<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-K

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

                  For the fiscal year ended December 31, 2000

                         Commission File No,: 0-25172

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

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

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

      Registrant's telephone number, including area code: (302) 427-7883
       Securities registered pursuant to Section 12(b) of the Act:
                    Common Stock, par value $0.01 per share
                               (Title of class)
       Securities registered pursuant to Section 12(g) of the Act: None


          The registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes     X        No______.
               -----

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

          The aggregate market value of the voting stock held by non-affiliates
of the registrant, i.e., persons other than directors and executive officers of
the registrant is, $66,821,527 and is based upon the last sales price as quoted
on The Nasdaq Stock Market for March 20, 2001.

          As of March 20, 2001, the Registrant had 4,758,360 shares outstanding
(excluding treasury shares).

                      DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the Annual Report to Stockholders for the year ended
December 31, 2000 are incorporated by reference into Part II of this Form 10-K.
Portions of the Proxy Statement for the 2001 Annual Meeting of Stockholders are
incorporated by reference into Part III of this Form 10-K.
<PAGE>

<TABLE>
<CAPTION>
                                      INDEX


PART I                                                                                                     PAGE
                                                                                                           ----
<S>                                                                                                        <C>
Item 1.      Business..................................................................................       1

Item 2.      Properties................................................................................      28

Item 3.      Legal Proceedings.........................................................................      28

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

PART II

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

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

Item 7.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations.................................................................      29

Item 7A.     Quantitative and Qualitative Disclosure about Market Risk.................................      29

Item 8.      Financial Statements and Supplementary Data...............................................      29

Item 9.      Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure..................................................................      29

PART III

Item 10.     Directors and Executive Officers of the Registrant........................................      30

Item 11.     Executive Compensation....................................................................      30

Item 12.     Security Ownership of Certain Beneficial Owners and
             Management................................................................................      30

Item 13.     Certain Relationships and Related Transactions............................................      30

PART IV

Item 14.     Exhibits, Financial Statement Schedules and Reports
             on Form 8-K...............................................................................      30

SIGNATURES ............................................................................................      33
</TABLE>
<PAGE>

PART 1

Item 1.  Business

General

   First Bell Bancorp, Inc (the "Company") was organized by the Board of
Directors of Bell Federal Savings and Loan Association of Bellevue (the
"Association") for the purpose of acquiring all of the capital stock of the
Association issued in connection with the Association's conversion from a mutual
to stock form, which was consummated on June 29, 1995 (the "Conversion"). At
December 31, 2000, the Company had consolidated total assets of $832.7 million
and total equity of $61.6 million. The Company is incorporated under Delaware
law and is a savings and loan holding company subject to regulations by the
Office of Thrift Supervision ("OTS"), the Federal Deposit Insurance Corporation
("FDIC") and the Securities and Exchange Commission ("SEC"). Currently, the
Company does not transact any material business other than through its
subsidiary, the Association. All references to the Company include the
Association unless otherwise indicated, except that references to the Company
prior to June 29, 1995 are to the Association.

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

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

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

Private Securities Litigation Reform Act Safe Harbor Statement

         In addition to historical information, this 10-K includes certain
forward-looking statements based on current management expectations. Examples of
this forward-looking information can be found in, but are not limited to, the
allowance for loan losses discussion and certain sections of the 2000 Annual
Report incorporated herein. The Company's actual results could differ materially
from those of management's expectations. Factors that could cause future results
to vary from current management expectations include, but are not limited to,
general economic conditions, legislative and regulatory changes, monetary and
fiscal policies of the federal government, changes in tax policies, rates and
regulations of federal, state
                                       1
<PAGE>

and local tax authorities, changes in interest rates, deposit flows, the cost of
funds, demand for loan products, demand for financial services, competition,
changes in the quality or composition of the Company's loan and investment
portfolios, changes in accounting principles, policies or guidelines, and other
economic, competitive, governmental and technological factors affecting the
Company's operations, markets, products, services and prices.

Market Area and Competition

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

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

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

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

Lending Activities

         Loan and Mortgage-Backed Securities Portfolio Composition. The loan
portfolio consists primarily of conventional mortgage loans secured by one- to
four-family, owner-occupied residences, and, to a much lesser extent,
residential construction loans, multi-family loans, home equity loans and
consumer loans. Mortgage loans are originated to be held in the portfolio. At
December 31, 2000, total loans receivable were $536.1 million, of which $507.6
million, or 94.7%, were conventional mortgage loans. Of the conventional
mortgage loans outstanding at that date, 91.2% were fixed-rate loans. At
December 31, 2000, the loan portfolio also included $12.1 million of residential
construction loans; $399,000 of multi-family loans; $15.1 million of residential
home equity loans; and $969,000 of other consumer loans. The Association also
offers FHA/VA qualifying one- to four-family residential mortgage loans.

         The types of loans originated are regulated by federal law and
regulations. Interest rates charged on loans are affected principally by the
demand for such loans and the supply of money available for lending

                                       2
<PAGE>

purposes. These factors are, in turn, affected by general and economic
conditions, monetary policies of the federal government, legislative and tax
policies and governmental budgetary matters.

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

<TABLE>
<CAPTION>
                                                                                 For the Year Ended December 31,
                                                                         -----------------------------------------------
                                                                           2000                1999               1998
                                                                           ----                ----               ----
                                                                                     (in thousands)
<S>                                                                      <C>                 <C>                <C>
Loan receivable at beginning of period                                   $545,222            $559,846           $596,003

Additions:
      Originations of conventional mortgages(1)(2)                         50,582              82,564             66,825

Reductions:
       Transfer of mortgage loans to foreclosed real estate                    29                 459                201
       Repayments(1)                                                       59,646              96,729            102,781
       Loan sales                                                              --                  --                 --
                                                                         --------            --------           --------

           Total reductions                                                59,675              97,188            102,982
                                                                         --------            --------           --------

           Total loans receivable at end of period                       $536,129            $545,222           $559,846
                                                                         ========            ========           ========

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

       Purchases                                                           23,073                  --                 --
       Sales                                                                   --                  --             30,255
       Repayments                                                           1,768                  --              1,402
       (Discount Accretion)/Premium amortization                              (34)                 --                228
       Unrealized gain or loss                                                252                  --                 --
                                                                         --------            --------           --------

Mortgage-backed securities at end of period                              $ 21,523            $     --           $     --
                                                                         ========            ========           ========
</TABLE>

(1)  Includes conventional mortgages, residential construction loans and home
     equity mortgage loans.
(2)  The Association originated no multi-family loans during the periods shown.

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                            At December 31. (in thousands)
                                                     2000                       1999                     1998
                                                     ----                       ----                     ----
                                                           Percent of                Percent of               Percent of
                                             Amount        Total       Amount        Total        Amount      Total       Amount
                                             ------        -----       ------        -----        ------      -----       ------
<S>                                          <C>           <C>         <C>           <C>          <C>         <C>         <C>
Real estate loans:
   Conventional mortgages                    $507,601      94.68%      $516,514      94.73%       $535,864    95.72%      $568,405
   Residential construction loans              12,087       2.25         16,229       2.98          17,924     3.20         25,563
   Multi family loans                             399       0.07            500       0.09             651     0.12            860
   Second mortgage loans                       15,073       2.82         11,012       2.02           4,508     0.81            268
                                             --------     ------       --------     ------        --------   ------       --------
     Total real estate loans                  535,160      99.82        544,255      99.82         558,947    99.85        595,096

Consumer loans:
   Loans on deposit accounts                      969       0.18            967       0.18             895     0.15            899
   Home improvement loans                           -          -              -          -               4        -              8
                                             --------     ------       --------     ------        --------   ------       --------
     Total consumer loans                         969       0.18            967       0.18             899     0.15            907
                                             --------     ------       --------     ------        --------   ------       --------
Total loans receivable                        536,129     100.00%       545,222     100.00%        559,846   100.00%       596,003
                                                          ======                    ======                   ======
Less:
   Undisbursed portion of loans in process      5,373                     8,652                     10,354                  12,072
   Deferred net loan origination fees           2,020                     2,386                      3,153                   3,822
   Allowance for loan losses                      925                       925                        805                     715
                                             --------                  --------                   --------                --------
     Loans receivable, net                   $527,811                  $533,259                   $545,534                $579,394
                                             ========                  ========                   ========                ========
Mortgage-backed securities
   GNMA                                      $ 12,148      56.44%      $      -          -%       $      -        -%      $ 26,958
   FHLMC                                            -          -              -          -               -        -              -
   FNMA                                         9,375      43.56              -          -               -        -          4,927
                                             --------     ------       --------     ------        --------   ------       --------
     Total mortgage-backed securities        $ 21,523     100.00%      $      -          -%       $      -        -%      $ 31,885
                                             ========     ======       ========     ======        ========   ======       ========
<CAPTION>
                                                1997                        1996
                                                ----                        ----
                                                   Percent of                       Percent of
                                                   Total           Amount           Total
                                                   -----           ------           -----
<S>                                             <C>                <C>              <C>
Real estate loans:
   Conventional mortgages                          95.37%          $524,867         95.92%
   Residential construction loans                   4.29             19,877          3.63
   Multi family loans                               0.14              1,220          0.22
   Second mortgage loans                            0.05                297          0.06
                                                  ------           --------        ------
     Total real estate loans                       99.85            546,261         99.83

Consumer loans:
   Loans on deposit accounts                        0.15                938          0.17
   Home improvement loans                              -                 11             -
                                                  ------           --------        ------
     Total consumer loans                           0.15                949          0.17
                                                  ------           --------        ------
Total loans receivable                            100.00%           547,210        100.00%
                                                  ======                           ======
Less:
   Undisbursed portion of loans in process                           11,120
   Deferred net loan origination fees                                 4,610
   Allowance for loan losses                                            665
                                                                   --------
     Loans receivable, net                                         $530,815
                                                                   ========
Mortgage-backed securities
   GNMA                                            84.55%          $      -             -%
   FHLMC                                               -                  -             -
   FNMA                                            15.45                  -             -
                                                  ------           --------        ------
     Total mortgage-backed securities             100.00%          $      -              %
                                                  ======           ========        ======
</TABLE>

                                       4
<PAGE>

Loan Maturity Schedule. The following table sets forth certain information at
December 31, 2000 regarding the dollar amount of loans maturing in the portfolio
based on their remaining contractual terms to maturity. The table does not
include the effect of prepayments or scheduled principal amortization.
Prepayments and scheduled principal amortization on loans totalled $59.6
million, $96.7 million and $102.8 million for the years ended December 31, 2000,
1999 and 1998, respectively.

<TABLE>
<CAPTION>
                                                                      At December 31, 2000 (in thousands)
                                       --------------------------------------------------------------------------------------------
                                                         More Than     More Than Six   More Than One      More Than   More Than Five
                                        Three Months   Three Months      Months to     Year to Three   Three Years to  Years to Ten
                                           or Less     to Six Months   Twelve Months        Years         Five Years       Years
                                       --------------------------------------------------------------------------------------------
<S>
Interest-earning Assets:
   Real estate loans:
      One-to-four-family adjustable-
         rate loans ..................     $    --          $   -          $  --           $   33        $      92       $    157
      One-to-four-family fixed-rate
         loans .......................          38              2             20              984            1,417         47,107
      Residential construction loans            --             --             --               --               --             --
      Multi family....................          28             --              7                7               23            152
     Second mortgage loans............       2,114            103             --            1,408            9,015          2,433
                                           -------          -----          -----           ------        ---------       --------
         Total Real Estate Loans             2,180            105             27            2,432           10,547         49,849


Consumer Loans                                 969             --             --                -               --             --
                                           -------          -----          -----           ------        ---------       --------

         Total loans..................     $ 3,149          $ 105          $  27           $2,432        $  10,547       $ 49,849
                                           =======          =====          =====           ======        =========       ========

<CAPTION>
                                           -----------------------------
                                             More Than Ten
                                                Years            Total
                                           -----------------------------
<S>                                        <C>                 <C>
Interest-earning Assets:
   Real estate loans:
      One-to-four-family adjustable-
         rate loans...................      $  44,330          $  44,612
      One-to-four-family fixed-rate
         loans........................        413,421            462,989
      Residential construction loans           12,087             12,087
      Multi family....................            182                399
     Second mortgage loans............             --             15,073
                                            ---------          ---------
         Total Real Estate Loans              470,020            535,160


Consumer Loans                                     --                969
                                            ---------          ---------

         Total loans . . . . . . . .        $ 470,020         $  536,129
                                            =========         ==========
</TABLE>

                                       5
<PAGE>

     The following table sets forth the dollar amount of all loans and mortgage-
backed securities at December 31, 2000 which have fixed or adjustable interest
rates, and which are due after December 31, 2001.

                                                 Due After December 31, 2001
                                              ---------------------------------
                                               Fixed      Adjustable    Total
                                               -----      ----------    -----
                                                       (In thousands)
Real estate loans:
  Conventional mortgages....................  $462,989      $44,612    $507,601
  Residential construction..................     2,242        9,845      12,087
  Multi-family..............................       399            -         399
  Second mortgage...........................    13,095        1,978      15,073
Consumer loans..............................         -          969         969
                                              --------     --------    --------

     Total loans............................  $478,725      $57,404    $536,129

Mortgage backed securities..................         -       21,523      21,523
                                              --------      -------    --------
     Total Loans and Mortgage Backed
       Securities...........................  $478,725      $78,927    $557,652
                                              ========      =======    ========

     One to Four-Family Residential Mortgage Lending. The residential mortgage
loans are primarily secured by owner-occupied, one- to four-family residences.
Loan originations are generally obtained from existing or past customers,
members of the local communities served, or referrals from local real estate
agents, attorneys and builders. The Association originates fixed-rate loans and
adjustable rate mortgage ("ARM") loans. At December 31, 2000, conventional
mortgage loans totalled $507.6 million, or 94.7%, of total loans at such date.
Of the Association's conventional mortgage loans secured by one- to four-family
residences, $463.0 million, or 91.2%, were fixed-rate loans.

     Originated mortgage loans are held in the loan portfolio and are secured by
properties located within the Association's primary market area. Historically,
the market interest rates of mortgage loans in the Pittsburgh area have been
below national averages. The mortgage loan portfolio has decreased from $544.3
million at December 31, 1999 to $535.2 million at December 31, 2000.

     The Association from time to time purchases one- to four-family mortgage
loans and loan participations. A number of these loans are secured by properties
located outside the Association's market area, such as other regions of
Pennsylvania, California, Illinois, Maryland, New York, Texas, Virginia, Utah,
North Carolina, Tennessee and Georgia. The Association did not purchase any
mortgage loans or participations in 2000. At December 31, 2000, the Association
had $12.1 million in purchased mortgage loans and loan participations serviced
by others, totalling 2.3% of the total loan portfolio at that date, primarily
secured by one- to four-family residences. The Association intends to continue
purchasing loans to supplement reduced loan demand as needed. Loans purchased
generally must meet the same underwriting criteria as loans originated by the
Association.

     In 2000, 1999, and 1998, the Association did not participate in any sales
of conventional mortgage loans. Most of the loan portfolio is underwritten in
conformity with Federal National Mortgage Association ("FNMA") secondary market
requirements. Although the Association has been approved by FNMA to sell loans
in the secondary market, there is no assurance that the Association will be able
to

                                       6
<PAGE>

originate loans for sale in the secondary market or, that if originated, such
loans will be sold in the secondary market in the future. Should the Association
decide to sell mortgage loans in the future, the lower interest rates on such
loans, characteristic of the Pittsburgh market, may tend to diminish the demand
for such loans in the secondary market.

     In 2000, the maximum loan to value ratio on Adjustable Rate Loans was
increased to 90%. On all other conventional mortgages with the exception of
Community Reinvestment Act ("CRA") loans, the maximum loan-to-value ratio is
80%. If the loan to value ratio exceeds 80%, private mortgage insurance is
purchased to bring the Company's exposure at or below 80%. As a result, a
majority of borrowers are previous homeowners, whom the Association believes to
be relatively stable borrowers. The Association also offers FHA/VA qualifying
one-to four-family residential mortgage loans. One-to four-family residential
mortgage loans do not provide for negative amortization. Mortgage loans in the
portfolio generally include due-on-sale clauses, which provide the Association
with the contractual right to demand the loan immediately due and payable in the
event that the borrower transfers ownership of the property that is subject to
the mortgage. It is the Association's policy to enforce due-on-sale clauses. The
residential mortgage loans originated are generally for terms to maturity from
15 to 30 years. At December 31, 2000, the maximum one-to four-family loan amount
is $600,000, unless otherwise approved by the Board of Directors.

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

     The volume and types of ARM loans originated are affected by such market
factors as the level of interest rates, competition, consumer preferences and
the availability of funds. In 2000, of the $42.6 million, of conventional
mortgage and constructions loans originated, $30.5 million were adjustable rate
mortgages. Although ARM loans will continue to be offered, there can be no
assurance that in the future ARM loans will be originated in sufficient volume
to constitute a significant portion of the loan portfolio.

                                       7
<PAGE>

     In an effort to provide financing for low and moderate income home buyers,
additional single family residential mortgage loans are offered to moderate
income borrowers and residents of CRA neighborhoods, with terms of up to 30
years. Such loans must be secured by a single family, owner-occupied unit. These
loans are originated using modified underwriting guidelines with reduced down
payments and expenses. Private mortgage insurance is normally required. Because
the Association typically charges a lower rate of interest, lower mortgage
origination fees and a discount on closing costs on its CRA loans, a lower rate
of return is expected on such loans, as compared to other residential mortgage
loans. For the years ended December 31, 2000, 1999 and 1998, the Association
originated 35, 47, and 43 loans under the CRA loan program, with aggregate
dollar amounts of $2.1 million, $2.8 million, and $2.0 million, respectively.

     Residential Construction Loans. The Association originates loans for the
construction of one-to four-family residential properties. Such loans are made
on contract directly to the home buyer. Residential construction loans are
subject to the same maximum loan amounts as conventional mortgage loans.
Residential construction loans are made for terms of up to one year, at which
time the loans convert to permanent conventional mortgage financing. Residential
construction loans are generally offered at the Association's prevailing
interest rate. An additional fee may be charged for construction servicing.
Advances are made to builders as phases of construction of the property are
completed. As of December 31, 2000, the Association's residential construction
loans totaled $12.1 million, or 2.3% of the total loan portfolio. Of these
construction loans, $5.4 million had been committed but were undisbursed as of
that date.

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

     Multi-Family Loans. In prior years, the Association also originated multi-
family loans. As of December 31, 2000, the Association's total loan portfolio
contained 10 multi-family loans, totalling $399,000, or 0.1%, of total loans.
Since 1991, the Association has not originated any multi-family mortgage loans.
In the future, the Association may originate a limited number of multi-family
loans on a case-by-case basis.

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

                                       8
<PAGE>

     Second Mortgage Loans. During 1998, the Association began offering home
equity installment and line of credit loans to homeowners in its lending
territory. Home equity installment loans are underwritten for a fixed rate with
a five year term or an adjustable rate ten year term in which the rate adjusts
after the fifth year based on the prime rate. Line of credit loans can be drawn
on for ten years and paid back in twenty years and are based on the prime rate.
The Association offers second mortgage loans with maximum combined loan-to-value
ratios of up to 80%. During 2000 the Association originated 293 home equity
installment and line of credit loans totalling $7.9 million. At December 31,
2000, the Association had $15.1 million or 2.8% of total loans in second
mortgage loans.

     Consumer Loans. The Association also offers secured consumer loans. At
December 31, 2000, the Association's consumer loans totalled $969,000, or 0.2%
of the Association's total loan portfolio, all of which were secured by deposit
accounts.

     Loan Servicing and Loan Fees. Servicing on all loans that have been sold
has been retained. Fees are received for these servicing activities, which
include collecting and remitting loan payments, inspecting the properties and
making certain insurance and tax payments on behalf of the borrowers. At
December 31, 2000, the Association was servicing $16.5 million of loans for
others. Loan servicing income was $6,000. $7,000 and $9,000 for the years ended
December 31, 2000, 1999 and 1998, respectively. The Association also receives
income in the form of service charges and other fees on loans. For the years
ended December 31, 2000, 1999 and 1998, the Association earned $167,000,
$142,000 and $198,000, respectively, in loan related service charges and other
fees.

     Mortgage-backed Securities. As of December 31, 2000, the Association had
$21.5 million in mortgage backed securities. These securities consisted of three
Government National Mortgage Association ("GNMA"), adjustable rate securities,
with a fair value of $12.1 million and four Federal National Mortgage
Association ("FNMA"), adjustable rate securities, with a fair value of $9.4
million. These securities are classified as available-for-sale. At December 31,
1999 and 1998, the Association had no mortgage-backed securities. The
Association may invest in mortgage-backed securities in the future to offset any
significant decrease in demand for one- to four-family loans.

     Loan Approval Procedures and Authority. Loan approval authority has been
granted by the Board of Directors to the Association's Loan Committee. All
mortgage loans must be approved by the Loan Committee. As of December 31, 2000,
any loan application over $600,000 must be approved by the Board of Directors.

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

                                       9
<PAGE>

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

Asset Quality

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

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

                                       10
<PAGE>

Delinquent Loans. At December 31, 2000, 1999 and 1998, delinquencies in the loan
portfolio were as follows:


<TABLE>
<CAPTION>

                                               At December 31, 2000                             At December 31, 1999
                               --------------------------------------------------- -------------------------------------------------
                                       60 - 89 Days            90 Days or More            60 - 89 Days          90 Days or More
                               --------------------------  ----------------------- ------------------------  -----------------------
                                               Principal               Principal                 Principal              Principal
                                   Number of  Balance of    Number of  Balance of     Number of  Balance of   Number of Balance of
                                     Loans       Loans       Loans       Loans         Loans      Loans        Loans      Loans
                                     -----       -----       -----       -----         -----      -----        -----      -----
                                                    (Dollars in thousands)                       (Dollars in thousands)
<S>                               <C>         <C>           <C>        <C>            <C>        <C>          <C>       <C>
Conventional mortgage loans....        10           $405         13       $565              2      $127           7        $269
Multi-family loans.............        --             --         --         --             --        --          --          --
Consumer loans.................        --             --         --         --             --        --          --          --
                                   -------        ------      -----      -----          -----     -----      ------      ------
     Total loans...............        10           $405         13      $ 565              2      $127           7        $269
                                   =======        ======      =====      =====          =====     =====      ======      ======

Delinquent to total loans......                     0.08%                 0.11%                    0.02%                   0.05%
                                                  ======                 =====                    =====                  ======
</TABLE>

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

                   Delinquent loans to total loans.....                               0.03%                                 0.09%
                                                                                   =======                                 =====
</TABLE>

                                       11
<PAGE>

          Non-Performing Loans and Real Estate Owned. The following table sets
forth information regarding non-accrual mortgage and other loans and real estate
owned ("REO"). Interest is not accrued on loans past due 90 days or more. The
Association had $29,000 in real estate owned and no in substance foreclosures at
December 31, 2000. During the years ended December 31, 2000, 1999 and 1998, the
amounts of interest income that would have been recorded on non-accrual loans,
had they been current, totalled $32,000, $6,000, and $32,000, respectively.
Interest income recorded on non-accrual loans was $33,000, $8,000, and $18,000
for each of the years ended December 31, 2000, 1999 and 1998, respectively.


<TABLE>
<CAPTION>
                                                                   At December 31,
                                              ----------------------------------------------------------------
                                                 2000       1999         1998          1997         1996
                                              ----------------------------------------------------------------
                                                                 (Dollars in Thousands)
<S>                                           <C>       <C>          <C>         <C>          <C>
Non-accrual delinquent mortgage loans........   $565        $ 269        $498         $634        $400
Non-accrual delinquent other loans...........     --           --          --           --          --
                                              ------     --------    --------     --------     -------
  Total non-performing loans.................   $565          269         498          634        400
Real estate owned............................     29          390          82           --         229
                                              ------     --------    --------     --------     -------
  Total non-performing assets................   $594        $ 659        $580         $634        $629
                                              ======     ========    ========     ========     =======
Total non-performing loans to total loans....   0.11%        0.05%       0.10%        0.11%      0.08%
Total non-performing assets to total assets..   0.07%        0.08%       0.08%        0.09%      0.10%
</TABLE>

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

          At December 31, 2000, classified assets totaled $594,000, or 0.07% of
total assets, and consisted of real estate owned property and seven conventional
mortgage loans classifed as "Substandard".

          Allowance for Loan Losses, Investments in Real Estate and Real Estate
Owned. The allowance for loan losses is established and maintained through a
provision for loan losses based on management's evaluation of the risk inherent
in the loan portfolio and the condition of the local economy in the Company's
market area. Such evaluation, which includes a review of all loans on which full
collectibility is not reasonably assured, considers among other matters, the
estimated fair value of the underlying collateral, economic and regulatory
conditions, and other factors that warrant recognition of an adequate loan loss
allowance. Management believes that the allowance for loan losses is adequate to
cover losses inherent in the portfolio as of December 31, 2000. Although
management believes it uses the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary if economic and other conditions differ substantially from the
economic and

                                       12
<PAGE>

other conditions in the assumptions used in making the initial determinations,
such as a material increase in the balance of the loan portfolio.

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


<TABLE>
<CAPTION>

                                                                       For the Years Ended December 31,
                                                      --------------------------------------------------------------
                                                        2000        1999         1998         1997          1996
                                                      ---------   ----------   ----------   ----------   -----------
                                                                               (in thousands)
<S>                                                  <C>          <C>          <C>           <C>         <C>
Allowance for loan losses:
Balance at beginning of period..................          $925         $805        $715          $665         $575
Charge-offs:
    Conventional mortgages......................            --           --          --            --           --
    Residential construction....................            --           --          --            --           --
    Multi-family................................            --           --          --            --           --
    Consumer....................................            --           --          --            --           --
                                                      --------    ---------    --------     ---------    ---------
      Total charge-offs.........................            --           --          --            --           --
Total recoveries................................            --           --          --             5           --

Provision for (recovery of) loan losses                     --          120          90            45           90
                                                      --------    ---------    --------     ---------    ---------
Balance at end of period(1).....................          $925         $925        $805          $715         $665
                                                      ========    =========    ========     =========    =========
Ratio of net charge-offs during the period to
average loans outstanding during the period.....           --%          --%         --%           --%          --%
Ratio of allowance for loan losses to total
loans at the end of  the period.................         0.18%        0.17%       0.15%         0.12%        0.13%
Ratio of allowance for loan losses to
non-performing assets at the end of the period..          1.56x        1.40x       1.39x         1.13x        1.06x
</TABLE>

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

         In addition, the OTS and FDIC, as an integral part of their examination
process, periodically review the allowance for loan losses and real estate owned
and investments in real estate valuations. Such agencies may require the
recognition of additions to the allowance or additional write-downs based on
their judgments about information available to them at the time of their
examination. The OTS, in conjunction with the other federal banking agencies,
adopted an interagency policy statement on the allowance for loan and lease
losses. The policy statement provides guidance for financial institutions on
both the responsibilities of management for the assessment and establishment of
adequate allowances and guidance for banking agency examiners to use in
determining the adequacy of general valuation guidelines. Generally, the policy
statement recommends that institutions have effective systems and controls to
identify, monitor and address asset quality problems; that management analyze
all significant factors that affect the collectibility of the portfolio in a
reasonable manner; and that management establish acceptable allowance evaluation
processes that meet the objectives set forth in the policy statement. As a
result of the declines in local and regional real estate market values and the
significant losses experienced by many financial institutions, there has been a
greater level of scrutiny by regulatory authorities of the loan

                                       13
<PAGE>

portfolios of financial institutions undertaken as part of the examination of
institutions by the OTS and the FDIC. While management believes that it has
established an adequate allowance for loan losses, there can be no assurance
that regulators, in reviewing the loan portfolio, will not request a material
increase at that time in the allowance for loan losses, thereby negatively
affecting the financial condition and earnings at such time.


Investment Activities

         As a member of the FHLB System, the Association is required to maintain
liquid assets at minimum levels which vary from time to time. The Association
increases or decreases its liquid investments depending on the availability of
funds, the comparative yields on liquid investments in relation to the return on
loans and in response to its interest rate risk management. To meet liquidity
obligations, federally chartered savings institutions have authority to invest
in various types of assets, including U.S. Treasury obligations, securities of
various federal agencies, mortgage-backed and mortgage-related securities,
certain certificates of deposit of insured banks and savings institutions,
certain bankers acceptances, repurchase agreements, loans of federal funds and,
subject to certain limits, corporate securities, commercial paper and mutual
funds. The Association's liquid investments primarily consist of federal funds
sold, U.S. Government securities, federal agency securities and interest-bearing
deposits. Historically, the Association has maintained its liquid assets at
levels well above the minimum regulatory requirements. At December 31, 2000,
$79.0 million, or 9.5%, of the Association's total assets were invested in
liquid assets.

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

         Investment Securities. OTS guidelines regarding investment portfolio
policy and accounting require insured institutions to categorize securities and
certain other assets as held for "investment," "sale," or "trading." The
Association's investment policy provides for "held for investment" and
"available for sale" portfolios. Although the Association's investment policy
allows that some investments and loans will qualify to be held-to-maturity,
the policy allows the sale of investments in certain specific instances, such
as when the quality of an asset deteriorates, or when regulatory changes
require that an asset be disposed. At December 31, 2000, the Association had
total investments of $224.6 million, all of which were classified as available-
for-sale. The investments classified as available-for-sale consisted of $197.2
million in municipal securities, $11.0 million in collateralized mortgage
obligations ("CMO's") $5.0 million in Federal Home Loan Bank Bonds, $11.4
million in Federal Home Loan Bank Stock and $4,000 in stock of FNMA.

                                       14
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                    At December 31,
                                                     -----------------------------------------------------------------------------
                                                              2000                     1999                     1998
                                                     ------------------------------------------------   --------------------------
                                                      Carrying    Market        Carrying     Market       Carrying     Market
                                                       Value       Value          Value       Value         Value       Value
                                                     ---------   --------        --------  -----------  -----------  -------------
                                                                                    (In thousands)
<S>                                                  <C>         <C>            <C>         <C>          <C>         <C>
Investment securities:
   Municipal securities...........................     $199,196     $197,186        $199,141   $184,768      $118,986     $118,986
   U.S. Treasury securities.......................           --           --           4,985      5,167         9,976       10,677
   Collateralized mortgage obligations............       11,037       11,044          12,902     12,761        17,691       17,691
   FHLB bond......................................        5,000        5,000           5,000      4,853            --           --
   Other investments..............................            4            4               4         75             4           89
   FHLB Stock.....................................       11,400       11,400          11,400     11,400         9,000        9,000
                                                     ----------    ---------       ---------  ---------    ----------   ----------
     Total investments............................     $226,637    $ 224,634        $233,432   $219,024      $155,657     $156,443
                                                     ==========    =========       =========  =========    ==========   ==========
</TABLE>

         The  following table sets forth the carrying values,  market values and
average yields for the  Association's  available for sale  investment  portfolio
(excluding  $11.4  million in FHLB stock and $4,000 in FNMA stock) by  maturity,
call date or repricing date,  whichever is first, at December 31, 2000, (dollars
in thousands).

<TABLE>
<CAPTION>

                             One Year or Less    One to Five Years   Five to Ten Years   More than Ten Years  Total Securities
                             ----------------    -----------------   -----------------   -------------------  ----------------
                                       Weighted            Weighted             Weighted           Weighted            Weighted
                             Carrying  Average   Carrying  Average    Carrying  Average   Carrying  Average  Carrying   Average
                               Value    Yield      Value    Yield      Value    Yield       Value    Yield     Value     Yield
                             --------- --------- --------- --------   --------- -------   --------- -------- --------- ---------
<S>                          <C>       <C>       <C>       <C>        <C>       <C>       <C>       <C>      <C>       <C>
Investment Securities:
Muncipal securties          $ 1,523    4.31%    $177,888    4.54%    $16,612    4.54%     $3,173    4.44%    $199,196    4.54%
Collateralized
  Mortgage Obligations      $ 6,069    7.76%    $  4,968    6.50%         --      --          --      --     $ 11,037    7.19%
FHLB bond                   $ 5,000    8.00%          --      --          --      --          --      --     $  5,000    8.00%

</TABLE>

                                       15
<PAGE>

Sources of Funds

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

         Deposits. Deposits serve as the predominant source of funds. The
Association offers interest rates on deposits that are competitive in the
Greater Pittsburgh market area to maintain a strong depositor base. Deposits
consist of savings and club accounts, interest-bearing and non-interest-bearing
demand deposit accounts, money market deposit accounts and certificates of
deposit. The Association relies on its competitive pricing policies and customer
service to maintain deposit growth. The Association has produced an overall
increase in total deposits of 10.9%, from $483.9 million at December 31, 1996 to
$536.7 million at December 31, 2000. The flow of deposits is influenced
significantly by general economic conditions, changes in money market and
prevailing interest rates and competition.

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

<TABLE>
<CAPTION>
                                                                    For the Years Ended December 31,
                                                        --------------------------------------------------------
                                                             2000               1999                1998
                                                        ----------------  ------------------  ------------------
                                                                            (In thousands)
<S>                                                     <C>               <C>                 <C>
Deposits.............................................         $817,448           $740,561            $701,925
Withdrawals..........................................          808,601            737,891             716,621
                                                            ----------         ----------           ---------
Net increase (decrease) before interest credited.....            8,847              2,670             (14,696)
Interest credited....................................           15,907             14,133              14,769
                                                            ----------          ---------           ---------
Net increase in deposits.............................         $ 24,754           $ 16,803            $     73
                                                            ==========          =========           =========
</TABLE>

         The following table indicates the amount of the certificates of deposit
of $100,000 or more by the time remaining until maturity as of December 31,
2000.

                                                              Amount
                                                       ----------------------
                                                          (In thousands)
Maturity Period:
   Three months or less...........................            $ 6,062
   Over three through six months..................              8,296
   Over six through 12 months.....................             19,940
   Over 12 months.................................             11,364
                                                              -------
      Total.......................................            $45,662
                                                              =======


                                       16
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                       Year Ended December 31,
                                       ----------------------------------------------------------------------------------
                                                        2000                                      1999
                                       ---------------------------------------  -----------------------------------------
                                                                    Weighted                                     Weighted
                                                                    Average                                       Average
                                         Average                    Nominal        Average                        Nominal
                                         Balance      Interest       Rate          Balance        Interest         Rate
                                       ------------  -----------  -------------  -------------  --------------  ---------
                                                                                           (in thousands)
<S>                                   <C>           <C>           <C>           <C>            <C>            <C>
Money market and NOW
  deposits..........................      $ 83,044       $1,637          1.97%        $53,508         $ 1,404       2.62%

Savings deposits....................        59,000        2,737          4.64          85,151           3,021       3.55

Certificates of deposit.............       389,054       23,256          5.98         356,439          19,751       5.54

Borrowings..........................       221,960       13,047          5.88         230,335          12,886       5.59
                                           -------       ------          ----        --------         -------      -----

    Total interest-bearing
      liabilities...................      $753,058      $40,677          5.40%       $725,433         $37,062       5.11%
                                          ========      =======                      ========         =======
<CAPTION>

                                      -----------------------------------
                                                     1998
                                      -----------------------------------
                                                                Weighted
                                                                 Average
                                         Average                 Nominal
                                         Balance     Interest     Rate
                                      ------------  ---------- ----------
<S>                                   <C>           <C>           <C>
Money market and NOW
  deposits..........................      $ 47,945     $ 1,147      2.39%

Savings deposits....................        82,136       2,480      3.02

Certificates of deposit.............       362,720      21,186      5.84

Borrowings..........................       142,481       8,031      5.64
                                          --------     -------      ----

    Total interest-bearing
      liabilities...................      $635,282     $32,844      5.17%
                                          ========     =======
</TABLE>

                                       17
<PAGE>

      The following table presents the amount of certificate accounts
outstanding based upon original contractual periods to maturity and contracted
rates, at December 31, 2000, and based upon contracted rates, at December 31,
1999 and 1998.

<TABLE>
<CAPTION>
                                                       December 31, 2000                                  At December 31,
                      -----------------------------------------------------------------------------   -----------------------
                        Less     One to      Two to      Three     Four to     Five to       Total
                        Than       Two       Three      to Four      Five        Ten        December
                      One Year    Years      Years       Years      Years       Years       31, 2000       1999         1998
                      ---------  ---------  ----------  ---------  ---------  -----------   ---------   ----------   ----------
                                                                   (In thousands)
<S>                   <C>        <C>        <C>         <C>        <C>         <C>         <C>          <C>          <C>
Certificate Accounts:

  3.00% to 5.50%..... $     18   $ 11,802     $12,905     $1,050    $ 4,180      $   676    $ 30,631     $217,751     $175,279
  5.501% to 6.00%....    9,474     28,554      14,931      1,241     16,992        2,364      73,556      119,707      123,361
  6.001% to 6.50%....   74,636     19,042       2,360        347      8,331        5,848     110,564       29,773       47,976
  6.501% to 7.50%....   69,327     82,687      14,701        835      5,910       14,912     188,372       14,350       16,779
  7.501% to 8.50%....       --         --          --         --         --        2,346       2,346        2,750        2,806
  8.501% to 9.50%....       --         --          --         --         --           --          --        2,033        2,887
  9.501% to 10.50%...       --         --          --         --         --           --          --           --          298
                      --------   --------     -------     ------    -------      -------    --------     --------     --------
                      $153,455   $142,085     $44,897     $3,473    $35,413      $26,146    $405,469     $386,364     $369,386
                      ========   ========     =======     ======    =======      =======    ========     ========     ========
</TABLE>

Borrowings

        Borrowings are used in conjunction with deposits in funding the
operating and investment activity of the Company. At December 31, 2000, the
Company had borrowings of $219.3 million. Of these borrowings, $208.0 million
are held at the Association level and the remaining $11.3 is held at the Company
level. All of the Association's borrowings have an original contractual maturity
of ten years. However, every six months the FHLB has the option to convert $70
million of these borrowings to an adjustable rate based on the three month
Libor. If the FHLB elects to convert the borrowings to an adjustable rate, the
borrowings can be repaid without penalty. The balance of the Association's
borrowings, $138 million carry a fixed interest rate for the first five years.
On the fifth anniversary date the FHLB has the option to convert these
borrowings to an adjustable rate base on three month Libor. Again, if the FHLB
elects to convert the borrowings to adjustable rates, the borrowing can be
repaid without penalty. If the borrowings are not converted to an adjustable
rate, the rate remains fixed at the current contractual rate for the remaining
five years of the borrowings. The weighted average rate on these borrowings is
5.73%. The Association had a short-term borrowing of $20,000 with the FHLB which
matured in January 2000 and was paid in full. The borrowings are secured by the
assets of the Association. The Company has an adjustable rate term loan of $11.3
million The interest rate on this term loan adjusts quarterly based on the three
month labor rate, plus 150 basis points. The rate on this loan as of December
31, 2000, is 8.26%. These borrowings are secured by the assets of the Company.

Subsidiary Activities

        The Association does not maintain any subsidiaries.

                                       18
<PAGE>

                          REGULATION AND SUPERVISION

General

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

Holding Company Regulation

        The Company is a non-diversified unitary savings and loan holding
company within the meaning of federal law. Under prior law, a unitary savings
and loan holding company, such as the Company was not generally restricted as to
the types of business activities in which it may engage, provided that the
Association continued to be a qualified thrift lender. See "Federal Savings
Institution Regulation-QTL Test." The Gramm-Leach-Bliley Act of 1999 provides
that no company may acquire control of a savings association after May 4, 1999
unless it engages only in the financial activities permitted for financial
holding companies under the law or for multiple savings and loan holding
companies as described below. Further, the Gramm-Leach Bliley Act specifies that
existing savings and loan holding companies may only engage in such activities.
The Gramm-Leach-Bliley Act, however, grandfathered the unrestricted authority
for activities with respect to unitary savings and loan holding companies
existing prior to May 4, 1999, such as the Company, so long as the Association
continues to comply with the QTL Test. Upon any nonsupervisory acquisition by
the Company of another savings institution or savings bank that meets the
qualified thrift lender test and is deemed to be a savings institution by the
OTS, the Company would become a multiple savings and loan holding company (if
the acquired institution is held as a separtate subsidiary) and would generally
be limited to activities permissible for bank holding companies under Section
4(c)(8) of the Association Holding Company Act, subject to the prior approval of
the OTS, and certain activities authorized by OTS regulation.

                                       19
<PAGE>

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

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

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

Acquisition of The Holding Company.

        Under the Federal Change in Bank Control Act ("CIBCA") a notice must
be submitted to the office of Thrift supervision ("OTS") if any person
(including a Company), or group acting in concert, seeks to acquire 10% or
more of the Company's outstanding voting stock, unless the OTS has found the
acquisition will not result in a change of control of the Company. Under
CIBCA, the OTS has 60 days from the filing of a complete notice to act, taking
into consideration certain factors, including the financial an managerial
resources of the acquiror and the anti-trust effects of the acquisition. Any
Company that so acquires control would then be subject to regulation as a
Savings and Loan Holding Company.

Federal Savings Institution Regulation

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

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

                                       20
<PAGE>

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

        The capital regulations also incorporate an interest rate risk
component. Savings institutions with "above normal" interest rate risk exposure
are subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. For the present time, the OTS has deferred
implementation of the interest rate risk component. At December 31, 2000, the
Association met each of its capital requirements.

        The following table presents the Association's capital position at
December 31, 2000.
<TABLE>
<CAPTION>
                                                           Excess                  Capital
                                                                                   -------
                      Actual          Required          (Deficiency)        Actual        Required
                      ------          --------          ------------        -----         --------
<S>                   <C>             <C>              <C>                 <C>            <C>
Tangible               $79,402         $12,651         $66,751               9.41%          1.50%
Core                    79,402          33,727          45,675               9.41           4.00
(Leverage)
Risk-based              80,327          27,804          52,523              23.11           8.00
</TABLE>


        Prompt Corrective Regulatory Action. The OTS is required to take certain
supervisory actions against undercapitalized institutions, the severity of which
depends upon the institution's degree of undercapitalization. Generally, a
savings institution that has a ratio of total capital to risk weighted assets of
less than 8%, a ratio of Tier 1 (core) capital to risk-weighted assets of less
than 4% or a ratio of core capital to total assets of less than 4% (3% or less
for instituitions with highest examination rating) is considered to be
"undercapitalized." A savings institution that has a total risk-based capital
ratio less than

                                       21
<PAGE>

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

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

        In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation ("FICO") to recapitalize the predecessor to the SAIF. During 1999,
FICO payments for SAIF members approximated 2.07 basis points.

        The Association's assessment rate for fiscal 2000 was 0.52 basis points
and the premium paid for this period was $108,000. A significant increase in
SAIF insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of the Association. Management cannot predict
what insurance assessment rates will be in the future.

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

        Loans to One Borrower. Federal law provides that savings institutions
are generally subject to the limits on loans to one borrower applicable to
national banks. A savings institution may not make a loan or extend credit to a
single or related group of borrowers in excess of 15% of its unimpaired capital
and surplus. An additional amount may be lent, equal to 10% of unimpaired
capital and surplus, if secured by readily-marketable collateral. At December
31, 2000, the Association's limit on loans to one borrower was

                                       22
<PAGE>

$11.9 million and the Association's largest aggregate outstanding balance of
loans to one borrower was $495,000.

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

        A savings institution that fails the QTL test is subject to certain
operating restrictions and may be required to convert to a bank charter. As of
December 31, 2000, the Association maintained 76.7% of its portfolio assets in
qualified thrift investments and, therefore, met the QTL test. Recent
legislation has expanded the extent to which education loans, credit card loans
and small business loans may be considered "qualified thrift investments."

        Limitation on Capital Distributions. OTS regulations impose limitations
upon all capital distributions by a savings institution, such as cash dividends,
payments to repurchase its shares and payments to shareholders of another
institution in a cash-out merger. Under new regulation, an application to and
the prior approval of the OTS is required prior to any capital distribution if
the institution does not meet the criteria for "expedited treatment" of
applications under OTS regulations (e.g., generally, examination ratings in the
two top categories), the total capital distributions for the calendar year
exceed net income for that year plus the amount of retained net income for the
preceding two years, the institution would be undercapitalized following the
distribution or the distribution would otherwise be contrary to a statute,
regulation or agreement with OTS. If an application is not required, the
institution must still provide prior notice to OTS of the capital distribution.
In the event the Association's capital fell below its regulatory requirements or
the OTS notified it that it was in need of more than normal supervision, the
Association's ability to make capital distributions could be restricted. In
addition, the OTS could prohibit a proposed capital distribution by any
institution, which would otherwise be permitted by the regulation, if the OTS
determines that such distribution would constitute an unsafe or unsound
practice.

        Liquidity. During 2000 the Association was required to maintain an
average daily balance of specified liquid assets equal to a monthly average of
not less than a specified percentage of its net withdrawable deposit accounts
plus short-term borrowings. This liquidity requirement was 4%. Recent
legislation eliminated the statutory liquidity requirement.

                                       23
<PAGE>


        Assessments. Savings institutions are required to pay assessments to the
OTS to fund the agency's operations. The general assessments, paid on a semi-
annual basis, are computed upon the savings institution's total assets,
including consolidated subsidiaries, as reported in the Association's latest
quarterly thrift financial report. The assessments paid by the Association for
the fiscal year ended December 31, 2000 totalled $152,000.

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

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

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

        Standards for Safety and Soundness. The federal banking agencies have
adopted Interagency Guidelines Prescribing Standards for Safety and Soundness.
The  guidelines  set forth the safety and

                                       24
<PAGE>

soundness standards that the federal banking agencies use to identify and
address problems at insured depository institutions before capital becomes
impaired. If the OTS determines that an institution fails to meet any standard
prescribed by the guidelines, the OTS may require the institution to submit an
acceptable plan to achieve compliance with the standard.

Federal Home Loan Bank System

        The Association is a member of the Federal Home Loan Bank System, which
consists of twelve regional Federal Home Loan Banks. The Federal Home Loan Bank
provides a central credit facility primarily for member institutions. The
Association, as a member of the Federal Home Loan Bank, is required to acquire
and hold shares of capital stock in that Federal Home Loan Bank in an amount at
least equal to 1.0% of the aggregate principal amount of its unpaid residential
mortgage loans and similar obligations at the beginning of each year, or 1/20 of
its advances (borrowings) from the Federal Home Loan Bank, whichever is greater.
The Association was in compliance with this requirement with an investment in
Federal Home Loan Bank stock at December 31, 2000 of $11.4 million.

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

Federal Reserve System

        The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The regulations generally provide
that reserves be maintained against aggregate transaction accounts as follows:
a 3% reserve ratio is assessed on net transaction accounts over $5.5 million to
and including $42.8 million; a 10% reserve ratio is applied above $42.8 million.
The first $5.5 million of otherwise reservable balances (subject to adjustments
by the Federal Reserve Board) are exempted from the reserve requirements. These
amounts are adjusted annually. The Association complies with the foregoing
requirements.

                                       25
<PAGE>

                          FEDERAL AND STATE TAXATION

Federal Taxation

     General.  The Company and the Association report their income on a
consolidated basis and the accrual method of accounting, and are subject to
federal income taxation in the same manner as other corporations with some
exceptions, including particularly the Association's reserve for bad debts
discussed below. The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax rules
applicable to the Association or the Company. The Association has not been
audited by the IRS during the last five years. For its 2000 taxable year, the
Company is subject to a maximum federal income tax rate of 34%.

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

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

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

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

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

                                       26
<PAGE>

Association will incur an additional tax liability of approximately $600,000
over the next three years.

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

     The amount of additional taxable income triggered by a non-dividend is an
amount that, when reduced by the tax attributable to the income, is equal to the
amount of the distribution. Thus, if the Association makes a non-dividend
distribution to the Company, approximately one and one-half times the amount of
such distribution (but not in excess of the amount of such reserves) would be
includable in income for federal income tax purposes, assuming a 34% federal
corporate income tax rate. The Association does not intend to pay dividends that
would result in a recapture of any portion of its bad debt reserves.

     Corporate Alternative Minimum Tax. The Internal Revenue Code (the "Code")
imposes a tax on alternative minimum taxable income ("AMTI"), which directly
and indirectly taxes certain items as tax preferences (e.g. tax exempt
interest income), at a rate of 20%. In 2000 and 1999, due to the Company's
level of tax exempt interest income, the Company paid alternative minimum tax
of $994,000 and $684,000, respectively. These payments are subsequently
treated as minimum tax credits which have an indefinite carryforward period
and can be used to reduce future regular tax liabilities of the Company.

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

State and Local Taxation

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

                                       27
<PAGE>

The Company is subject to the Capital Stock Tax of the Commonwealth of
Pennsylvania and the Franchise Tax of the state of Delaware.

Personnel

     As of December 31, 2000, the Association had 51 full-time equivalent
employees. The employees are not represented by a collective bargaining unit,
and the Association considers its relationship with its employees to be good.

Item 2. Properties

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

Item 3. Legal Proceedings

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

                                       28
<PAGE>

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

     None


                                    PART II

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

     Information relating to the market for Registrant's common equity and
related stockholder matters appears under "Shareholder Information" on page 48
in the Registrant's 2000 Annual Report to Stockholders and is incorporated
herein by reference. Information relating to the dividend restrictions for
Registrant's common stock appears under Note 12 to the "Notes to Consolidated
Financial Statements Years Ended December 31, 2000, 1999 and 1998" on pages 35
and 36 in the Registrant's 2000 Annual Report to stockholders and is
incorporated herein by reference.

Item 6.  Selected Financial Data

     The above-captioned information appears under "Selected Financial and Other
Data of the Company" in the Registrant's 2000 Annual Report to Stockholders on
pages 1 and 2 is incorporated herein by reference.

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

     The above-captioned information appears under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Registrant's
2000 Annual Report to Stockholders on pages 7 through 21 and is incorporated
herein by reference.

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

     The above-captioned information appears under the heading "Interest Rate
Sensitivity" in the registrant's 2000 Annual Report to Stockholders on pages 10
through 13 is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

     The Consolidated Financial Statements of First Bell Bancorp, Inc. and its
subsidiary, together with the report thereon by Deloitte & Touche LLP appears in
the Registrant's 2000 Annual Report to Stockholders on pages 23 through 45 and
are incorporated herein by reference.

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

     None.

                                       29
<PAGE>

                                   PART III

Item 10. Directors and Executive Officers of the Registrant

     The information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 30, 2001,
at pages 4 through 7.

Item 11. Executive Compensation

     The information relating to directors' compensation and executives'
compensation is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 30, 2001,
at pages 7 through 13 (excluding the Compensation Committee Report and Stock
Performance Graph).

Item 12. Security Ownership of Certain Beneficial Owners and Management

     The information relating to security ownership of certain beneficial owners
and management is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 30, 2001,
at pages 4 through 6.

Item 13. Certain Relationships and Related Transactions

     The information relating to certain relationships and related transactions
is incorporated herein by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held on April 30, 2001, at page 13.

                                    PART IV

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

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

(1)  Consolidated Financial Statements of the Company are incorporated by
     reference to the following indicated pages of the 2000 Annual Report to
     Stockholders.

                                                                       PAGE

     Independent Auditors Report...................................     23

     Consolidated Balance Sheets for the
       December 31, 2000 and 1999..................................     24

     Consolidated Statements of Income for the

                                       30
<PAGE>

       Years Ended December 31, 2000, 1999 and 1998...................  25

     Consolidated Statements of Comprehensive Income(Loss) for the
       Years Ended December 31, 2000, 1999 and 1998...................  26

     Consolidated Statements of Changes in Stockholders' Equity
       for the Years Ended December 31, 2000, 1999 and 1998...........  27

     Consolidated Statements of Cash Flows for the
       Years Ended December 31, 2000, 1999 and 1998...................  28

     Notes to Consolidated Financial Statements for the
       Years Ended December 31, 2000, 1999 and 1998...................  29-45

     The remaining information appearing in the 2000 Annual Report to
Stockholders is not deemed to be filed as part of this report, except as
expressly provided herein.

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

(3)  Exhibits

     (a)  The following exhibits are filed as part of this report.
          3.1   Certificate of Incorporation of First Bell Bancorp, Inc.*
          3.2   Bylaws of First Bell Bancorp, Inc.*
          4.0   Stock Certificate of First Bell Bancorp, Inc.*
          4.2   Shareholder Rights Plan.**
         10.1   First Bell Bancorp, Inc. 1996 Master Stock Option Plan***
         10.2   Bell Federal Savings and Loan Association of Bellevue Master
                Stock Compensation Plan***
         10.5   Form of Bell Federal Savings and Loan Association of Bellevue
                Supplemental Executive Retirement Plan*
         10.6   Employment Agreement between First Bell Bancorp, Inc. and
                certain executive officers, including Messrs. Eckert and Hinds
                ****
         10.7   Employment Agreement between Bell Federal Savings and Loan
                Association of Bellevue and certain executive officers,
                including Messrs. Eckert and Hinds ****
         11.0   Computation  of earnings per share (filed  herewith)
         13.0   Portions of the 2000 Annual Report to Stockholders (filed
                herewith)
         21.0   The wholly owned subsidiary of the Company is Bell Federal
                Savings and Loan Association of Bellevue, Pittsburgh,
                Pennsylvania
         23.0   Consent of Independent Accountant (filed herewith)
         99.0   Proxy Statement for 2001 Annual Meeting of Stockholders to be
                held on April 30, 2001 and previously filed on March 30, 2001 is
                herein incorporated by reference

____________________________
*    Incorporated herein by reference into this document from the Exhibits to
     the Form S-1, Registration Statement, originally filed on November 9, 1994,
     as amended and declared effective on May 9, 1995, Registration No.
     33-86160.
**   Incorporated herein by reference into this document from the exhibits to
     the Form 8K originally filed on November 20, 1998.


                                       31
<PAGE>

***  Incorporated herein by reference into this document from the Exhibits to
     the Form S-1 Registration Statement originally filed on November 9, 1994 as
     amended and declared effective on May 9, 1999, Registration No. 33-86160.
**** Incorporated herein by reference into this document from the Exhibits to
     the December 31, 1998 Form 10K originally filed on March 30, 1999

     (b)  Reports on Form 8-K
          None.

                                       32
<PAGE>

                                  SIGNATURES

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

Date:     April 2, 2001                 By: /s/ Albert H. Eckert II
      ------------------------              -----------------------------------
                                        Albert H. Eckert II,
                                        President, Chief Executive Officer
                                        and Director

Date:     April 2, 2001                 By: /s/ Jeffrey M. Hinds
      ------------------------              -----------------------------------
                                        Jeffrey M. Hinds
                                        Executive Vice President, Chief
                                        Financial Officer and Director


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

/s/ Albert H. Eckert, II          President, Chief Executive     April 2, 2001
-------------------------------   Officer and Director           --------------
Albert H. Eckert, II


/s/ Jeffrey M. Hinds              Executive Vice President,      April 2, 2001
-------------------------------   Chief Financial Officer and    --------------
Jeffrey M. Hinds                  Director



/s/ Thomas J. Jackson, Jr.        Director                       April 2, 2001
-------------------------------                                  --------------
Thomas J. Jackson, Jr.


/s/ Robert C. Baierl              Secretary and Director         April 2, 2001
-------------------------------                                  --------------
Robert C. Baierl


/s/ William S. McMinn             Vice President and             April 2, 2001
-------------------------------   Director                       --------------
William S. McMinn

                                       33
<PAGE>

/s/ Peter E. Reinert              Director                       April 2, 2001
-------------------------------                                  --------------
Peter E. Reinert


/s/ Jack W. Schweiger             Director                       April 2, 2001
-------------------------------                                  --------------
Jack W. Schweiger


/s/ Theodore R. Dixon             Director                       April 2, 2001
-------------------------------                                  --------------
Theodore R. Dixon

                                       34