SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q


[ X ]    Quarterly  Report  Pursuant  to Section  13 or 15(d) of the  Securities
         Exchange Act of 1934 For the quarterly period ended December 31, 1999

                                       Or

[   ]    Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

         For the transition period from __________ to __________

                          Commission File No.: 0-18833

                           Chester Valley Bancorp Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        Pennsylvania                                    23-2598554
--------------------------------------------------------------------------------
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                   Identification No.)


    100 E. Lancaster Ave., Downingtown PA                          19335
--------------------------------------------------------------------------------
   (Address Of Principal Executive Offices)                     (Zip Code)

       Registrant's telephone number, including area code: (610) 269-9700

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

Transitional Small Business Disclosure Format. YES [   ]   NO [ X ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

         Common Stock ($1.00 par value)                     3,890,603
         ------------------------------                     ---------
             (Title of Each Class)                (Number of Shares Outstanding
                                                      as of February 1, 2000)
<PAGE>
                  CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES

                                      INDEX

                                                                           Page
                                                                          Number
                                                                          ------

PART 1.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

         CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
           December 31, 1999 and June 30, 1999 (Unaudited)                     3

         CONSOLIDATED STATEMENTS OF OPERATIONS
           Three Months Ended December 31, 1999 and 1998 (Unaudited)           4

         CONSOLIDATED STATEMENTS OF OPERATIONS
           Six Months Ended December 31, 1999 and 1998 (Unaudited)             5

         STATEMENT OF OTHER COMPREHENSIVE INCOME
           Three Months Ended December 31, 1999 and 1998 (Unaudited)           6

         STATEMENT OF OTHER COMPREHENSIVE INCOME
           Six Months Ended December 31, 1999 and 1998 (Unaudited)             6

         CONSOLIDATED STATEMENTS OF CASH FLOWS
           Six Months Ended December 31, 1999 and 1998 (Unaudited)             7

         NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS               8-13

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

         CONDITION AND RESULTS OF OPERATIONS                               14-19


Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
           RISK                                                            20-22

PART 2.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS                                                    23

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                            23

Item 3.  DEFAULTS UPON SENIOR SECURITIES                                      23

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                  23

Item 5.  OTHER INFORMATION                                                    23

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K                                     23

SIGNATURES                                                                    24
<PAGE>
<TABLE>
<CAPTION>
                  CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                             (Dollars in Thousands)

                                                                           (Unaudited)
                                                                  December 31,       June 30,
                                                                     1999             1999
                                                                  -----------      -----------
<S>                                                               <C>              <C>
ASSETS:

Cash in banks                                                     $     6,562      $     5,194
Interest-earning deposits                                               8,015           13,409
                                                                  -----------      -----------
     Total cash and cash equivalents                                   14,577           18,603
Trading account securities                                              6,891            9,221
Investment securities available for sale                               94,590          109,600
Investment securities (fair value - December 31,
      $35,121; June 30, $7,816)                                        35,922            7,801
Loans receivable, less allowance for
      loan losses of $3,821 and $3,651                                312,637          291,388
Accrued interest receivable                                             3,069            2,461
Property and equipment - net                                            8,048            8,200
Other assets                                                            5,498            3,884
                                                                  -----------      -----------
     Total Assets                                                 $   481,232      $   451,158
                                                                  ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:

Deposits                                                          $   341,957      $   359,514
Advance payments by borrowers for taxes and insurance                   1,747            3,055
Federal Home Loan Bank advances                                       101,245           50,375
Other borrowings                                                          677              653
Accrued interest payable                                                1,390            1,573
Other liabilities                                                         462            2,135
                                                                  -----------      -----------
     Total Liabilities                                            $   447,478      $   417,305
                                                                  -----------      -----------

Stockholders' Equity:
Preferred stock - $1.00 par value;
     5,000,000 shares authorized; none issued                            --               --
Common stock - $1.00 par value; 10,000,000 shares authorized;
     3,898,170 and 3,707,460 shares issued at December 31,
     and June 30, respectively                                          3,898            3,707
Additional paid-in capital                                             20,732           17,904
Retained earnings - partially restricted                               12,526           13,794
Accumulated other comprehensive income (loss)                          (3,274)          (1,552)
                                                                  -----------      -----------
     Subtotal                                                          33,882           33,853
Treasury stock, at cost (7,914 shares at December 31)                    (128)            --
                                                                  -----------      -----------
     Total Stockholders' Equity                                        33,754           33,853
                                                                  -----------      -----------
     Total Liabilities and Stockholders' Equity                   $   481,232      $   451,158
                                                                  ===========      ===========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                        3
<PAGE>
<TABLE>
<CAPTION>
                  CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

              (Dollars in Thousands, Except for Per Share Amounts)


                                                                      (Unaudited)
                                                                  Three Months Ended
                                                                      December 31,
                                                              ----------------------------
                                                                 1999             1998
                                                              -----------      -----------
<S>                                                           <C>              <C>
INTEREST INCOME:
  Loans                                                       $     6,033      $     5,777
  Investment securities and interest-bearing deposits               2,352            1,395
                                                              -----------      -----------
     Total interest income                                          8,385            7,172
                                                              -----------      -----------
INTEREST EXPENSE:

  Deposits                                                          3,304            3,029
  Securities sold under agreements to repurchase                     --                  4
  Short-term borrowings                                               925              221
  Long-term borrowings                                                451              529
                                                              -----------      -----------
     Total interest expense                                         4,680            3,783
                                                              -----------      -----------
NET INTEREST INCOME                                                 3,705            3,389
  Provision for loan losses                                           105               45
                                                              -----------      -----------
      Net interest income after provision for loan losses           3,600            3,344
                                                              -----------      -----------
OTHER INCOME:

  Investment services income, net                                     886              742
  Service charges and fees                                            483              369
  Gain on trading account securities                                   50              227
  (Loss) on sale of assets available for sale                        (183)              (2)
  Other                                                                40               51
                                                              -----------      -----------
     Total other income                                             1,276            1,387
                                                              -----------      -----------
OPERATING EXPENSES:

  Salaries and employee benefits                                    1,882            1,624
  Occupancy and equipment                                             561              491
  Data processing                                                     206              195
  Deposit insurance premiums                                           53               43
  Other                                                               787              675
                                                              -----------      -----------
     Total operating expenses                                       3,489            3,028
                                                              -----------      -----------
  Income before income taxes                                        1,387            1,703
  Income tax expense                                                  232              535
                                                              -----------      -----------
NET INCOME                                                          1,155            1,168
                                                              ===========      ===========
EARNINGS PER SHARE (1):

  Basic                                                       $       .30      $       .30
                                                              ===========      ===========
  Diluted                                                     $       .29      $       .30
                                                              ===========      ===========
DIVIDENDS PER SHARE PAID DURING PERIOD (1)                    $       .09      $       .07
                                                              ===========      ===========
WEIGHTED AVERAGE SHARES OUTSTANDING (1):

  Basic                                                         3,883,519        3,812,784
                                                              ===========      ===========
  Diluted                                                       3,911,761        3,855,598
                                                              ===========      ===========
</TABLE>

(1)  Earnings  per  share,  dividends  per share  and  weighted  average  shares
     outstanding  have been  restated  to  reflect  the  effects of the 5% stock
     dividend paid in September 1999.

     See accompanying notes to unaudited consolidated financial statements.

                                        4
<PAGE>
<TABLE>
<CAPTION>
                   CHESTER VALLEY BANCORP INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

              (Dollars in Thousands, Except for Per Share Amounts)

                                                                        (Unaudited)
                                                                     Six Months Ended
                                                                       December 31,
                                                              ----------------------------
                                                                  1999            1998
                                                              -----------      -----------
<S>                                                           <C>              <C>
INTEREST INCOME:

  Loans                                                       $    11,933      $    11,427
  Investment securities and interest-bearing deposits               4,694            2,735
                                                              -----------      -----------
     Total interest income                                         16,627           14,162
                                                              -----------      -----------
INTEREST EXPENSE:

  Deposits                                                          6,761            6,141
  Securities sold under agreements to repurchase                     --                  7
  Short-term borrowings                                             1,313              458
  Long-term borrowings                                                977              948
                                                              -----------      -----------
     Total interest expense                                         9,051            7,554
                                                              -----------      -----------
NET INTEREST INCOME                                                 7,576            6,608
  Provision for loan losses                                           210               90
                                                              -----------      -----------
      Net interest income after provision for loan losses           7,366            6,518
                                                              -----------      -----------
OTHER INCOME:

  Investment services income, net                                   1,698            1,488
  Service charges and fees                                            882              729
  Gain on trading account securities                                   38              380
  (Loss)/gain on sale of assets available for sale                   (170)              78
  Other                                                                86               98
                                                              -----------      -----------
     Total other income                                             2,534            2,773
                                                              -----------      -----------
OPERATING EXPENSES:

  Salaries and employee benefits                                    3,685            3,292
  Occupancy and equipment                                           1,101              999
  Data processing                                                     424              385
  Deposit insurance premiums                                          101               85
  Other                                                             1,500            1,256
                                                              -----------      -----------
     Total operating expenses                                       6,811            6,017
                                                              -----------      -----------
  Income before income taxes                                        3,089            3,274
  Income tax expense                                                  654            1,007
                                                              -----------      -----------
NET INCOME                                                    $     2,435      $     2,267
                                                              ===========      ===========
EARNINGS PER SHARE (1):

  Basic                                                       $       .63      $       .59
                                                              ===========      ===========
  Diluted                                                     $       .62      $       .58
                                                              ===========      ===========
DIVIDENDS PER SHARE PAID DURING PERIOD (1)                    $       .18      $       .13
                                                              ===========      ===========
WEIGHTED AVERAGE SHARES OUTSTANDING (1):

  Basic                                                         3,886,667        3,831,337
                                                              ===========      ===========
  Diluted                                                       3,916,974        3,875,307
                                                              ===========      ===========
</TABLE>

(1)  Earnings  per  share,  dividends  per share  and  weighted  average  shares
     outstanding  have been  restated  to  reflect  the  effects of the 5% stock
     dividend paid in September 1999.

     See accompanying notes to unaudited consolidated financial statements.

                                        5
<PAGE>
<TABLE>
<CAPTION>
                   CHESTER VALLEY BANCORP INC. AND SUBSIDIARY

                    STATEMENTS OF OTHER COMPREHENSIVE INCOME

                             (Dollars in Thousands)

                                                                         (Unaudited)
                                                                      Three Months Ended
                                                                         December 31,
                                                                    --------------------
                                                                      1999         1998
                                                                    -------      -------
<S>                                                                 <C>          <C>
OTHER COMPREHENSIVE INCOME, NET OF TAX:
  Net income                                                        $ 1,155      $ 1,168
  Net unrealized holding (losses) on securities available
     for sale during the period                                        (301)         (99)
  Reclassification adjustment for losses included
     in net income                                                      111         --

                                                                    -------      -------
COMPREHENSIVE INCOME                                                $   965      $ 1,069
                                                                    =======      =======


<CAPTION>
                                                                         (Unaudited)
                                                                       Six Months Ended
                                                                         December 31,
                                                                    --------------------
                                                                      1999        1998
                                                                    -------      -------
<S>                                                                 <C>          <C>
OTHER COMPREHENSIVE INCOME, NET OF TAX:
  Net income                                                        $ 2,435      $ 2,267
  Net unrealized holding (losses) gains on securities available
     for sale during the period                                      (1,832)          57
  Reclassification adjustment for losses (gains) included
     in net income                                                      110          (38)
                                                                    -------      -------
COMPREHENSIVE INCOME                                                $   713      $ 2,286
                                                                    =======      =======

</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

                                        6
<PAGE>
<TABLE>
<CAPTION>
                  CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Dollars in Thousands)

                                                                                    (Unaudited)
                                                                            Six Months Ended December 31,
                                                                            -----------------------------
                                                                                 1999          1998
                                                                               --------      --------
<S>                                                                            <C>           <C>
Cash flows (used in) from operating activities:
Net income                                                                     $  2,435      $  2,267
Add (deduct) items not affecting cash flows from operating activities:
   Depreciation                                                                     451           311
   Provision for loan losses                                                        210            90
   Gain on trading account securities                                               (38)         (380)
   Loss (gain) on sale of loans  held for sale                                        3           (20)
   Loss (gain) on sale of securities available for sale                             167           (58)
   Amortization of deferred loan fees, discounts and premiums                      (381)         (466)
   Decrease (increase) in trading account securities                              2,368         2,496
   (Increase) decrease in accrued interest receivable                              (608)          350
   (Increase) in other assets                                                      (532)       (3,559)
   (Decrease) increase in other liabilities                                      (1,673)          928
   (Decrease) in accrued interest payable                                          (183)           (3)
                                                                               --------      --------
Net cash flows from operating activities                                          2,219         1,956
                                                                               --------      --------
Cash flows from (used in) investment activities:
   Capital expenditures                                                            (299)         (742)
   Net increase in loans                                                        (21,450)       (8,650)
   Proceeds from sale of loans held for sale                                        197         1,457
   Purchase of investment securities                                            (32,966)       (1,083)
   Proceeds from maturities, payments and calls of investment securities          4,838         4,921
   Purchase of securities available for sale                                    (38,069)      (49,238)
   Proceeds from sales and calls of securities available for sale                50,287        17,551
                                                                               --------      --------
Net cash flows used in investment activities                                    (37,462)      (35,784)
                                                                               --------      --------
Cash flows from (used in) financing activities:

   Net  (decrease) increase in deposits before interest credited                (24,679)       15,146
   Interest credited to deposits                                                  7,122         5,638
   Increase in securities sold under agreements to repurchase                      --              55
   Proceeds from FHLB advances                                                   50,901        13,599
   Repayments of FHLB advances                                                      (31)       (2,908)
   Decrease in advance payments by borrowers for taxes and insurance             (1,308)       (1,128)
   Net increase in other borrowings                                                  24           134
   Cash dividends on common stock                                                  (682)         (526)
   Repayments of principal on ESOP debt                                            --             (98)
   Common stock issued                                                              333           244
   Payment for fractional shares                                                     (7)          (15)
   Stock options exercised                                                           75            32
   Reduction of common stock acquired by ESOP                                      --              98
   Common stock repurchased                                                        (531)         --
                                                                               --------      --------
Net cash flows from financing activities                                         31,217        30,271
                                                                               --------      --------
Net decrease in cash and cash equivalents                                        (4,026)       (3,557)

Cash and cash equivalents:

   Beginning of period                                                           18,603        15,905
                                                                               --------      --------
   End of period                                                               $ 14,577      $ 12,348
                                                                               ========      ========

Supplemental disclosures:
   Cash payments during the year for:
      Taxes                                                                    $    579      $    936
      Interest                                                                 $  9,234      $  7,557

Non-cash items:

   Net unrealized (loss) gain on investment securities available for sale,
   net of tax                                                                  $ (1,722)     $     19
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                        7
<PAGE>
                           CHESTER VALLEY BANCORP INC.

                                AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Chester Valley Bancorp Inc. (the "Company") is a unitary thrift holding company,
incorporated in the Commonwealth of Pennsylvania in 1989. The Company is subject
to the regulations of certain  federal and state banking  agencies and undergoes
periodic  examinations  by those  regulatory  authorities.  The  business of the
Company and its subsidiaries  consists of the operations of First Financial Bank
("First  Financial" or the "Bank"), a  Pennsylvania-chartered  stock savings and
loan association  founded in 1922, and  Philadelphia  Corporation for Investment
Services ("PCIS"),  a full service investment advisory and securities  brokerage
firm.  The Bank  provides a wide range of banking  services  to  individual  and
corporate  customers  through its branch banks in Chester County,  Pennsylvania.
All of the branches are full service and offer commercial and retail deposit and
loan products.  These  products  include  checking  accounts  (non-interest  and
interest-bearing),  savings  accounts,  certificates of deposit,  commercial and
installment  loans, real estate mortgages,  and home equity loans. The Bank also
offers ancillary services,  including trust services and money management,  that
complement  these products.  The Bank is subject to extensive  competition  from
other  financial   institutions  and  other  companies  that  provide  financial
services. PCIS is registered as a broker/dealer in all 50 states and Washington,
DC and it is also  registered as an investment  advisor with the  Securities and
Exchange  Commission.   PCIS  provides  many  additional   services,   including
self-directed and managed retirement  accounts,  safekeeping,  daily sweep money
market funds, portfolio and estate valuations, life insurance and annuities, and
margin accounts, to individuals and small corporate accounts.

Principles of Consolidation and Presentation

The accompanying  consolidated  financial statements include the accounts of the
Company and its  wholly-owned  subsidiaries,  the Bank and PCIS. The accounts of
the Bank include its wholly-owned  subsidiary, D & S Service Corp., which owns D
&  FProjects  and  Wildman  Projects,  Inc.,  both  of  which  are  wholly-owned
subsidiaries thereof. All material  inter-company balances and transactions have
been eliminated in  consolidation.  Prior period amounts are  reclassified  when
necessary to conform with the current period's presentation.

                                        8
<PAGE>
The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with instructions to Form 10-Q. Accordingly,  they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles ("GAAP") for complete financial statements. However, such information
reflects all adjustments which are, in the opinion of management,  necessary for
a fair presentation of results for the unaudited interim periods.

The results of operations  for the three- and six-month  periods ended  December
31, 1999, are not  necessarily  indicative of the results to be expected for the
fiscal  year  ending  June  30,  2000.  The  consolidated  financial  statements
presented  herein should be read in  conjunction  with the audited  consolidated
financial  statements  and the notes thereto  included in the  Company's  Annual
Report to Stockholders for the fiscal year ended June 30, 1999.

Earnings Per Share

The dilutive  effect of stock options is excluded from basic  earnings per share
but included in the  computation  of diluted  earnings  per share.  Earnings per
share and weighted average shares  outstanding for the periods  presented herein
have been  adjusted  to reflect  the  effects of the 5% stock  dividend  paid in
September 1999.

                                        9
<PAGE>

The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
                                          Three Months Ended           Six Months Ended
                                             December 31,                December 31,
                                      ------------------------     -------------------------
                                       (Dollars in Thousands, Except for Per Share Amounts)

                                         1999          1998           1999           1998
                                      ---------     ----------     ----------     ----------
<S>                                   <C>           <C>            <C>            <C>
Numerator:
   Net income                         $   1,155     $    1,168     $    2,435     $    2,267
                                      =========     ==========     ==========     ==========

Denominator:
   Denominator for basic earnings
   per share-weighted average
   shares                             3,883,519      3,812,784      3,886,667      3,831,337

Effect of dilutive securities:
   Stock options                         28,242         42,814         30,307         43,970
                                      ---------     ----------     ----------     ----------

Denominator for diluted earnings
   per share-adjusted weighted
   average shares and assumed
   exercise                           3,911,761      3,855,598      3,916,974      3,875,307
                                      =========     ==========     ==========     ==========

Basic earnings per share              $     .30     $      .30     $      .63     $      .59
                                      =========     ==========     ==========     ==========

Diluted earnings per share            $     .29     $      .30     $      .62     $      .58
                                      =========     ==========     ==========     ==========

</TABLE>


                                       10
<PAGE>
NOTE 2 - LOANS RECEIVABLE

Loans receivable are summarized as follows:

<TABLE>
<CAPTION>
                                                At December 31,      At June 30,
                                                      1999              1999
                                                   ---------          ---------
                                                      (Dollars in Thousands)
<S>                                                <C>                <C>
First mortgage loans:
   Residential                                     $ 163,924          $ 157,342
   Construction-residential                           14,743             14,469
   Land acquisition and
      development                                      4,500              5,075
   Commercial                                         62,230             55,198
   Construction-commercial                             9,694              9,794
Commercial business                                   17,242             14,708
Consumer                                              59,114             51,416
                                                   ---------          ---------

Total loans                                          331,447            308,002
                                                   ---------          ---------

Less:
   Undisbursed loan proceeds:
      Construction-residential                        (9,669)            (8,712)
      Construction-commercial                         (3,719)            (2,681)
   Deferred loan fees - net                           (1,601)            (1,570)
   Allowance for loan losses                          (3,821)            (3,651)
                                                   ---------          ---------

Net loans                                          $ 312,637          $ 291,388
                                                   =========          =========

</TABLE>


NOTE 3 - COMMITMENTS

Commitments to potential  mortgagors of the Bank amounted to $3.96 million as of
December 31,  1999,  of which $3.17  million was for  variable-rate  loans.  The
balance of the commitments  represents  $788,000 of fixed-rate  loans (primarily
consisting of  single-family  residential  mortgages)  bearing interest rates of
between 7.00% and 7.63%. At December 31, 1999, the Company had $13.39 million of
undisbursed  construction  loan funds as well as $17.74  million of  undisbursed
remaining consumer and commercial line balances.

                                       11
<PAGE>

NOTE 4 - REGULATORY CAPITAL

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier  1  capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as  defined).  At  December  31,  1999 and June 30, 1999 the Bank was in
compliance  with  all  such  requirements  and is  deemed  a  "well-capitalized"
institution  for  regulatory  purposes.  There are no conditions or events since
December  31, 1999 that  management  believes  have  changed  the  institution's
category.

The Bank's  regulatory  capital amounts and ratios are presented in the table as
follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                                                           To Be Well
                                                                                                         Capitalized
                                                                                Required                  Under Prompt
                                                                               For Capital               Corrective
                                                      Actual                Adequacy Purposes           Action Provisions
                                              --------------------         --------------------        -------------------
                                              Amount         Ratio         Amount         Ratio        Amount       Ratio
                                              ------         -----         ------         -----        ------       -----
<S>                                            <C>            <C>           <C>             <C>        <C>           <C>
As of December 31,  1999:

    Total Capital
     (to Risk Weighted Assets)                 $36,524        13.04%        $22,412         8.00%      $28,015       10.00%

   Tier 1 Capital
     (to Risk Weighted Assets)                 $33,018        11.79%        $11,206         4.00%      $16,809        6.00%

   Tier 1 Capital
     (to Average Assets)                       $33,018         6.87%        $19,217         4.00%      $24,021        5.00%

As  of June 30, 1999:

   Total Capital
     (to Risk Weighted Assets)                 $34,005        13.05%        $20,848         8.00%      $26,060       10.00%

   Tier 1 Capital
    (to Risk Weighted Assets)                  $30,768        11.81%        $10,424         4.00%      $15,636        6.00%

   Tier 1 Capital
     (to Average  Assets)                      $30,768         6.86%        $17,934         4.00%      $22,418        5.00%
</TABLE>

                                       12
<PAGE>
NOTE 5 - SEGMENT REPORTING

The Company has two reportable  segments:  First Financial Bank ("the Bank") and
Philadelphia  Corporation for Investment  Services ("the  Brokerage").  The Bank
operates a branch  bank  network  with eight  full-service  banking  offices and
provides deposit and loan services to customers.  Additionally,  the Bank offers
trust services at its Downingtown,  Pennsylvania  headquarters.  PCIS operates a
full service  investment  advisory  and  securities  brokerage  firm through two
offices. Both segments operate primarily in southeastern Pennsylvania.

The Company evaluates performance based on profit or loss from operations before
income taxes not including  nonrecurring gains and losses. There are no material
intersegment sales or transfers.

The  Company's  reportable  segments  have  traditionally  been two  independent
financial  services  institutions.  PCIS was  acquired by the Company on May 29,
1998.  The two segments are managed  separately.  All senior  officers from PCIS
prior to the acquisition have been retained to manage that segment.

The following table highlights  income  statement and balance sheet  information
for each of the segments at or for December 31, 1999 and 1998:
<TABLE>
<CAPTION>
                                   At and for the three months ended December 31,
                                               (Dollars in Thousands)
                     -------------------------------------------------------------------------
                                    1999                                   1998
                     ----------------------------------     ----------------------------------
                       Bank       Brokerage     Total         Bank       Brokerage      Total
                     --------     --------     --------     --------     --------     --------
<S>                  <C>          <C>          <C>          <C>          <C>          <C>
Net interest
    income           $  3,675     $     30     $  3,705     $  3,372     $     17     $  3,389
Other income              438          838        1,276          662          725        1,387
Total net income        1,070           85        1,155        1,078           90        1,168
Total assets          479,236        1,996      481,232      408,303        2,191      410,494
Total trading
    securities       $  6,461     $    430     $  6,891     $ 17,688     $    548     $ 18,236


<CAPTION>
                                        For the six months ended December 31,
                                               (Dollars in Thousands)
                     -------------------------------------------------------------------------
                                    1999                                   1998
                     ----------------------------------     ----------------------------------
                       Bank       Brokerage     Total         Bank       Brokerage      Total
                     --------     --------     --------     --------     --------     --------
<S>                  <C>          <C>          <C>          <C>          <C>          <C>
Net interest
    income           $  7,523     $     53     $  7,576     $  6,567     $     41     $  6,608
Other income              936        1,598        2,534        1,306        1,467        2,773
Total net income     $  2,279     $    156     $  2,435     $  2,083     $    184     $  2,267
</TABLE>

                                       13
<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION


In this Report,  the Company has included certain  "forward looking  statements"
concerning the future  operations of the Company.  It is management's  desire to
take  advantage  of the  "safe  harbor"  provisions  of the  Private  Securities
Litigation  Reform Act of 1995.  This  statement  is for the express  purpose of
availing the Company of the  protections of such safe harbor with respect to all
"forward  looking  statements"  contained in this  Report.  The Company has used
"forward  looking  statements"  to describe the future plans and  strategies and
future  financial  results.  Management's  ability to predict the results or the
effect of future plans and strategy is inherently uncertain.  Factors that could
affect results include interest rate trends,  competition,  the general economic
climate in Chester County,  the  mid-Atlantic  region and the United States as a
whole,  loan delinquency  rates,  changes in federal and state  regulation,  and
other  uncertainties  described in the Company's filings with the Securities and
Exchange  Commission.  These factors  should be  considered  in  evaluating  the
"forward  looking  statements",  and undue reliance should not be placed on such
statements.

                               FINANCIAL CONDITION

The Company's  total assets  increased to $481.23  million at December 31, 1999,
from  $451.16  million at June 30,  1999,  principally  due to a $28.12  million
aggregate increase in held-to-maturity  investment  securities to $35.92 million
from $7.80  million at June 30, 1999 and to a lesser  extent,  a $21.25  million
increase in loans from  $291.39  million at June 30, 1999 to $312.64  million at
December  31,  1999.  Such  increases  were funded in large part by increases in
Federal Home Loan Bank ("FHLB")  advances from $50.38  million at June 30, 1999,
to $101.25 million at December 31, 1999.

Stockholders'  equity  decreased  to $33.75  million at  December  31, 1999 from
$33.85  million at June 30, 1999, as a result of the  recognition of an increase
in net  unrealized  losses on securities  available for sale,  net of taxes,  of
$3.27  million  and the  payment  during the period of cash  dividends  totaling
$349,000. The decrease in stockholders' equity was offset by net income of $2.44
million,  the sale of $333,000 of common stock in connection  with the Company's
dividend  reinvestment plan, and $75,000 received as a result of the exercise of
stock options.

                                       14
<PAGE>
                              RESULTS OF OPERATIONS

Net interest income, on a fully tax equivalent  basis,  increased 11.9% to $3.94
million for the three-month  period ended December 31, 1999, and 17.35% to $8.05
million for the  six-month  period ended  December  31, 1999,  compared to $3.52
million and $6.86  million,  respectively,  for the same periods in 1998.  Total
interest income, on a fully tax equivalent basis, increased to $8.62 million and
$17.10  million for the three- and six-month  periods  ended  December 31, 1999,
from $7.30 million and $14.41 million for the same periods in 1998, primarily as
a result of the effect of an increase in the average balance of interest-earning
assets.

The average balance of interest-earning  assets increased to $454.59 million and
$448.73  million for the three- and six-month  periods ended  December 31, 1999,
respectively,  from $376.83 million and $373.09 million,  respectively,  for the
same periods in 1998.  The increase was  primarily  due to a $53.97  million and
$58.48 million increase in the average balance of investment  securities  during
the three- and six-month periods in 1999, respectively. Partially offsetting the
effect on interest  income of the increases in the average  balances were the 17
basis-point  and 10  basis-point  decreases  in the  yield to 7.54% and 7.62% on
interest-earning  assets for the three- and six-month periods ended December 31,
1999, respectively,  as the result of declining general market rates of interest
experienced during the period.

Total interest  expense  increased to $4.68 million and $9.05 million from $3.78
million and $7.55 million for the  respective  three- and  six-month  periods in
1999 and 1998,  largely as the result of the increase in the average  balance of
interest-bearing  liabilities  to $406.73  million and  $397.74  million for the
three- and six-month periods ended December 31, 1999, respectively,  as compared
to $325.04  million and  $320.25  million  for the same  periods in 1998.  These
increases were due to $35.76 million and $45.05 million increases in the average
balance of deposits  and $45.92  million  and $32.44  million  increases  in the
average  balance  of  borrowings   during  the  three  and  six-month   periods,
respectively.  Partially  offsetting  the  increase  in  interest  expense was a
decrease in the average rate paid on such liabilities to 4.60% and 4.55% for the
three- and six-month periods ended December 31, 1999,  respectively,  from 4.65%
and 4.72% for the same  periods in 1998,  as the result  primarily  of declining
general market rates of interest and management's continued efforts to focus its
growth in the areas of low-costing or no-cost deposits.

Although the tax equivalent  interest rate spread increased to 3.07% from 3.00%,
the average tax equivalent  net yield on  interest-earning  assets  decreased to
3.59% from 3.68% for the  six-month  periods  ended  December 31, 1999 and 1998,
respectively, due to the reasons discussed above.

                                       15
<PAGE>
Provision for Loan Losses

The Company provided $105,000 and $210,000 for loan losses during the three- and
six-month  periods ended December 31, 1999,  respectively as compared to $45,000
and $90,000,  respectively,  for the same periods in 1998. The provision for the
three- and six-months ending December 31, 1999 has increased over the three- and
six-months  ending  December  31, 1998  primarily  as a result of an increase in
loans of $21.25 million since June 30, 1999. These provisions have been added to
the  Company's  allowance  for  loan  losses  due  to  economic  conditions  and
management's  assessment  of the  inherent  risk of loss  existing  in the  loan
portfolio.  At December 31, 1999,  the allowance  for loan losses  totaled $3.82
million or 1.21% of net loans (before  allowance),  compared to $3.65 million or
1.24% of net loans and $3.43 million or 1.22% of net loans at June 30, 1999, and
December 31, 1998,  respectively.  As a percentage of non-performing assets, the
allowance  for loan losses was 321% at December  31,  1999,  compared to 391% at
June 30, 1999, and further compared to 237% at December 31, 1998.

Other Income

Total other  income  decreased  to $1.28  million and $2.53  million  during the
three- and six-month periods ended December 31, 1999  respectively,  as compared
to $1.39 million and $2.77 million during the same periods in 1998. The decrease
is a result of a $181,000 and $248,000  increase in losses on the sale of assets
available for sale,  primarily  securities available for sale, during the three-
and six-month,  ended December 31, 1999,  respectively.  Additionally,  gains on
trading  account  security  decreased  $177,000 and  $342,000 for the  three-and
six-month  period in 1999.  The decrease in other income was offset by increases
in  investment  services  income of $144,000 and $210,000  during the three- and
six-month  periods ended December 31, 1999,  respectively,  compared to the same
periods in 1998.  An  increase  in checking  account  fees,  as the result of an
increased  number of accounts,  and an increase in the fees earned on the Bank's
debit card, due to increased usage and also an increased  number of cardholders,
contributed to the increase of $114,000 and $153,000 in service charges and fees
during the three- and six-month periods ended December 31, 1999.

Operating Expenses

Total operating  expenses increased $461,000 or 15.22% and $794,000 or 13.20% to
$3.49  million and $6.81  million,  respectively,  for the three- and  six-month
periods  ended  December  31, 1999 as compared to the same time periods in 1998.
The  increase in  operating  expenses  for the three- and  six-month  periods in
fiscal  2000 was due to (i)  normal  salary  increases  combined  with  benefits
expense;  and (ii) the increased number of staff associated with the addition of
the Bank's eighth branch office that opened in March 1999 in Devon.

                                       16
<PAGE>
Income Tax Expense

Income tax  expense  was  $232,000  and  $654,000  for the three- and  six-month
periods ended December 31, 1999, respectively, as compared to $535,000 and $1.01
million for the same periods in 1998. The decrease in income tax expense for the
three- and six-month  periods ended December 31, 1999 is due to a higher portion
of the  Company's  pre-tax  earnings  comprised of tax-free  interest  income as
compared  to the same  period in 1998.  This  caused the  effective  tax rate to
decrease from 30.76% at December 31, 1998 to 21.17% at December 31, 1999.

                                  ASSET QUALITY

Non-performing  assets are comprised of non-accrual  loans and real-estate owned
("REO") and totaled  $1.19  million and $933,000 at December 31, 1999,  and June
30,  1999,  respectively.  Non-accrual  loans are loans on which the  accrual of
interest has ceased because the collection of principal or interest  payments is
determined  to be  doubtful  by  management.  It is the policy of the Company to
discontinue  the accrual of interest  when  principal  or interest  payments are
delinquent  90 days  or  more  (unless  the  loan  principal  and  interest  are
determined by management to be fully secured and in the process of  collection),
or earlier,  if the  financial  condition  of the  borrower  raises  significant
concern  with  regard to the  ability of the  borrower  to  service  the debt in
accordance with the current loan terms. Interest income is not accrued until the
financial  condition and payment  record of the borrower once again  demonstrate
the  borrower's  ability to service the debt. At December 31, 1999,  the Company
did not have any loans  greater  than 90 days  delinquent  which  were  accruing
interest.  Non-performing  assets to total  assets and  non-performing  loans to
total assets were both .27% at December  31, 1999,  compared to .21% at June 30,
1999, and .35% at December 31, 1998.  Non-performing  loans, which totaled $1.19
million at  December  31,  1999  consisted  of eight  single-family  residential
mortgage loans aggregating  $816,000,  one commercial  mortgage loan aggregating
$221,000 and  non-performing  consumer and  commercial  business  loans totaling
$152,000.

At December 31, 1999, the Company's classified assets, which consisted of assets
classified  as  substandard,  doubtful or loss,  as well as REO,  totaled  $1.42
million  compared to $1.24  million at June 30,  1999,  and further  compared to
$1.82 million at December 31, 1998. Included in assets classified substandard at
December 31, 1999 and 1998,  and at June 30,  1999,  were all loans 90 days past
due and loans which were less than 90 days delinquent but inadequately protected
by the current paying capacity of the borrower or of the collateral  pledged, or
which were subject to one or more  well-defined  weaknesses which may jeopardize
the satisfaction of the debt. The Company  maintains a $4.19 million  investment
in a long-term  tax-free revenue bond which it had classified as special mention
as a result of a deterioration in cash flow for debt service. The investment has
been performing since its

                                       17
<PAGE>
origination. Company management has met with the debtor and a plan was presented
to management to improve these deficiencies. The Company has underwritten and is
reporting  $2.00 million of this investment as a loan in connection with its due
diligence  since the bonds are not rated.  This  project is being  monitored  by
management on a monthly basis.

                         LIQUIDITY AND CAPITAL RESOURCES

Management  monitors  liquidity  daily and  maintains  funding  sources  to meet
unforseen changes in cash  requirements.  The Company's primary sources of funds
are deposits, borrowings,  repayments, prepayments and maturities of outstanding
loans  and  mortgage-backed  securities,  sales of  assets  available  for sale,
maturities of investment securities and other short-term investments,  and funds
provided from operations.  While scheduled loan and  mortgage-backed  securities
repayments and maturing  investment  securities and short-term  investments  are
relatively  predictable sources of funds, deposit flows and loan prepayments are
greatly  influenced  by the  movement  of interest  rates in  general,  economic
conditions and  competition.  The Company manages the pricing of its deposits to
maintain a deposit  balance  deemed  appropriate  and  desirable.  Although  the
Company's deposits represent the majority of its total liabilities,  the Company
has also utilized other borrowing sources, namely FHLB advances.

Liquidity management is both a daily and long-term function. Excess liquidity is
generally invested in short-term investments such as FHLB overnight deposits. On
a longer term basis,  the Company  maintains a strategy of  investing in various
lending and  investment  securities  products.  The Company  uses its sources of
funds to primarily fund loan commitments and maintain a substantial portfolio of
investment  securities,  and to meet its  ongoing  commitments  to pay  maturing
savings certificates and savings withdrawals.  At December 31, 1999, the Company
had $3.96 million in commitments to fund loan originations. In addition, at such
date the Company had  undisbursed  loans in process  for  construction  loans of
$13.39 million and $17.74 million in undisbursed lines of credit.  Management of
the  Company  believes  that  the  Company  has  adequate  resources,  including
principal  prepayments  and  repayments of loans and  investment  securities and
borrowing capacity, to fund all of its commitments to the extent required.

The Company's current dividend policy is to declare a regular quarterly dividend
with the intent  that the level of the  dividend  per share be  reviewed  by the
Board of Directors on a quarterly  basis.  Dividends will be in the form of cash
and/or  stock  after  giving  consideration  to all  aspects  of  the  Company's
performance  for the  quarter.  On November  17,  1999,  the Board of  Directors
declared a quarterly cash dividend of $.09 per share, which was paid on December
17, 1999, to stockholders of record as of December 3, 1999.

                                       18
<PAGE>
The Bank is required under applicable federal regulations, to maintain specified
levels of liquid  investments  and qualifying  types of United States  Treasury,
federal agency and other  investments  having  maturities of five years or less.
Regulations  currently  in effect  require the Bank to  maintain a liquid  asset
ratio of not  less  than 4% of its net  withdrawable  accounts  plus  short-term
borrowings.  These  levels are  changed  from time to time by the OTS to reflect
economic  conditions.  First Financial's average regulatory  liquidity ratio for
the month ended December 31, 1999 was 20.84%.

                                YEAR 2000 ISSUES

Year  2000  issues  result  from the  inability  of many  computer  programs  or
computerized  equipment to accurately calculate,  store or use data for the year
2000 or later. These potential  shortcomings could result in a system failure or
miscalculations causing disruptions of operation,  including among other things,
a  temporary  inability  to  process  transactions,   track  important  customer
information,  provide convenient access to this information, or engage in normal
business operations. The Company did not incur any additional costs for the Year
2000 in the second  quarter ended  December 31, 1999.  While  lingering  concern
exists about certain dates during Year 2000, the most significant date,  January
1, 2000, has passed without incident.  As of the date of this filing the Company
has not experienced any significant Year 2000 problems  relating to its internal
or third party  computer  systems.  Nor has the Company  experienced  any issues
regarding the ability of  commercial  customers to meet debt service as a result
of Year 2000 issues.  The Company will continue to monitor  systems for problems
in the future,  however the costs related to that process are not expected to be
significant.

                        RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998 the Financial  Accounting  Standards Board ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement (as amended by SFAS No. 137 in June 1999)  establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other  contracts,   (collectively   referred  to  as
derivatives)  and for hedging  activities.  It requires that an entity recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of a derivative  depends on the intended use of the derivative
and the resulting  designation.  If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, (b)
a hedge of the exposure to variable cash flows of a forecasted  transaction,  or
(c) a hedge of certain foreign currency exposures.  SFAS No. 133, as amended, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
Earlier adoption is permitted. The Company has not yet decided whether to

                                       19
<PAGE>
adopt the statement  early or determined the impact,  if any, of this statement,
including its  provisions  for the potential  reclassifications  of  investments
securities, on the Company's operations, financial condition or equity.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  primary  asset/liability  management  goal of the  Company is to manage and
control its interest rate risk, thereby reducing its exposure to fluctuations in
interest rates, and achieving sustainable growth in net interest income over the
long term. Other objectives of asset/liability  management include: (1) ensuring
adequate  liquidity and funding,  (2)  maintaining a strong capital base and (3)
maximizing net interest income opportunities.

In general,  interest rate risk is mitigated by closely  matching the maturities
or repricing  periods of  interest-sensitive  assets and liabilities to ensure a
favorable  interest  rate spread.  Management  regularly  reviews the  Company's
interest-rate sensitivity,  and uses a variety of strategies as needed to adjust
that sensitivity  within acceptable  tolerance ranges established by management.
Changing the relative  proportions of fixed-rate and adjustable-rate  assets and
liabilities  is  one of the  primary  strategies  utilized  by  the  Company  to
accomplish this objective.

The matching of assets and  liabilities  may be analyzed by examining the extent
to which such  assets  and  liabilities  are  "interest-rate  sensitive"  and by
monitoring an institution's  interest-sensitivity  gap. An  interest-sensitivity
gap is considered  positive when the amount of  interest-rate  sensitive  assets
exceeds the amount of  interest-rate  sensitive  liabilities  repricing within a
defined  period and is  considered  negative  when the  amount of  interest-rate
sensitive  liabilities  exceeds  the amount of  interest-rate  sensitive  assets
repricing within a defined period.

To provide a more accurate one-year gap position of the Company, certain deposit
classifications are based on the interest-rate  sensitive  attributes and not on
the  contractual  repricing   characteristics  of  these  deposits.   Management
estimates,  based on historical trends of the Bank's deposit accounts,  that 52%
of its money market and NOW accounts are  sensitive to interest rate changes and
that  7% of its  savings  deposits  are  sensitive  to  interest  rate  changes.
Accordingly,   these  interest   sensitive  portions  of  such  liabilities  are
classified in the less than one year categories with the remainder placed in the
over five years  category.  Deposit  products  with  interest  rates  based on a
particular   index  are   classified   according  to  the   specific   repricing
characteristic  of the index.  Deposit  rates other than time deposit  rates are
variable,  and changes in deposit  rates are  typically  subject to local market
conditions  and  management's  discretion  and are not indexed to any particular
rate.

                                       20
<PAGE>
Generally, during a period of rising interest rates, a positive gap would result
in an increase  in net  interest  income  while a negative  gap would  adversely
affect net interest income.  However,  the interest  sensitivity  table does not
provide a comprehensive representation of the impact of interest rate changes on
net interest income. Each category of assets or liabilities will not be affected
equally or  simultaneously  by changes in the general  level of interest  rates.
Even assets and liabilities which  contractually  reprice within the same period
may not,  in fact,  reprice  at the same price or the same time or with the same
frequency. It is also important to consider that the table represents a specific
point  in time.  Variations  can  occur  as the  Company  adjusts  its  interest
sensitivity  position  throughout  the year.  For a discussion  of the potential
impact of interest rate changes upon the market value of the Company's portfolio
equity,  see "Market Risk" in the  Company's  Annual Report on Form 10-K for the
year ended June 30,  1999.  There has been no material  change in the  Company's
market value of portfolio equity since June 30, 1999.

The Company  periodically  identifies certain loans as held for sale at the time
of origination,  primarily consisting of fixed-rate,  single-family  residential
mortgage  loans  which  meet  the   underwriting   characteristics   of  certain
government-sponsored  enterprises  (conforming  loans).  The  Company  regularly
re-evaluates  its policy and  revises it as deemed  necessary.  The  majority of
loans sold to date have consisted of sales to Freddie Mac of whole loans and 95%
participation  interests in  long-term,  fixed-rate,  single-family  residential
mortgage  loans in  furtherance  of the  Company's  goal of better  matching the
maturities and  interest-rate  sensitivity of its assets and  liabilities.  When
selling loans, the Company has generally retained servicing in order to increase
its  non-interest  income.  At December 31, 1999,  the Company  serviced  $16.39
million of mortgage loans for others.  Sales of loans produce  future  servicing
income and provide funds for additional lending and other purposes.

                                       21
<PAGE>
<TABLE>
<CAPTION>
             Interest Rate Sensitivity Analysis at December 31, 1999

                             (Dollars in thousands)

                                                                             More Than            More Than          More Than
                                                                          Three Months           Six Months           One Year
                                                       Three Months            Through              Through            Through
                                                            or Less         Six Months             One Year        Three Years
                                                   ----------------------------------------------------------------------------
<S>                                                       <C>               <C>                   <C>                <C>
INTEREST-EARNING ASSETS:
   Loans (1)

        Real estate (2)                                      $8,995               $946               $1,602             $3,827
        Commercial                                           20,185             15,888               34,023             80,396
        Consumer                                              8,183              2,027                3,976             14,566
   Securities and interest-bearing deposits                  37,478                675                3,814             15,803
                                                   ----------------------------------------------------------------------------

   Total interest-earning assets                            $74,841            $19,536              $43,415           $114,592
                                                   ----------------------------------------------------------------------------

INTEREST-BEARING LIABILITIES:

   Savings accounts                                            $500               $501                 $999                 --
   NOW accounts                                                 450                450                  900                 --
   Money market accounts                                     41,108                 --                   --                 --
   Certificate accounts                                      62,728             25,894               31,670             69,355
   Borrowings                                                65,018              2,599                3,460              6,880
                                                   ----------------------------------------------------------------------------
   Total interest-bearing liabilities                      $169,804            $29,444              $37,029            $76,235
                                                   ----------------------------------------------------------------------------

Cumulative excess of interest-earning assets
   to interest-bearing liabilities                        ($94,963)         ($104,871)            ($98,485)          ($60,128)
                                                          =========         ==========            =========          =========
Cumulative ratio of interest rate-sensitive
   assets to interest rate-sensitive liabilities              44.1%              47.4%                58.3%              80.8%
                                                              =====              =====                =====              =====
Cumulative difference as a percentage of
   total assets                                             (19.7%)            (21.8%)              (20.5%)              12.5%
                                                            =======            =======              =======              =====
<PAGE>
<CAPTION>
                                                      More Than
                                                    Three Years
                                                        Through         More Than
                                                     Five Years        Five Years             Total
                                                   -------------------------------------------------
<S>                                                    <C>               <C>               <C>
INTEREST-EARNING ASSETS:
   Loans (1)

        Real estate (2)                                  $1,218              $432           $17,020
        Commercial                                       48,440            41,951           240,883
        Consumer                                         10,233            19,788            58,773
   Securities and interest-bearing deposits              22,099            62,251           142,120
                                                   -------------------------------------------------

   Total interest-earning assets                        $81,990          $124,422          $458,796
                                                   -------------------------------------------------

INTEREST-BEARING LIABILITIES:

   Savings accounts                                          --           $24,548           $26,548
   NOW accounts                                              --            37,253            39,053
   Money market accounts                                     --                --            41,108
   Certificate accounts                                   8,625             2,961           201,233
   Borrowings                                            21,055             2,234           101,246
                                                   -------------------------------------------------
   Total interest-bearing liabilities                   $29,680           $66,996          $409,188
                                                   -------------------------------------------------

Cumulative excess of interest-earning assets
   to interest-bearing liabilities                     ($7,818)           $49,608           $49,608
                                                       ========           =======           =======
Cumulative ratio of interest rate-sensitive
   assets to interest rate-sensitive liabilities          97.7%            112.1%            112.1%
                                                          =====            ======            ======
Cumulative difference as a percentage of
   total assets                                            1.6%             10.3%             10.3%
                                                           ====             =====             =====
</TABLE>

(1)  Net of  undisbursed  loan proceeds  related to commercial  and  residential
     construction loans.

(2)  Includes commercial mortgage loans.

            Certain   shortcomings  are  inherent  in  the  method  of  analysis
presented  in  the  table  above.  For  example,  although  certain  assets  and
liabilities may have similar maturities or periods to repricing,  they may react
in different  degrees to changes in market  interest  rates.  Also, the interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes in market  interest  rates,  while interest rates on other types may lag
behind  changes  in  market  rates.   Additionally,   certain  assets,  such  as
adjustable-rate  loans,  have features which restrict  changes in interest rates
both on a short-term basis and over the life of the asset. Further, in the event
of changes in interest  rates,  prepayment  and early  withdrawal  levels  would
likely  deviate  significantly  from  those  assumed in  calculating  the table.
Finally,  the ability of many borrowers to service their  adjustable-rate  loans
may decrease in the event of an interest rate increase.

                                       22
<PAGE>
Part II.          Other Information

                  Item 1.  Legal Proceedings

                                    None

                  Item 2.  Changes in Securities and Use of Proceeds

                                    None

                  Item 3.  Defaults Upon Senior Securities

                                    Not Applicable.

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

                                    None

                  Item 5.  Other Information

                                    None

                  Item 6.  Exhibits and Reports on Form 8-K

                                    None

                                    Exhibit 27 Financial Data Schedule




                                       23
<PAGE>
SIGNATURES

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

                           Chester Valley Bancorp Inc.

Date          2-11-00                      /s/Ellen Ann Roberts
    --------------------------------       ------------------------------------
                                           Ellen Ann Roberts
                                           Chairman and Chief Executive Officer


Date         2-11-00                       /s/Anthony J. Biondi
    --------------------------------       ------------------------------------
                                           Anthony J. Biondi
                                           President and Chief Operating Officer



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