance and the average rate on borrowings decreased to
$214.1 million and 5.73% for the year ended December 31, 2002 from $216.6
million and 5.83% for the year ended December 31, 2001. A decrease in interest
expense on money market and NOW deposits of $387,000 was offset

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

20

<PAGE>


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

by an increase in interest expense for passbook, club and other accounts of
$193,000.

Net Interest Income

  Tax equivalent net interest income increased by $3.2 million or 28.1% to
$14.6 million for the year ended December 31, 2002 from $11.4 million for the
year ended December 31, 2001. The increase was the result of interest income
decreasing by $5.3 million and a decrease in interest expense of $8.5 million.

Provision for Loan Loss

  No additional provision for loan loss was recorded during the year ended
December 31, 2002. In determining the provision for loan losses, management
assesses the risk inherent in its loan portfolio including, but not limited to,
an evaluation of the concentration of loans secured by properties located in
the Pittsburgh area, the trends in national and local economies, trends in the
real estate market and in the Company's loan portfolio and the level of
non-performing loans and assets. The Company's history of loan losses has been
minimal, which management believes is a reflection of the Company's
underwriting standards. There were no charge-offs for the years ended December
31, 2002 and 2001. Management believes the current level of loan loss reserve
is adequate to cover probable losses inherent in the portfolio as of such date.
However, there can be no assurance that the Company will not sustain losses in
future periods.

Other Income

  Other income increased by $652,000 or 26.8% to $3.1 million for the year
ended December 31, 2002 from $2.4 million for the year ended December 31, 2001.
During 2002, the Company restructured its securities portfolio to reduce
prepayment risk. As a result, gains on sales of investment securities increased
to $783,000 for the year ended December 31, 2002 compared to $329,000 for the
year ended December 31, 2001. In addition, service fees and charges increased
$166,000, and the cash-surrender value of bank-owned life insurance increased
by $72,000 for the year ended December 31, 2002. The Association did not
purchase any additional insurance in 2002 and did not own any bank-owned life
insurance in 2000.

Other Expenses

  Other expenses increased by $149,000 or 2.9% to $5.3 million for the year
ended December 31, 2002 from $5.2 million for the year ended December 31, 2001.
The increase was primarily the result of increases in compensation and payroll
taxes and fringe benefits, office occupancy and miscellaneous expenses. During
fiscal year 2002, compensation, payroll taxes and fringe benefits increased
$69,000 or 2.6% while, office occupancy and miscellaneous expenses increased by
$50,000 and $32,000, respectively.

Income Taxes

  Income taxes increased to $948,000 from an income tax benefit of $505,000 as
a larger percentage of the Company's income was derived from taxable assets in
the year ended December 31, 2002 in comparison to the year ended December 31,
2001. The annualized effective tax rate was 9.9% for 2002 compared to (8.6%)
for 2001.

December 31, 2001 Operating Results

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

Interest Income

  Interest income discussed in this section is tax equivalent interest income.
Tax equivalent adjustments of $2.8 million and $3.1 million were made for the
years ended December 31, 2001, and 2000, respectively. Interest income
decreased by $3.3 million or 5.8% to $52.5 million for the year ended December
31, 2001 from $55.8 million for the year ended December 31, 2000. The decrease
was primarily due to a decrease in interest earned on conventional mortgages
offset by an increase in interest earned on investment securities and
mortgage-backed securities. Interest on investment securities and
mortgage-backed securities increased by $485,000 and $979,000, respectively,
for the year ended December 31, 2001 in comparison to the year-ended December
31, 2000. The increase was the result of the average balance of the investment
portfolio increasing from $238.7 million to $285.5 million and the average
balance of the mortgage-backed portfolio increasing from $13.6 million to $39.1
million. Interest on conventional mortgage loans decreased by $4.2 million or
11.0% to $34.3 million for the year ended December 31, 2001 from $38.4 million
for the year ended December 31, 2000. The decrease was

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

                                                                             21

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------

the result of the average balance for conventional mortgage loans decreasing by
$52.6 million to $481.4 million for the year ended December 31, 2001 from
$534.0 million for the comparable 2000 period. Also contributing to the
decrease was a nine basis points decline in the average rate earned on
conventional mortgage loans. The average rate earned on conventional mortgage
loans for 2001 was 7.11% compared to 7.20% for 2000.

Interest Expense

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

Net Interest Income

  Tax equivalent net interest income decreased by $3.7 million or 24.5% to
$11.4 million for the year ended December 31, 2001 from $15.1 million for the
year ended December 31, 2000. The decrease was the result of interest income
decreasing by $3.2 million and an increase in interest expense of $471,000.

Provision for Loan Loss

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

Other Income

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

Other Expenses

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

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

22

<PAGE>


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


Income Taxes

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

New Accounting Pronouncements

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

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

                                                                             23

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
Management's Report on Internal Control
and Compliance with Laws and Regulations
--------------------------------------------------------------------------------

February 21, 2003

To the Stockholders of First Bell Bancorp, Inc.:

Financial Statements

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

Internal Control

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

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

  Management assessed the institution's internal control over financial
reporting, including safeguarding of assets, for financial presentations in
conformity with both accounting principles generally accepted in the United
States of America and TFR instructions as of December 31, 2002. This assessment
was based on criteria for effective internal control over financial reporting,
including safeguarding of assets, described in Internal Control--Integrated
Framework issued by the committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, management believes that the Company
maintained effective internal control over financial reporting, including
safeguarding of assets, presented in conformity with both accounting principles
generally accepted in the United States of America and TFR instructions as of
December 31, 2002.

Internal Control (Continued)

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

Compliance with Laws and Regulations

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

  Management assessed its compliance with the designated safety and soundness
laws and regulations and has maintained records of its determinations and
assessments as required by the OTS. Based on this assessment, management
believes that the Company has complied, in all material respects, with the
designated safety and soundness laws and regulations for the year ended
December 31, 2002.

/s/ Albert H. Eckert, II
Albert H. Eckert, II
Chief Executive Officer

/s/ Jeffery M. Hinds
Jeffrey M. Hinds
Chief Financial Officer

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

24

<PAGE>

Report Of Independent Auditors
--------------------------------------------------------------------------------

Board of Directors and Stockholders
First Bell Bancorp, Inc.:

  We have audited the accompanying consolidated balance sheet of First Bell
Bancorp, Inc. and subsidiary as of December 31, 2002 and 2001, and the related
consolidated statements of income, comprehensive income, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated statements of income, comprehensive income,
changes in stockholders' equity and cash flows for the year ended December 31,
2000, were audited by other auditors whose report dated March 23, 2001
expressed an unqualified opinion on those statements.

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

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of First Bell
Bancorp, Inc. and subsidiary as of December 31, 2002 and 2001, and the results
of their operations and their cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States
of America.

/s/ S.R. Snodgrass, A.C.
Wexford, PA
January 24, 2003 except for Note 19
as to which the date is March 22, 2003

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

                                                                             25

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                         ------------------
                                                                                           2002      2001
                                         ASSETS                                          --------  --------
<S>                                                                                      <C>       <C>
CASH AND CASH EQUIVALENTS:
   Cash on hand......................................................................... $  1,205  $  1,103
   Noninterest-bearing deposits.........................................................    3,340     2,299
   Interest-bearing deposits............................................................   30,869    28,796
                                                                                         --------  --------
       Total cash and cash equivalents..................................................   35,414    32,198
FEDERAL FUNDS SOLD......................................................................   10,750     4,150
INVESTMENT SECURITIES AVAILABLE-FOR-SALE................................................  309,108   281,430
MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE...........................................  158,637    55,995
LOANS--Net of allowance for loan losses of $925.........................................  333,672   436,473
PREMISES AND EQUIPMENT..................................................................    3,209     3,417
FEDERAL HOME LOAN BANK STOCK............................................................   11,752    10,400
BANK-OWNED LIFE INSURANCE...............................................................   22,096    21,012
OTHER ASSETS............................................................................    8,247    10,128
                                                                                         --------  --------
       Total assets..................................................................... $892,885  $855,203
                                                                                         ========  ========
                          LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS................................................................................ $586,686  $561,352
BORROWINGS..............................................................................  221,750   214,250
ADVANCES BY BORROWERS FOR TAXES AND INSURANCE...........................................    6,995     9,471
OTHER LIABILITIES.......................................................................    3,748     3,689
                                                                                         --------  --------
       Total liabilities................................................................  819,179   788,762
                                                                                         --------  --------
STOCKHOLDERS' EQUITY:
Preferred stock ($.01 par value; 2,000,000 shares authorized; no shares issued or
  outstanding)..........................................................................       --        --
Common stock ($.01 par value; 20,000,000 shares authorized; 8,596,250 shares issued, one
  stock right per share)................................................................       86        86
Additional paid-in capital..............................................................   63,184    62,854
Retained earnings--substantially restricted.............................................   79,196    72,914
Unearned ESOP shares (426,479 and 459,999 shares).......................................   (3,017)   (3,254)
Unearned MRP shares (180,845 shares)....................................................   (2,521)   (2,521)
Treasury stock, at cost (4,060,536 and 3,837,890 shares)................................  (66,346)  (62,030)
Accumulated other comprehensive income (loss)...........................................    3,124    (1,608)
                                                                                         --------  --------
       Total stockholders' equity.......................................................   73,706    66,441
                                                                                         --------  --------
       Total liabilities and stockholders' equity....................................... $892,885  $855,203
                                                                                         ========  ========
</TABLE>

See notes to consolidated financial statements.

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

26

<PAGE>

Consolidated Statement of Income
(In thousands, except per share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                      Years Ended December 31,
                                                     -------------------------
                                                       2002     2001     2000
                                                     -------  -------  -------
 <S>                                                 <C>      <C>      <C>
 INTEREST AND DIVIDEND INCOME:
    Loans........................................... $27,349  $34,250  $38,445
    Interest-bearing deposits.......................     632    1,346    1,218
    Mortgage-backed securities......................   2,999    1,956      977
    Federal funds sold..............................     133      307      800
    Investment securities, taxable..................   4,502    2,908    1,438
    Investment securities, non-taxable..............   8,380    8,267    9,021
    Federal Home Loan Bank stock....................     374      703      806
                                                     -------  -------  -------
        Total interest and dividend income..........  44,369   49,737   52,705
                                                     -------  -------  -------
 INTEREST EXPENSE:
    Deposits........................................  20,340   28,513   27,630
    Borrowings......................................  12,272   12,635   13,047
                                                     -------  -------  -------
        Total interest expense......................  32,612   41,148   40,677
                                                     -------  -------  -------
 NET INTEREST INCOME................................  11,757    8,589   12,028
 PROVISION FOR LOAN LOSSES..........................      --       --       --
                                                     -------  -------  -------
 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES  11,757    8,589   12,028
                                                     -------  -------  -------
 OTHER INCOME:
    Service fees and charges........................   1,214    1,048      623
    Gain on sale of investments, net................     783      329      138
    Gain on sale of loans...........................      --       62       --
    Earnings on bank-owned life insurance...........   1,084    1,012       --
    Gain (loss) on sale of real estate owned........      --      (21)      84
    Miscellaneous income............................       5        4       13
                                                     -------  -------  -------
        Total other income..........................   3,086    2,434      858
                                                     -------  -------  -------
 OTHER EXPENSES:
    Compensation, payroll taxes and fringe benefits.   2,699    2,630    2,777
    Federal insurance premiums......................     100      104      108
    Office occupancy expense........................     940      890      766
    Computer services...............................     326      324      298
    Miscellaneous expenses..........................   1,254    1,222    1,649
                                                     -------  -------  -------
        Total other expenses........................   5,319    5,170    5,598
                                                     -------  -------  -------
 INCOME BEFORE PROVISION FOR INCOME TAXES...........   9,524    5,853    7,288
                                                     -------  -------  -------
 PROVISION FOR INCOME TAXES:
    Current:
      Federal.......................................   1,876      452    1,149
      State.........................................     425      375      666
    Deferred tax benefit............................  (1,353)  (1,332)  (1,229)
                                                     -------  -------  -------
        Total provision for income taxes............     948     (505)     586
                                                     -------  -------  -------
 NET INCOME......................................... $ 8,576  $ 6,358  $ 6,702
                                                     =======  =======  =======
 BASIC EARNINGS PER SHARE........................... $  2.09  $  1.55  $  1.61
                                                     =======  =======  =======
 DILUTED EARNINGS PER SHARE......................... $  2.02  $  1.52  $  1.57
                                                     =======  =======  =======
</TABLE>

See notes to consolidated financial statements.

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

                                                                             27

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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

<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                                   ------------------------
                                                                     2002    2001     2000
                                                                   -------  ------  -------
<S>                                                                <C>      <C>     <C>
Net Income........................................................ $ 8,576  $6,358  $ 6,702
Unrealized gains (losses) arising during the period...............   7,953    (491)  12,911
Less: reclassification adjustment for gains realized in net income     783     329       --
                                                                   -------  ------  -------
Other comprehensive income, before taxes..........................  15,746   5,538   19,613
Tax benefit (expense).............................................  (2,438)    279   (5,047)
                                                                   -------  ------  -------
Other comprehensive income, net of taxes.......................... $13,308  $5,817  $14,566
                                                                   =======  ======  =======
</TABLE>
See notes to consolidated financial statements.

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

28

<PAGE>

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

<TABLE>
<CAPTION>
                                        Common Stock                                         Accumulated
                                        ------------ Additional Unearned Unearned               Other
                                                Par   Paid-in     ESOP     MRP    Treasury  Comprehensive  Retained
                                        Shares Value  Capital    Shares   Shares   Stock    Income, (Loss) Earnings  Total
                                        ------ ----- ---------- -------- -------- --------  -------------- -------- -------
<S>                                     <C>    <C>   <C>        <C>      <C>      <C>       <C>            <C>      <C>
BALANCE, DECEMBER 31, 1999............. 5,189   $86   $62,217   $(3,740) $(3,378) $(55,522)    $(8,931)    $63,786  $54,518
  Purchase of treasury stock...........  (431)   --        --        --       --    (6,508)         --          --   (6,508)
  Allocation of MRP shares.............    --    --        91        --      441        --          --          --      532
  Allocation of ESOP shares............    --    --       248       233       --        --          --          --      481
  Unrealized gain in securities
   available-for-sale, net of taxes of
   $5,047..............................    --    --        --        --       --        --       7,864          --    7,864
  Dividends ($.48 per share)...........    --    --        --        --       --        --          --      (1,969)  (1,969)
  Net income...........................    --    --        --        --       --        --          --       6,702    6,702
                                        -----   ---   -------   -------  -------  --------     -------     -------  -------
BALANCE, DECEMBER 31, 2000............. 4,758    86    62,556    (3,507)  (2,937)  (62,030)     (1,067)     68,519   61,620
  Allocation of MRP shares.............    --    --        19        --      416        --          --          --      435
  Allocation of ESOP shares............    --    --       279       253       --        --          --          --      532
  Unrealized loss in securities
   available-for-sale, net of a tax
   benefit of $279.....................    --    --        --        --       --        --        (541)         --     (541)
  Dividends ($.48 per share)...........    --    --        --        --       --        --          --      (1,963)  (1,963)
  Net income...........................    --    --        --        --       --        --          --       6,358    6,358
                                        -----   ---   -------   -------  -------  --------     -------     -------  -------
BALANCE, DECEMBER 31, 2001............. 4,758    86    62,854    (3,254)  (2,521)  (62,030)     (1,608)     72,914   66,441
  Purchase of treasury stock...........  (238)   --        --        --       --    (4,489)         --          --   (4,489)
                                        -----   ---   -------   -------  -------  --------     -------     -------  -------
  Allocation of ESOP shares............    --    --       330       237       --        --          --          --      567
  Exercise of options..................    16    --        --        --       --       173          --          --      173
  Unrealized gain in securities
   available-for-sale, net of taxes of
   $2,438..............................    --    --        --        --       --        --       4,732          --    4,732
  Dividends ($.54 per share)...........    --    --        --        --       --        --          --      (2,294)  (2,294)
  Net income...........................    --    --        --        --       --        --          --       8,576    8,576
                                        -----   ---   -------   -------  -------  --------     -------     -------  -------
BALANCE, DECEMBER 31, 2002............. 4,536   $86   $63,184   $(3,017) $(2,521) $(66,346)    $ 3,124     $79,196  $73,706
                                        =====   ===   =======   =======  =======  ========     =======     =======  =======
</TABLE>

See notes to consolidated financial statements.

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

                                                                             29

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

Consolidated Statement of Cash Flows
(In thousands)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                          Years Ended December 31,
                                                                                       ------------------------------
                                                                                          2002        2001      2000
                                                                                       ---------   ---------  --------
<S>                                                                                    <C>         <C>        <C>
OPERATING ACTIVITIES:
   Net income......................................................................... $   8,576   $   6,358  $  6,702
   Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation......................................................................       308         300       294
    Deferred income taxes.............................................................    (1,353)     (1,332)   (1,229)
    Amortization of premiums and accretion of discounts...............................     1,021         388       (82)
    Compensation expense--allocations of ESOP and MRP shares..........................       567         967     1,013
    Gain on sale of investments, net..................................................      (783)       (329)     (138)
    Gain on sale of loans.............................................................        --         (62)       --
    Increase or decrease in other assets and liabilities:
      Accrued interest receivable.....................................................      (281)        294      (436)
      Accrued interest on deposits....................................................       (27)       (134)      166
      Accrued interest on borrowings..................................................       (19)       (110)      319
      Accrued income taxes............................................................       776        (732)     (929)
      Earnings on bank-owned life insurance...........................................    (1,084)     (1,012)       --
      Other, net......................................................................       407        (267)   (1,096)
                                                                                       ---------   ---------  --------
      Net cash provided by operating activities.......................................     8,108       4,329     4,584
                                                                                       ---------   ---------  --------
INVESTING ACTIVITIES:
   Securities available-for-sale:
    Purchase of investment securities.................................................  (188,114)   (112,005)       --
    Purchase of mortgage-backed securities............................................  (121,014)    (66,375)  (23,073)
    Principal paydowns................................................................    78,411      23,821     3,637
    Net proceeds from sale of investment securities...................................   107,328      29,885        --
    Net proceeds from sale of mortgage-backed securities..............................        --      21,184        --
   Securities held-to-maturity:
    Net proceeds from sale of investment securities...................................        --          --     5,125
   Purchase of bank-owned life insurance..............................................        --     (20,000)       --
   Net (increase) decrease in federal funds sold......................................    (6,600)      2,275    26,575
   Net decrease in conventional loans.................................................   109,384      71,193     5,419
   Purchase of conventional loans.....................................................    (6,583)         --        --
   Proceeds from sale of conventional loans...........................................        --      20,207        --
   Redemption (purchase) of Federal Home Loan Bank stock..............................    (1,352)      1,000        --
   Net proceeds from sale of real estate owned........................................                    29       493
   Purchase of premises and equipment.................................................      (100)        (36)      (53)
                                                                                       ---------   ---------  --------
    Net cash provided by (used in) investing activities...............................   (28,640)    (28,822)   18,123
                                                                                       ---------   ---------  --------
FINANCING ACTIVITIES:
   Net increase in deposits........................................................... $  25,334   $  24,667  $ 24,754
   Decrease in Advances by borrowers for taxes and insurance..........................    (2,476)     (1,522)     (230)
   Proceeds from borrowings...........................................................    15,000          --     5,000
   Repayments on borrowings...........................................................    (7,500)     (5,000)  (23,750)
   Dividends paid.....................................................................    (2,294)     (1,963)   (1,932)
   Purchase of treasury stock.........................................................    (4,489)         --    (6,508)
   Exercise of stock options..........................................................       173          --        --
                                                                                       ---------   ---------  --------
      Net cash provided by (used in) financing activities.............................    23,748      16,182    (2,666)
                                                                                       ---------   ---------  --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................................     3,216      (8,311)   20,041
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..........................................    32,198      40,509    20,468
                                                                                       ---------   ---------  --------
CASH AND CASH EQUIVALENTS, END OF YEAR................................................ $  35,414   $  32,198  $ 40,509
                                                                                       =========   =========  ========
SUPPLEMENTAL DISCLOSURES:
   Cash paid for:
    Interest on deposits and advances by borrowers for taxes and insurance............ $  20,367   $  28,647  $ 27,464
    Interest on borrowings............................................................    12,291      12,745    12,728
    Income taxes......................................................................     1,809       1,613     2,752
</TABLE>

See notes to consolidated financial statements.

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

30

<PAGE>

Notes to Consolidated Financial Statements
Years Ended December 31, 2002, 2001, and 2000
--------------------------------------------------------------------------------

1. BASIS OF PRESENTATION

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

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

   The consolidated financial statements have been prepared in accordance with
   accounting principles generally accepted in the United States of America and
   with general practices within the banking industry. In preparing such
   consolidated financial statements, management is required to make estimates
   and assumptions that affect the reported amounts of assets and liabilities
   at the date of the consolidated financial statements and the reported
   amounts of revenues and expenses during the period. Actual results could
   differ from those estimates.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    a. Federal Home Loan Bank System--The Association is a member of the
       Federal Home Loan Bank ("FHLB") system. As a member, the Association is
       required to maintain a minimum investment in capital stock of the FHLB
       of not less than 5% of the Association's outstanding borrowings plus
       0.07% of the remaining borrowing capacity. Deficiencies, if any, in the
       required investment at the end of any reporting period are purchased in
       the subsequent reporting period. The Association receives dividends on
       its FHLB stock.

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

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

       The Association services mortgage loans for the Federal National
       Mortgage Association ("FNMA"). The Association is required to restrict
       cash balances equal to the corresponding escrow funds. As of December
       31, 2002 and 2001, restricted cash of approximately $400,000 and
       $659,000, respectively, has been segregated on the books of the
       Association.

       The Association's reserve requirements imposed by the Federal Reserve
       Bank was approximately $2,188,000 and $1,167,000 at December 31, 2002
       and 2001, respectively.

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

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

                                                                             31

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------


       Premiums are amortized and discounts are accreted to maturity using the
       level yield method. The Company does not maintain a trading account.

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

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

    f. Servicing of Loans--The total amount of loans serviced for others was
       $18,236,000 and $30,950,000, at December 31, 2002 and 2001, respectively.

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

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

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

    h. Mortgage Servicing Rights ("MSRs")--The Company has agreements for the
       express purpose of selling loans in the secondary market. The Company
       maintains servicing rights for

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

32

<PAGE>

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

       most of these loans. Originated MSRs are recorded by allocating total
       costs incurred between the loan and servicing rights based on their
       relative fair values. MSRs are amortized in proportion to the estimated
       servicing income over the estimated life of the servicing portfolio.
       MSRs are a component of other assets on the consolidated balance sheet.

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

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

    j. Premises and Equipment. Premises and equipment are stated at cost, less
       accumulated depreciation. Depreciation is principally computed on the
       straight-line method over the estimated useful lives of the related
       assets, which range from three to ten years for furniture, fixtures and
       equipment and 25 to 50 years for building premises. Leasehold
       improvements are amortized over the shorter of their estimated useful
       lives or their respective lease terms, which range from seven to fifteen
       years. Expenditures for maintenance and repairs are charged against
       income as incurred. Costs of major additions and improvements are
       capitalized.

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

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

    m. Other Comprehensive Income--The Company follows FAS No. 130, "Reporting
       Comprehensive Income, which established standards for reporting and
       display of comprehensive income and its components (revenues, expenses,
       gains and losses) in a full set of general-purpose financial statements.
       The only component of Other Comprehensive Income is unrealized gains and
       losses on investment securities carried as "Available for Sale".

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

    o. Stock Options--The Company maintains a stock option plan for the
       directors and certain officers. The plan also permits options to be
       granted to employees at the Company's discretion. The Company accounts
       for its stock option plan under provisions of APB Opinion No. 25,
       Accounting for Stock Issued to Employees, and related interpretations.
       Under this Opinion, no compensation expense has been recognized with
       respect to the plan because the exercise price of the Company's stock
       options equals the market price of the underlying stock on the grant
       date.

       Had compensation expense for the stock option plan been recognized in
       accordance with the fair value accounting provisions of FAS No. 123,
       Accounting for Stock-based Compensation, net income applicable to common
       stock and basic and diluted net income per share for the years

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

                                                                             33

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------

       ended December 31, would have been as follows, (in thousands, except per
       share data):

<TABLE>
<CAPTION>
                                            2002   2001   2000
                                           ------ ------ ------
                 <S>                       <C>    <C>    <C>
                 Net income applicable to
                  common stock:
                   As reported............ $8,576 $6,358 $6,702
                   Less pro forma expense
                    related to option.....     --     86     86
                                           ------ ------ ------
                   Pro forma.............. $8,576 $6,272 $6,616
                                           ====== ====== ======
                 Basic net income per
                  common share:
                   As reported............ $ 2.09 $ 1.55 $ 1.61
                   Pro forma..............   2.09   1.53   1.59
                 Diluted net income per
                  common share:
                   As reported............ $ 2.02 $ 1.52 $ 1.57
                   Pro forma..............   2.02   1.50   1.54
</TABLE>

       For purposes of computing pro forma results, the Company estimated the
       fair values of stock options using the Black-Scholes option pricing
       model. The model requires the use of subjective assumptions, which can
       materially effect fair value estimates. Therefore, the pro forma results
       are estimates of results of operations as if compensation expense had
       been recognized for the stock option plan.

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

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

    r. Recent Accounting Pronouncements--In August 2001, the Financial
       Accounting Standards Board ("FASB") issued FAS No. 143, Accounting for
       Asset Retirement Obligations, which requires that the fair value of a
       liability be recognized when incurred for the retirement of a long-lived
       asset and the value of the asset be increased by that amount. The
       statement also requires that the liability be maintained at its present
       value in subsequent periods and outlines certain disclosures for such
       obligations. The adoption of this statement, which is effective January
       1, 2003, is not expected to have a material effect on the Company's
       financial statements.

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

       In April 2002, the FASB issued FAS No. 145, Rescission of FASB Statement
       No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
       Corrections. FAS No. 145 rescinds FAS No. 4, which required all gains
       and losses from extinguishment of debt to be aggregated and, if
       material, classified as an extraordinary item, net of related income tax
       effect. As a result, the criteria in APB Opinion No. 30 will now be used
       to classify those gains and losses. This statement also amends FAS No.
       13 to require that certain lease modifications that have economic
       effects similar to sale-leaseback transactions be accounted for in the
       same manner as sale-leaseback transactions. This statement also makes
       technical corrections to existing pronouncements, which are not
       substantive but in some cases may change accounting practice. The
       provisions of this statement related to the rescission of FAS No. 4
       shall be applied in fiscal years beginning after May 15, 2002. Any gain
       or loss on extinguishments of debt that was classified as an
       extraordinary item in prior periods presented that does not meet the
       criteria in APB Opinion No. 30 for classification as an extraordinary
       item shall be reclassified. Early adoption of the provisions of this
       statement related to FAS No. 13 shall be effective for transactions
       occurring

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

34

<PAGE>

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

       after May 15, 2002. All other provisions of this statement shall be
       effective for financial statements issued on or after May 15, 2002.
       Early application of this statement is encouraged. The adoption of the
       effective portions of this statement did not have an impact on the
       Company's financial position of results of operations. The adoption of
       the remaining portions of this statement is not expected to have an
       impact on the Company's financial position or results of operations.

       In July 2002, the FASB issued FAS No. 146, Accounting for Costs
       Associated with Exit or Disposal Activities, which requires companies to
       recognize costs associated with exit or disposal activities when they
       are incurred rather than at the date of a commitment to an exit or
       disposal plan. This statement replaces EITF Issue No. 94-3, Liability
       Recognition for Certain Employee Termination Benefits and Other Costs to
       Exit an Activity (Including Certain Costs Incurred in a Restructuring).
       The new statement will be effective for exit or disposal activities
       initiated after December 31, 2002, the adoption of which is not expected
       to have a material effect on the Company's financial statements.

       On October 1, 2002, the FASB issued FAS No. 147, Acquisitions of Certain
       Financial Institutions, effective for all business combinations
       initiated after October 1, 2002. This statement addresses the financial
       accounting and reporting for the acquisition of all or part of a
       financial institution, except for a transaction between two or more
       mutual enterprises. This statement removes acquisitions of financial
       institutions, other than transactions between two or more mutual
       enterprises, from the scope of FAS No. 72, Accounting for Certain
       Acquisitions of Banking or Thrift Institutions, and FASB Interpretation
       No. 9, Applying APB Opinions No. 16 and 17 When a Savings and Loan
       Association or a Similar Institution Is Acquired in a Business
       Combination Accounted for by the Purchase Method. The acquisition of all
       or part of a financial institution that meets the definition of a
       business combination shall be accounted for by the purchase method in
       accordance with FAS No. 141, Business Combinations, and FAS No. 142,
       Goodwill and Other Intangible Assets. This statement also provides
       guidance on the accounting for the impairment or disposal of acquired
       long-term customer-relationship intangible assets (such as depositor and
       borrower-relationship intangible assets and credit cardholder intangible
       assets), including those acquired in transactions between two or more
       mutual enterprises. The adoption of this statement did not have an
       effect on the Company's financial statements.

       On December 31, 2002, the FASB issued FAS No. 148, Accounting for
       Stock-Based Compensation--Transition and Disclosure, which amends FAS
       No. 123, Accounting for Stock-Based Compensation. FAS No. 148 amends the
       disclosure requirements of FAS No. 123 to require more prominent and
       more frequent disclosures in financial statements about the effects of
       stock-based compensation. Under the provisions of FAS No. 123, companies
       that adopted the preferable, fair value based method were required to
       apply that method prospectively for new stock option awards. This
       contributed to a "ramp-up" effect on stock-based compensation expense in
       the first few years following adoption, which caused concern for
       companies and investors because of the lack of consistency in reported
       results. To address that concern, FAS No. 148 provides two additional
       methods of transition that reflect an entity's full complement of
       stock-based compensation expense immediately upon adoption, thereby
       eliminating the ramp-up effect. FAS No. 148 also improves the clarity
       and prominence of disclosures about the pro forma effects of using the
       fair value based method of accounting for stock-based compensation for
       all companies--regardless of the accounting method used--by requiring
       that the data be presented more prominently and in a more user-friendly
       format in the footnotes to the financial statements. In addition, the
       statement improves the timeliness of those disclosures by requiring that
       this information be included in interim as well as annual financial
       statements. The transition guidance and annual disclosure provisions of
       FAS No. 148 are effective for fiscal years ending after December 15,
       2002, with earlier application permitted in certain circumstances. The
       interim disclosure provisions are

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

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<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------

       effective for financial reports containing financial statements for
       interim periods beginning after December 15, 2002. Management has not
       completed its analysis of the effects of the adoption of this statement
       but it is not expected to have a material effect on the Company's
       financial statements.

       In November, 2002, the FASB issued Interpretation No. 45, Guarantor's
       Accounting and Disclosure requirements for Guarantees, Including
       Indirect Guarantees of Indebtedness of Others. This interpretation
       elaborates on the disclosures to be made by a guarantor in its interim
       and annual financial statements about its obligations under certain
       guarantees that it has issued. This interpretation clarifies that a
       guarantor is required to disclose (a) the nature of the guarantee,
       including the approximate term of the guarantee, how the guarantee
       arose, and the events or circumstances that would require the guarantor
       to perform under the guarantee; (b) the maximum potential amount of
       future payments under the guarantee; (c) the carrying amount of the
       liability, if any, for the guarantor's obligations under the guarantee;
       and (d) the nature and extent of any recourse provisions or available
       collateral that would enable the guarantor to recover the amounts paid
       under the guarantee. This interpretation also clarifies that a guarantor
       is required to recognize, at the inception of a guarantee, a liability
       for the obligations it has undertaken in issuing the guarantee,
       including its ongoing obligation to stand ready to perform over the term
       of the guarantee in the event that the specified triggering events or
       conditions occur. The objective of the initial measurement of that
       liability is the fair value of the guarantee at its inception. The
       initial recognition and initial measurement provisions of this
       interpretation are applicable on a prospective basis to guarantees
       issued or modified after December 31, 2002, irrespective of the
       guarantor's fiscal year-end. The disclosure requirements in this
       interpretation are effective for financial statements of interim or
       annual periods ending after December 15, 2002. Management has not
       completed its analysis of the effects of the adoption of this statement
       but it is not expected to have a material effect on the Company's
       financial statements.

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

3. STOCKHOLDER RIGHTS PLAN

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

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

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

   First Bell will generally be entitled to redeem the Rights at $0.01 per
   right at any time until the 10th

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

36

<PAGE>

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

   business day following public announcement that a person or group has
   acquired 10% or more of the Company's Common Stock.

4. INVESTMENT SECURITIES AVAILABLE-FOR-SALE

   These investments consist of municipal securities and collateralized
   mortgage obligations ("CMO's"), agency securities and Trust Preferred
   Securities. The following is a summary of investment securities
   available-for-sale at December 31, (in thousands):

<TABLE>
<CAPTION>
                                                2002
                                 ----------------------------------
                                           Gross   Gross
                                  Amor-   Unreal- Unreal-
                                  tized    ized    ized     Fair
                                  Cost     Gain    Loss     Value
                                 -------- ------- -------  --------
            <S>                  <C>      <C>     <C>      <C>
            Municipal Securities $184,611  3,209  $   (92) $187,728
            CMO's...............   38,104    455       --    38,559
            Agency Securities...   70,852    480     (300)   71,032
            Trust Preferred
             Securities.........    5,000      6       (6)    5,000
            Corporate
             Securities.........    6,967     --     (182)    6,785
            Other Investments...        4     --       --         4
                                 -------- ------  -------  --------
                                 $305,538 $4,150  $  (580) $309,108
                                 ======== ======  =======  ========

                                                2001
                                 ----------------------------------
                                           Gross   Gross
                                  Amor-   Unreal- Unreal-
                                  tized    ized    ized     Fair
                                  Cost     Gain    Loss     Value
                                 -------- ------- -------  --------
            Municipal Securities $179,969    492  $(2,299) $178,162
            CMO's...............   45,989     58      (58)   45,989
            Agency Securities...   52,895     --     (620)   52,275
            Trust Preferred
             Securities.........    5,000     --       --     5,000
            Other Investments...        4     --       --         4
                                 -------- ------  -------  --------
                                 $283,857 $  550  $(2,977) $281,430
                                 ======== ======  =======  ========
</TABLE>

   In 2002 and 2001, proceeds from the sale of investment securities
   available-for-sale were $107.3 million and $29.9 million, resulting in gross
   gains of $847,000 and $70,000 and gross losses of $64,000 and $55,000,
   respectively. There were no sales of investment securities
   available-for-sale during the year ended December 31, 2000.

   The carrying value and fair value of investment securities
   available-for-sale by contractual maturity as of December 31, 2002, are
   shown below, (in thousands):

<TABLE>
<CAPTION>
                                             Amortized  Fair
                                               Cost     Value
                                             --------- --------
                <S>                          <C>       <C>
                Due after one through
                  five years................ $ 23,871  $ 23,756
                Due after five years through
                  ten years.................   27,704    28,263
                Due after ten years.........  253,963   257,089
                                             --------  --------
                                             $305,538  $309,108
                                             ========  ========
</TABLE>

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

5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE

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

<TABLE>
<CAPTION>
                                              2002
                                ---------------------------------
                                          Gross   Gross
                                 Amor-   Unreal- Unreal-
                                 tized    ized    ized    Fair
                                 Cost     Gains   Loss    Value
                                -------- ------- ------- --------
              <S>               <C>      <C>     <C>     <C>
              Federal Home Loan
               Mortgage
               Corporation..... $ 31,283 $  512   $ (44) $ 31,751
              Federal National
               Mortgage
               Association.....  126,192    771     (77)  126,886
                                -------- ------   -----  --------
                                $157,475 $1,283   $(121) $158,637
                                ======== ======   =====  ========

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

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

                                                                             37

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------


   In 2001, proceeds from the sale of mortgage-backed securities
   available-for-sale were $21.2 million, resulting in gross and net gains of
   $314,000. There were no sales of mortgage- backed securities
   available-for-sale during the years ended December 31, 2002 and December 31,
   2000.

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

6. LOANS

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

<TABLE>
<CAPTION>
                                              2002     2001
                                            -------- --------
                  <S>                       <C>      <C>
                  Conventional mortgages... $324,722 $420,780
                  Residential construction
                    loans..................    3,891    5,716
                  Multi-family loans.......      176      241
                  Second mortgage loans....    8,024   14,015
                  Other loans..............      493      778
                                            -------- --------
                                             337,306  441,530

                  Less:
                  Deferred net loan
                    origination fees.......    1,049    1,564
                  Undisbursed portion of
                    construction loans in
                    process................    1,660    2,568
                  Allowance for loan losses      925      925
                                            -------- --------
                                            $333,672 $436,473
                                            ======== ========
</TABLE>

   Conventional mortgages consist of one-to four-family fixed and adjustable
   rate loans. The Company grants loans throughout the greater Pittsburgh,
   Pennsylvania metropolitan area. At December 31, 2002 and 2001 the Company's
   borrowers ability to repay the loans outstanding is, therefore, dependent on
   the economy of that area.

   Non-accrual loans totaled $1,806,000 and $1,056,000 at December 31, 2002 and
   2001, respectively. The Association does not accrue interest on loans past
   due 90 days or more. Uncollected interest on total non-accrual loans
   amounted to $104,000, $50,000 and $32,000 for the years ended December 31,
   2002, 2001 and 2000, respectively. Interest income recorded on non-accrual
   loans was $79,000, $57,000 and $33,000 for each of the years ended December
   31, 2002, 2001 and 2000, respectively.

   In February 2001 the Company sold approximately $20.2 million fixed rate
   mortgage loans for a gain of approximately $62,000. There were no loan sales
   for the years ended December 31, 2002 and 2000.

7. ALLOWANCE FOR LOAN LOSSES

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

<TABLE>
<CAPTION>
                                              2002 2001 2000
                                              ---- ---- ----
                   <S>                        <C>  <C>  <C>
                   Balance, beginning of year $925 $925 $925
                   Provision for loan losses.   --   --   --
                   Charge-offs...............   --   --   --
                   Recovery of previous loan
                     chargeoffs..............   --   --   --
                                              ---- ---- ----
                   Balance, end of year...... $925 $925 $925
                                              ---- ---- ----
</TABLE>

8. PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                  2002   2001
                                                 ------ ------
                  <S>                            <C>    <C>
                  Land and land improvements.... $  529 $  529
                  Office buildings and leasehold
                    improvements................  4,453  4,480
                  Furniture, fixtures and
                    equipment...................  2,011  1,884
                                                 ------ ------
                                                  6,993  6,893
                  Less accumulated depreciation
                    and amortization............  3,784  3,476
                                                 ------ ------
                                                 $3,209 $3,417
                                                 ====== ======
</TABLE>

   Depreciation expense for the years ended December 31, 2002, 2001, and 2000
   was $308,000, $300,000 and $294,000, respectively.

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

38

<PAGE>

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


9. DEPOSITS

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

<TABLE>
<CAPTION>
                                           Stated Rate     2002     2001
                                         --------------- -------- --------
<S>                                      <C>             <C>      <C>
Balance by interest rate:
Passbook, club and other accounts....... 1.98%--3.19%    $131,497
                                                         --------
                                         1.98%--3.68%             $ 85,318
                                                                  --------
Money market and NOW accounts........... 0.00%--1.98%      73,628
                                                         --------
                                         0.00%--2.47%               69,625
                                                                  --------
Certificate accounts.................... Less than 2.00%   34,850    1,148
                                         2.01%--2.50%      51,873   14,224
                                         2.51%--3.00%     114,328   11,462
                                         3.01%--3.50%      13,598   28,158
                                         3.51%--4.00%      63,103   18,427
                                         4.01%--4.50%      16,099   93,303
                                         4.51%--5.00%      14,705   61,925
                                         5.01%--5.50%      13,852   32,879
                                         5.51%--6.00%      16,399   34,777
                                         6.01%--6.50%       9,204   22,819
                                         6.51%--7.00%      27,644   46,713
                                         7.01%--7.50%       5,843   40,516
                                         7.51%--8.50%          63       58
                                                         -------- --------
                                                          381,561  406,409
                                                         -------- --------
                                                         $586,686 $561,352
                                                         ======== ========
</TABLE>

   The following is a summary of certificate accounts by contractual maturity
   at December 31, 2002, (in thousands):

<TABLE>
<CAPTION>
Contractual Maturity
--------------------
<S>                                      <C>
2003....................................  245,323
2004....................................   87,242
2005....................................   19,250
2006....................................    5,755
2007....................................   14,477
thereafter..............................    9,514
                                         --------
                                         $381,561
                                         ========
</TABLE>

   The Association maintains insurance on deposits through the Savings
   Association Insurance Fund ("SAIF"), which is under the supervision of the
   FDIC.

   Deposits in excess of $100,000 are not insured by the SAIF. The aggregate
   amount of certificates of deposit with a minimum denomination of $100,000
   was $54,075,000 and $51,278,000 at December 31, 2002 and 2001, respectively.

10. BORROWINGS

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

<TABLE>
<CAPTION>
                                                   Interest
Description                        Maturity          Rate        2002     2001
-----------                    ----------------- ------------- -------- --------
<S>                            <C>               <C>           <C>      <C>
Commercial bank term loan..... January, 2003 (4) See below (5)       -- $  6,250
Commercial bank term loan..... October, 2005 (4) See below (5) $ 13,750       --
FHLB Borrowing................   April, 2008 (1)         5.79%   40,000   40,000
FHLB Borrowing................     May, 2008 (1)         5.66%   25,000   25,000
FHLB Borrowing................    June, 2008 (1)         5.60%   45,000   45,000
FHLB Borrowing................ January, 2009 (2)         4.99%   28,000   28,000
FHLB Borrowing................    June, 2010 (3)         6.01%   25,000   25,000
FHLB Borrowing................    June, 2010 (3)         6.12%   25,000   25,000
FHLB Borrowing................    June, 2010 (3)         6.14%   20,000   20,000
                                                               -------- --------
Balance, end of year..........                                 $221,750 $214,250
                                                               ======== ========
</TABLE>

   Under terms of a blanket agreement, collateral for the FHLB borrowings must
   be secured by certain qualifying assets of the Company, which consist
   principally of first mortgage loans. Borrowings under the commercial bank
   term loan are secured by treasury shares of the Company.
--------
  (1) The FHLB has the option to convert this interest rate to an adjustable
      rate based on the three month London Interbank Offered Rate ("LIBOR") at
      the five-year anniversary date of the borrowings origination, which will
      occur in the second quarter of 2003.
  (2) The FHLB has the option to convert this interest rate to an adjustable
      rate based on the three month LIBOR at the five-year anniversary date of
      the borrowings origination and quarterly thereafter. The initial
      conversion date will occur in the first quarter of 2004.
  (3) Every six months the FHLB has the option to convert this interest rate to
      an adjustable rate based on the three-month LIBOR.
  (4) Quarterly payments of $1,250,000 are due on this term loan through the
      maturity date. In October, 2002 the balance of the term loan outstanding
      on December 31, 2001 was refinanced and an additional $12,000,000 was
      borrowed under identical rate and repayment terms.
  (5) The commercial bank term loan has a variable rate of interest based on 3
      month LIBOR plus 150 basis points. The interest rate was 2.92% and 3.77%
      on December 31, 2002 and December 31, 2001, respectively.

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

                                                                             39

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------


11. REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS

   The Association is subject to various regulatory capital requirements
   administered by the federal banking agencies. Failure to meet minimum
   capital requirements can initiate certain mandatory--and possibly additional
   discretionary--actions by regulators that, if undertaken, could have a
   direct material effect on the Association's financial statements. Under
   capital adequacy guidelines and the regulatory framework for prompt
   corrective action, the Association must meet specific capital guidelines
   that involve quantitative measures of the Association's assets, liabilities,
   and certain off-balance-sheet items as calculated under regulatory
   accounting practices. The Association's capital amounts and classification
   are also subject to qualitative judgments by the regulators about
   components, risk weightings, and other factors.
   Quantitative measures established by regulation to ensure capital adequacy
   require the Association to maintain minimum amounts and ratios (set forth in
   the table below) of Total and Tier I Capital to risk-weighted assets and of
   Tangible and Tier I Capital to total assets. As of December 31, 2002, the
   Association met all capital adequacy requirements to which it is subject.

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

   The following table reconciles capital under accounting principles generally
   accepted in the United States of America to regulatory capital, (in
   thousands):

<TABLE>
<CAPTION>
                                                              2002    2001
                                                            -------  -------
    <S>                                                     <C>      <C>
    Total retained earnings................................ $83,537  $77,627
    Unrealized (gain) loss on securities available for sale  (3,123)   1,608
                                                            -------  -------
    Tier 1, Core and tangible capital......................  80,414   79,235
    Allowance for loan losses..............................     925      925
                                                            -------  -------
    Risk-based capital..................................... $81,339  $80,160
                                                            =======  =======
</TABLE>

   The Association had the following amounts of capital and capital ratios, (in
   thousands):

<TABLE>
<CAPTION>
                                                                                  To Be Well
                                                                   For Capital  Capitalized Under
                                                                    Adequacy    Prompt Corrective
                                                       Actual       Purposes    Action Provisions
                                                   -------------- ------------- -----------------
                                                   Amount  Ratio  Amount  Ratio Amount    Ratio
                                                   ------- ------ ------- -----  -------  ------
<S>                                                <C>     <C>    <C>     <C>   <C>       <C>
As of December 31, 2002
   Total Capital (to risk-weighted assets)........ $81,339 25.65% $25,369 8.00% $31,711   10.00%
   Tier I Capital (to risk-weighted assets)....... $80,414 25.36%     N/A 4.00%  19,027    6.00%
   Tier I Capital (to total assets)...............  80,414  9.04%  35,475 4.00%  44,344    5.00%
   Tangible Capital...............................  80,414  9.04%  13,303 1.50%     N/A      N/A

As of December 31, 2001
   Total Capital (to risk-weighted assets)........ $80,160 23.69% $27,066 8.00% $33,832   10.00%
   Tier I Capital (to risk-weighted assets)....... $79,235 23.42%     N/A 4.00%  20,299    6.00%
   Tier I Capital (to total assets)...............  79,235  9.15%  34,641 4.00%  43,299    5.00%
   Tangible Capital...............................  79,235  9.15%  12,990 1.50%     N/A      N/A
</TABLE>

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

40

<PAGE>

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


   Tangible Capital and Tier I Capital (to total assets) capital ratios are
   computed as a percentage of total assets. Total Capital and Tier I Capital
   (to risk-weighted assets) ratios are computed as a percentage of
   risk-weighted assets. Risk-weighted assets were $317,116,000 and
   $338,320,000 at December 31, 2002 and 2001, respectively.

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

   The Association may not declare or pay cash dividends on or repurchase any
   of its shares of common stock if the effect thereof would cause equity to be
   reduced below applicable regulatory capital maintenance requirements or if
   such declaration and payment would otherwise violate regulatory
   requirements. As of December 31, 2002, the Association had approximately
   $138,000 of dividends it could pay to the Company subject to notice to the
   OTS. Any dividend by the Association beyond its current year-to-date net
   income combined with retained net income of the preceding two years would
   require approval of the OTS.

12. EARNINGS PER SHARE

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

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

<TABLE>
<CAPTION>
                                                2002      2001    2000
                                            -----        ------  ------
        <S>                                 <C>          <C>     <C>
        Weighted-average common shares
         outstanding....................... 8,596         8,596   8,596
        Average treasury stock shares......      (3,857) (3,838) (3,717)
        Average unearned ESOP and MRP
         shares............................  (627)         (662)   (726)
                                            -----        ------  ------
        Weighted-average common shares and
         common stock equivalents used to
         calculate basic earnings per share 4,112         4,096   4,153
        Additional common stock equivalents
         used to calculate diluted earnings
         per share:
          MRP shares.......................    --            --      30
          Stock options....................   134            96     101
                                            -----        ------  ------
        Weighted-average common shares
         and common stock equivalents
         used to calculate diluted earnings
         per share......................... 4,246         4,192   4,284
                                            =====        ======  ======
</TABLE>

13. INCOME TAXES

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

<TABLE>
<CAPTION>
                                                        2002     2001
                                                      -------  -------
         <S>                                          <C>      <C>
         Deferred Tax Assets:
           Unrealized loss on investment securities,
            available for sale....................... $    --  $   828
           Allowance for loan losses.................     124       --
           Minimum tax credits.......................   3,591    2,728
           Other.....................................     285      246
                                                      -------  -------
            Total deferred tax assets................   4,000    3,802
                                                      -------  -------
         Deferred Tax Liabilities:
           Unrealized gain on investment securities,
            available for sale.......................  (1,609)      --
           Deferred loan origination fees............    (390)    (621)
           Allowance for loan losses.................      --      (67)
           Depreciation on premises and
            equipment................................    (377)    (406)
                                                      -------  -------
            Total deferred tax liabilities...........  (2,376)  (1,094)
                                                      -------  -------
            Net deferred tax asset................... $ 1,624  $ 2,708
                                                      =======  =======
</TABLE>

   The Company generated minimum tax credit carryovers in 2002 and 2001 of
   $933,000 and $1,050,000, respectively. These tax credits can be carried over
   indefinitely.

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

                                                                             41

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------


   No valuation allowance was established at December 31, 2002 and 2001 in view
   of certain tax strategies coupled with the anticipated future taxable income
   as evidenced by the Company's earnings potential.

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

<TABLE>
<CAPTION>
                                         2002     2001     2000
                                       -------  -------  -------
               <S>                     <C>      <C>      <C>
               Current:
                Federal............... $ 1,876  $   452  $ 1,149
                State.................     425      375      666
               Deferred benefit.......  (1,353)  (1,332)  (1,229)
                                       -------  -------  -------
                  Total provision for
                    income taxes...... $   948  $  (505) $   586
                                       =======  =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                          2002   2001    2000
                                         -----  -----   -----
                  <S>                    <C>    <C>     <C>
                  Statutory tax rate....  34.0%  34.0%   34.0%
                  State income taxes....   2.9    4.2     6.0
                  Tax exempt interest
                    income.............. (26.2) (39.3)  (33.0)
                  Earnings on bank-owned
                    life insurance......  (3.9)  (5.9)     --
                  Other--net............   3.1   (1.6)    1.0
                                         -----  -----   -----
                     Effective tax rate.   9.9%  (8.6)%   8.0%
                                         =====  =====   =====
</TABLE>

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

14. EMPLOYEE BENEFIT PLANS

   Deferred Supplemental Compensation Plan--The Board of Directors maintains a
   supplemental deferred compensation plan for certain employees of the
   Association. The plan provides that participants may receive deferred
   compensation in an amount up to $90,000 per year based upon the return on
   assets of the Association for the year. The compensation will be paid to the
   employee upon retirement. Deferred compensation expense under this plan was
   $90,000, $26,600 and $45,000 for the years ended December 31, 2002, 2001 and
   2000, respectively.

   401(k) Plan--The Association maintains a defined contribution 401(k) plan to
   provide benefits for substantially all employees. The plan provides for, but
   does not require, employees to make tax deferred payroll savings
   contributions. The Association is required to make a matching contribution
   based on the level of employee contribution. The total expense recorded
   under this plan for the years ended December 31, 2002, 2001 and 2000, was
   approximately $7,800, $8,200 and $9,200, respectively.

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

   Compensation expense related to the ESOP for 2002, 2001 and 2000, totaled
   $567,000, $532,000 and $480,000, respectively, based on the average fair
   value of shares committed to be released. The loan and related interest
   expense on the loan are eliminated in these consolidated financial
   statements.

   The following table presents the components of the ESOP shares, (in
   thousands):

<TABLE>
<CAPTION>
                                            2002   2001   2000
                                           ------ ------ ------
                 <S>                       <C>    <C>    <C>
                 Allocated shares.........    228    192    159
                 Shares released for
                   allocation.............     34     36     33
                 Unreleased shares........    426    460    496
                                           ------ ------ ------
                 Total ESOP shares........    688    688    688
                                           ====== ====== ======
                 Fair value of unrealeased
                   shares................. $9,057 $6,417 $6,786
                                           ====== ====== ======
</TABLE>

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

42

<PAGE>

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


   Stock Option Plan--The Company has a fixed option plan whereby options have
   been granted to certain officers and directors of the Company. The plan also
   permits options to be granted to employees at the Company's discretion.
   Under the plan, the total number of shares of common stock that may be
   granted is 859,625. Options are vested at a rate of 20% per year over a
   five-year period beginning at the initial date of grant. Terminated
   employees forfeit any non-vested options and no option will be exercisable
   after ten years from the date of grant.

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

<TABLE>
<CAPTION>
                                                                 2002     2001     2000
                                                               -------- -------- --------
<S>                                                            <C>      <C>      <C>
Options outstanding, beginning of year........................  380,486  380,486  380,486
Options exercised.............................................   16,081       --       --
Options forfeited.............................................       --       --       --
                                                               -------- -------- --------
Options outstanding, end of year..............................  364,405  380,486  380,486
                                                               ======== ======== ========
Weighted average exercise price, end of year.................. $  10.70 $  10.70 $  10.70
                                                               ======== ======== ========
Options exercisable, end of year..............................  364,405  380,486  304,382
                                                               ======== ======== ========
Options available for grant, end of year......................  465,208  465,208  465,208
                                                               ======== ======== ========
Weighted-average fair value of options granted during the year $     -- $     -- $     --
                                                               ======== ======== ========
Remaining contractual life of outstanding options.............  4 Years  5 Years  6 Years
</TABLE>

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

   The following summarizes activity in the MRP for the year ended December 31:

<TABLE>
<CAPTION>
                                           2002     2001     2000
                                          ------- -------  -------
            <S>                           <C>     <C>      <C>
            Awards outstanding, beginning
             of year.....................      --  29,882   64,714
            Awards granted...............       1      --       --
                                          ------- -------  -------
            Awards forfeited.............      --      --   (3,175)
                                          ======= =======  =======
            Awards vested................      -- (29,882) (31,657)
                                          ======= =======  =======
            Awards outstanding, end of
             year........................       1      --   29,882
                                          ======= =======  =======
            Total remaining MRP shares,
             end of year................. 180,844 180,845  210,727
                                          ======= =======  =======
</TABLE>

   The cost of unearned shares related to these awards, included as a separate
   component of stockholders' equity, aggregated $2,521,000 at December 31,
   2002 and 2001. Compensation cost is recorded over the vesting period as
   shares are earned based on the average fair market value of stock during the
   fiscal year. There was no MRP expense for the year ended December 31, 2002
   and 2001. The expense for the year ended December 31, 2000 was $533,000.
   Terminated employees forfeit any non-vested awards.

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

                                                                             43

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
--------------------------------------------------------------------------------


15. COMMITMENTS AND CONTINGENCIES

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

<TABLE>
<CAPTION>
                                           2002              2001
                                     ----------------- -----------------
                                     Notional Notional Notional Notional
                                      Amount    Rate    Amount    Rate
                                     -------- -------- -------- --------
        <S>                          <C>      <C>      <C>      <C>
        15 year fixed rate mortgages $ 9,483   5.46%   $ 3,184   6.18%
        30 year fixed rate mortgages   5,781   6.18%     3,232   6.58%
        Construction mortgages......   1,660   6.40%     2,568   8.00%
        Home equity loans...........     106   6.75%       141   6.89%
        Available line of credit....   3,578   6.49%     3,844   6.60%
                                     -------           -------
                                     $20,608           $12,969
                                     =======           =======
</TABLE>

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

16. FAIR VALUES OF FINANCIAL INSTRUMENTS

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

<TABLE>
<CAPTION>
                                                        2002              2001
                                                  ----------------- -----------------
                                                  Carrying  Fair    Carrying  Fair
                                                   Amount   Value    Amount   Value
                                                  -------- -------- -------- --------
<S>                                               <C>      <C>      <C>      <C>
Assets:
   Cash and noninterest-bearing deposits......... $  4,545 $  4,545 $  3,402 $  3,402
   Interest-bearing deposits.....................   30,869   30,869   28,796   28,796
   Federal Funds sold............................   10,750   10,750    4,150    4,150
   Investment and mortgage-backed securities,
     available-for-sale..........................  467,745  467,745  337,425  337,425
   Loans.........................................  333,672  342,681  436,473  442,545
   Federal Home Loan Bank stock..................   11,752   11,752   10,400   10,400
   Bank-owned life insurance.....................   22,096   22,096   21,012   21,012
   Accrued interest receivable...................    5,370    5,370    5,089    5,089

Liabilities:
   Deposits......................................  586,686  596,445  561,352  568,131
   Borrowings....................................  221,750  240,787  214,250  226,835
   Advances by borrowers for taxes and insurance.    6,995    6,995    9,471    9,471
   Accrued interest payable......................    1,762    1,762    1,808    1,808
</TABLE>

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

    b. Investment and mortgage-backed securities available-for-sale--Fair
       values for these securities are based on quoted market prices or dealer
       quotes. If a quoted market price is not available, fair value is
       estimated using quoted market prices for similar securities.

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

44

<PAGE>

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


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

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

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

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

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

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

17. PARENT COMPANY ONLY FINANCIAL STATEMENTS

   The following are condensed financial statements for First Bell as of
   December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001
   and 2000, (in thousands):

   BALANCE SHEET

<TABLE>
<CAPTION>
                                                         2002    2001
         ASSETS                                         ------- -------
         <S>                                            <C>     <C>
         CASH AND INTEREST-BEARING DEPOSITS............ $   750 $   250
         FEDERAL FUNDS SOLD............................     750     750
         INVESTMENT IN AND ADVANCES TO BELL FEDERAL....  83,537  77,597
         LOAN RECEIVABLE-ESOP..........................   3,880   4,072
         OTHER ASSETS..................................     985   1,379
                                                        ------- -------
            Total assets............................... $89,902 $84,048
                                                        ======= =======

         LIABILITIES AND STOCKHOLDERS' EQUITY
         BORROWINGS.................................... $13,750 $ 6,250
         LOAN PAYABLE TO BELL FEDERAL..................      --   9,483
         OTHER LIABILITIES.............................   2,446   1,874
                                                        ------- -------
            Total liabilities..........................  16,196  17,607
                                                        ------- -------
         TOTAL STOCKHOLDERS EQUITY.....................  73,706  66,441
                                                        ------- -------
            Total liabilities and stockholders' equity. $89,902 $84,048
                                                        ======= =======
</TABLE>

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

                                                                             45

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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

   STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                2002    2001    2000
                                                               ------  ------  ------
<S>                                                            <C>     <C>     <C>
INCOME:
   Dividends from subsidiary.................................. $8,000  $8,000  $4,000
   Other income...............................................    207     387     475
                                                               ------  ------  ------
TOTAL INCOME..................................................  8,207   8,387   4,475
OPERATING EXPENSES............................................    723   1,605   1,998
                                                               ------  ------  ------
INCOME BEFORE PROVISION FOR INCOME TAXES......................  7,484   6,782   2,477
                                                               ------  ------  ------
INCOME TAX BENEFIT............................................   (149)   (381)   (478)
                                                               ------  ------  ------
INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARY..  7,633   7,163   2,955
   Equity (deficit) in undistributed earnings of Bell Federal.    943    (805)  3,747
                                                               ------  ------  ------
NET INCOME.................................................... $8,576  $6,358  $6,702
                                                               ======  ======  ======
</TABLE>

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

46

<PAGE>


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


   STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                                       -------------------------
                                                                         2002     2001     2000
                                                                       -------  -------  -------
<S>                                                                    <C>      <C>      <C>
OPERATING ACTIVITIES:
 Net income........................................................... $ 8,576  $ 6,358  $ 6,702
 Adjustments to reconcile net income to net cash provided by operating
   activities:
   Equity (deficit) in undistributed earnings of Bell Federal.........    (943)     805   (3,747)
   Other..............................................................     179      378      506
                                                                       -------  -------  -------
       Net cash provided by operating activities......................   7,812    7,541    3,461
                                                                       -------  -------  -------
INVESTING ACTIVITIES:
 Net increase in federal funds sold...................................      --       --     (150)
 Principal paydowns on ESOP loan receivable...........................     192      135       97
 Investment in and advances to Bell Federal...........................   1,089      359      160
                                                                       -------  -------  -------
       Net cash provided by investing activities......................   1,281      494      107
                                                                       -------  -------  -------
FINANCING ACTIVITIES:
 Proceeds from borrowings.............................................  15,000       --    5,000
 Repayments on borrowings.............................................  (7,500)  (5,000)  (3,750)
 Dividends paid.......................................................  (2,294)  (1,963)  (1,932)
 Purchase of treasury stock...........................................  (4,489)      --   (6,508)
 Exercise of options..................................................     173       --       --
 Proceeds from loan payable to Bell Federal...........................      --    8,372   12,889
 Principal payment on loan payable to Bell Federal....................  (9,483)  (9,740)  (8,729)
                                                                       -------  -------  -------
       Net cash used in financing activities..........................  (8,593)  (8,331)  (3,030)
                                                                       -------  -------  -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................     500     (296)     538
CASH, BEGINNING OF YEAR...............................................     250      546        8
                                                                       -------  -------  -------
CASH, END OF YEAR..................................................... $   750  $   250  $   546
                                                                       =======  =======  =======
</TABLE>

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

                                                                             47

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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

18. QUARTERLY EARNINGS SUMMARY (Unaudited)

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

<TABLE>
<CAPTION>
                                                                2002
                                             -----------------------------------------
                                             March 31 June 30  September 30 December 31
                                             -------- -------  ------------ -----------
<S>                                          <C>      <C>      <C>          <C>
INTEREST AND DIVIDEND INCOME................ $11,343  $11,199    $11,212      $10,615
INTEREST EXPENSE............................   8,541    8,114      8,142        7,815
                                             -------  -------    -------      -------
NET INTEREST INCOME.........................   2,802    3,085      3,070        2,800
PROVISION FOR LOAN LOSSES...................      --       --         --           --
                                             -------  -------    -------      -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
  LOSSES....................................   2,802    3,085      3,070        2,800
OTHER INCOME................................     563    1,190        691          642
OTHER EXPENSES..............................   1,218    1,348      1,321        1,432
                                             -------  -------    -------      -------
INCOME BEFORE PROVISION FOR INCOME TAXES....   2,147    2,927      2,440        2,010
PROVISION FOR INCOME TAXES..................     172      434        301           41
                                             -------  -------    -------      -------
NET INCOME..................................   1,975    2,493      2,139        1,969
                                             -------  -------    -------      -------
OTHER COMPREHENSIVE INCOME, NET OF TAX--
 Unrealized gain (loss) on investments......     439    2,305      2,979         (991)
                                             -------  -------    -------      -------
COMPREHENSIVE INCOME........................ $ 2,414  $ 4,798    $ 5,118      $   978
                                             =======  =======    =======      =======
BASIC EARNINGS PER SHARE (1)................ $  0.48  $  0.61    $  0.52      $  0.49
                                             =======  =======    =======      =======
DILUTED EARNINGS PER SHARE (1).............. $  0.47  $  0.59    $  0.50      $  0.47
                                             =======  =======    =======      =======

                                                                2001
                                             -----------------------------------------
                                             March 31 June 30  September 30 December 31
                                             -------- -------  ------------ -----------
INTEREST AND DIVIDEND INCOME................ $12,954  $12,576    $12,257      $11,950
INTEREST EXPENSE............................  10,713   10,529     10,268        9,638
                                             -------  -------    -------      -------
NET INTEREST INCOME.........................   2,241    2,047      1,989        2,312
PROVISION FOR LOAN LOSSES...................      --       --         --           --
                                             -------  -------    -------      -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
  LOSSES....................................   2,241    2,047      1,989        2,312
OTHER INCOME................................     851      484        551          548
OTHER EXPENSES..............................   1,237    1,306      1,279        1,348
                                             -------  -------    -------      -------
INCOME BEFORE PROVISION FOR INCOME TAXES....   1,855    1,225      1,261        1,512
PROVISION (BENEFIT) FOR INCOME TAXES........     180     (123)      (203)        (359)
                                             -------  -------    -------      -------
NET INCOME..................................   1,675    1,348      1,464        1,871
                                             -------  -------    -------      -------
OTHER COMPREHENSIVE INCOME, NET OF TAX--
 Unrealized gain (loss) on investments......   1,506     (878)     1,322       (2,491)
                                             -------  -------    -------      -------
COMPREHENSIVE INCOME (LOSS)................. $ 3,181  $   470    $ 2,786      $  (620)
                                             =======  =======    =======      =======
BASIC EARNINGS PER SHARE (1)................ $  0.41  $  0.33    $  0.36      $  0.46
                                             =======  =======    =======      =======
DILUTED EARNINGS PER SHARE (1).............. $  0.40  $  0.32    $  0.35      $  0.45
                                             =======  =======    =======      =======
</TABLE>
   -----
  (1) Quarterly per share amounts do not add to the total for the years ended
      December 31, 2002 and 2001, due to rounding.

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

48

<PAGE>

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

19. SUBSEQUENT EVENT

   On March 11, 2003 the Company announced that they have entered into a
   definitive agreement whereby Northwest Bancorp has acquired the Company and
   the Association. Under the terms of the agreement, the shareholders of the
   Company will receive $26.25 in cash for each share of the Company's common
   stock outstanding. The agreement is subject to regulatory approvals, the
   Company's shareholders approval, and other conditions. This acquisition has
   been approved by the Company's board of directors and is expected to close
   in the fourth quarter of 2003.

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

                                                                             49

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT

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

First Bell Bancorp, Inc.
Executive Management

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

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

Directors

Albert H. Eckert, II                 Jeffrey M. Hinds
  President and Chief Executive        Executive Vice President and
  Officer                              Chief Financial Officer
  First Bell Bancorp, Inc.             First Bell Bancorp, Inc. and
  and Bell Federal Savings              Bell Federal Savings and Loan
  and Loan Association                  Association

Thomas J. Jackson, Jr.               Jack W. Schweiger
  Retired Attorney-at-Law              President
  Houston Harbaugh                     Schweiger Homes

Robert C. Baierl                     Peter E. Reinert
  President                            Partner
  Wright Contract Interiors            Akerman, Senterfitt & Eidson, P.A.

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

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

50

<PAGE>

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

Bell Federal Savings and Loan Association of Bellevue
Executive Management

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

Jeffrey M. Hinds                     Ronald S. Boltey
  Executive Vice President             Assistant Vice President
  and Chief Financial Officer

William S. McMinn
  Treasurer

Directors

Albert H. Eckert, II                 Jeffrey M. Hinds
  President and Chief Executive        Executive Vice President and
  Officer                              Chief Financial Officer
  First Bell Bancorp, Inc.             First Bell Bancorp, Inc. and
  and Bell Federal Savings              Bell Federal Savings and Loan
  and Loan Association                  Association

Thomas J. Jackson, Jr.               Jack W. Schweiger
  Retired Attorney-at-Law              President
  Houston Harbaugh                     Schweiger Homes

Robert C. Baierl                     Peter E. Reinert
  President                            Partner
  Wright Contract Interiors            Akerman, Senterfitt & Eidson, P.A.

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


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

                                                                             51

<PAGE>

FIRST BELL BANCORP, INC. 2002 ANNUAL REPORT
Shareholder Information
--------------------------------------------------------------------------------

Market Summary of Stock

  First Bell Bancorp, Inc.'s common stock trades on The NASDAQ National Market.
The following summary sets forth the range of prices for common stock over the
periods noted. The common stock of the Company began trading on June 29, 1995.
As of March 3, 2003, there were approximately 3,500 stockholders of record,
calculated by including individual participants in securities position
listings, and 4,535,714 common shares outstanding.

<TABLE>
<CAPTION>
                                           2002
                                   ---------------------
                                   High   Low  Dividends
                                   ----- ----- ---------
                       <S>         <C>   <C>   <C>
                       1st Quarter 15.82 13.84   $0.12
                       2nd Quarter 18.01 15.40   $0.12
                       3rd Quarter 17.45 15.12   $0.15
                       4th Quarter 21.44 16.67   $0.15

                                           2001
                                   ---------------------
                                   High   Low  Dividends
                                   ----- ----- ---------
                       1st Quarter 15.31 13.63   $0.12
                       2nd Quarter 14.60 13.88   $0.12
                       3rd Quarter 15.50 13.90   $0.12
                       4th Quarter 14.70 13.50   $0.12
</TABLE>

Dividend Policy

  The management and Board of Directors of the Company continually review the
Company's dividend policy. The Company intends to continue its policy of paying
quarterly dividends; however, the payment will depend upon a number of factors,
including capital requirements, regulatory limitations, the Company's financial
condition, results of operations and the Association's ability to pay dividends
to the Company. At present, the Company has no significant source of income
other than dividends from the Association and to a lesser extent interest on
short-term investments. Consequently, the Company depends upon dividends from
the Association to accumulate earnings for payment of cash dividends to its
shareholders. See Note 11 to the Consolidated Financial Statements for a
discussion of restrictions on the Association's ability to pay dividends.

NASDAQ Listing

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

Dividend Reinvestment

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

Annual Report on Form 10-K and Exhibits

  A copy of the Annual Report on Form 10-K (excluding exhibits) of the Company
for the year-ended December 31, 2002, as filed with the Securities and Exchange
Commission, will be furnished free of charge, upon written request to
stockholders who have not previously received a copy from the Company.

  Written requests may be directed to:

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

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

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

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

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

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

Special Counsel
 Elias, Matz, Tiernan & Herrick L.L.P.
 734 15th Street, N.W.
 Washington, DC 20005

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

52

<PAGE>

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

Bell Federal Savings and Loan Association of Bellevue
Office Locations

Bellevue Office
532 Lincoln Avenue
Bellevue, Pennsylvania 15202
(412) 734-2700

Wexford Office*
10533 Perry Highway
Wexford, Pennsylvania 15090

McKnight Road Office*
7709 McKnight Road
Pittsburgh, Pennsylvania 15237

Sewickley Office
414 Beaver Street
Sewickley, Pennsylvania 15143

Wood Street Office*
Sixth & Wood Street
Suite 100
Pittsburgh, Pennsylvania 15222

Mt. Lebanon Office*
300 Cochran Road
Pittsburgh, Pennsylvania 15228

Craig Street Office*
201 North Craig Street
Pittsburgh, Pennsylvania 15213
--------
* Bell Federal Savings maintains an Automated Teller Machine (ATM) at these
  locations.

World Wide Web Address

www.bellfederalsavings.com

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

                                                                             53

<PAGE>

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                                    Bancorp,
                                      Inc.







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