<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION 
                                 WASHINGTON DC  20549 
                                       FORM 10-QSB 
/X/   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934
      FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 

                                     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)              1,633,885 
        (TITLE OF EACH CLASS)            (NUMBER OF SHARES OUTSTANDING 
                                           AS OF NOVEMBER 1, 1996)            


<PAGE>

                  CHESTER VALLEY BANCORP INC. AND SUBSIDIARY

                                      INDEX  

                                                                    PAGE
                                                                   NUMBER



PART 1.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
      September 30, 1996, and June 30, 1996                            3

    CONSOLIDATED STATEMENTS OF OPERATIONS
      Three Months Ended September 30, 1996 and 1995                   4

    CONSOLIDATED STATEMENTS OF CASH FLOWS
      Three Months Ended September 30, 1996 and 1995                   5

    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS            6-13


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS                            14-22


PART 2.  OTHER INFORMATION                                            23

ITEM 1.  LEGAL PROCEEDINGS                                            23

ITEM 2.  CHANGES IN SECURITIES                                        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>

                      CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                (Dollars in Thousands)

<TABLE>

<CAPTION>


                                                               SEPTEMBER 30,             JUNE 30,
                                                                   1996                      1996
                                                               -------------             --------

<S>                                                            <C>                       <C>
ASSETS:


Cash in banks                                                    $  1,704                $  1,528
Interest-bearing deposits                                           6,867                   8,784
Investment securities available for sale                            5,169                   6,159
Investment securities (market value - September 30, 
$21,612; June 30, $22,491)                                         21,836                  22,864
Mortgage-backed securities (market value - September 30,
$1,704; June 30, $1,755)                                            1,667                   1,729
Accrued interest receivable                                         1,648                   1,616
Loans held for sale                                                   162                      --
Loans receivable, less allowance for possible loan losses 
of $2,752 and $2,667                                              238,582                 223,963
Prepaid and deferred income taxes                                   1,054                     720
Real estate owned                                                     121                     121
Property and equipment                                              4,368                   4,323
Other assets                                                        1,208                   1,125
                                                                 --------                --------
   TOTAL ASSETS                                                  $284,386                $272,932
                                                                 ========                ========

LIABILITIES AND STOCKHOLDERS' EQUITY:

Deposit accounts                                                 $232,379                $228,206
Securities sold under agreements to repurchase                      8,503                      --
Advance payments by borrowers for taxes and insurance               1,188                   3,015
Employee Stock Ownership Plan (ESOP) debt                             467                     511
Federal Home Loan Bank advances                                    13,537                  13,972
Accrued interest payable                                              727                     653
Accrued and deferred income taxes                                      87                     322
Other liabilities                                                   2,376                     689
                                                                 --------                --------

   TOTAL LIABILITIES                                              259,264                 247,368
                                                                 --------                --------

STOCKHOLDERS' EQUITY:

Preferred stock - $1.00 par value; 5,000,000 shares                    --                      --
authorized; none issued
Common stock - $1.00 par value; 12,500,000 shares 
authorized; 1,657,895 and 1,580,164 shares issued at 
September 30 and June 30, respectively                              1,658                   1,580
Additional paid-in capital                                         13,256                  11,675
Common stock acquired by ESOP                                        (467)                   (511)
Retained earnings - partially restricted                           11,211                  13,110 
Net unrealized loss on securities available for sale, 
net of taxes                                                         (129)                    (97)
                                                                 --------                -------- 

   Subtotal                                                        25,529                  25,757


Treasury stock, at cost (22,010 shares and 10,464 shares
at September 30 and June 30, respectively)                           (407)                   (193)
                                                                 --------                -------- 

   TOTAL STOCKHOLDERS' EQUITY                                      25,122                  25,564
                                                                 --------                --------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $284,386                $272,932
                                                                 ========                ========

</TABLE>

          SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                          3


<PAGE>

                    CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (Dollars in Thousands, Except for Per Share Amounts)


<TABLE>

<CAPTION>

                                                                         THREE MONTHS ENDED
                                                                            SEPTEMBER 30,
                                                                   ----------------------------
                                                                       1996              1995
                                                                   ----------        ----------
<S>                                                                <C>               <C>
INTEREST INCOME:

Loans                                                              $    4,855        $    4,563 
Mortgage-backed securities                                                 32                38
Investment securities and interest-bearing deposits                       492               442
                                                                   ----------        ----------
   TOTAL INTEREST INCOME                                                5,379             5,043
                                                                   ----------        ----------

INTEREST EXPENSE:

Deposits                                                                2,464             2,459
Securities sold under agreements to repurchase                             27                --
Short-term borrowings                                                      72                60
Long-term borrowings                                                      182               182
                                                                   ----------        ----------
   TOTAL INTEREST EXPENSE                                               2,745             2,701
                                                                   ----------        ----------

NET INTEREST INCOME                                                     2,634             2,342

Provision for possible loan losses                                         96                92
                                                                   ----------        ----------

   NET INTEREST INCOME AFTER PROVISION FOR 
     POSSIBLE LOAN LOSSES                                               2,538             2,250
                                                                   ----------        ----------

OTHER INCOME:

Service charges and fees                                                  272               256
Gain on sale of loans                                                       3                 7
Gain on sale of securities available for sale                              48                52
Other                                                                      46                18
                                                                   ----------        ----------

   TOTAL OTHER INCOME                                                     369               333
                                                                   ----------        ----------

OPERATING EXPENSES:

Salaries and employee benefits                                            917               815
Occupancy and equipment                                                   359               324
Data processing                                                           150               124
SAIF special assessment                                                 1,387                --
Deposit insurance premiums                                                130               121
Other                                                                     392               339
                                                                   ----------        ----------

   TOTAL OPERATING EXPENSES                                             3,335             1,723
                                                                   ----------        ----------

Income (loss) before income taxes                                        (428)              860
Income tax expense (benefit)                                             (227)              264
                                                                   ----------        ----------

   NET INCOME (LOSS)                                               $     (201)       $      596
                                                                   ==========        ==========

EARNINGS PER SHARE (1):
  Primary                                                          $    (0.12)       $     0.36
                                                                   ==========        ==========
  Fully Diluted                                                    $    (0.12)       $     0.36
                                                                   ==========        ==========

DIVIDENDS PER SHARE PAID DURING PERIOD (1)                         $     0.11        $     0.09
                                                                   ==========        ==========

WEIGHTED AVERAGE SHARES OUTSTANDING (1):
Primary                                                             1,650,563         1,671,235
                                                                   ==========        ==========

Fully Diluted                                                       1,651,629         1,671,576
                                                                   ==========        ==========

</TABLE>


(1)  EARNINGS PER SHARE, DIVIDENDS PER SHARE AND WEIGHTED AVERAGE SHARES 
     OUTSTANDING HAVE BEEN RESTATED TO REFLECT THE EFFECT OF THE 5% STOCK 
     DIVIDEND PAID IN SEPTEMBER 1996.

   SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                       4


<PAGE>

                    CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)


<TABLE>

<CAPTION>

                                                                                         THREE MONTHS ENDED SEPTEMBER 30,
                                                                                         --------------------------------
                                                                                           1996                   1995
                                                                                         ---------               --------

<S>                                                                                      <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                        $   (201)              $    596
Add (deduct) items not affecting cash flows from operating activities:
  Depreciation                                                                                140                    134
  Provision for possible losses on loans                                                       96                     92
  Gain on sale of loans                                                                        (3)                    (7)
  Gain on sale of securities available for sale                                               (48)                   (52)
  Amortization of deferred loan fees, discounts and premiums                                 (100)                  (160)
  Increase in accrued interest receivable                                                     (32)                   (60)
  Increase in other assets                                                                    (83)                    (6)
  Decrease (increase) in prepaid and deferred income taxes                                   (334)                     7
  Increase (decrease) in accrued and deferred income taxes                                   (235)                    16
  Increase in other liabilities                                                             1,687                    210
  Increase in accrued interest payable                                                         74                     18
                                                                                         --------               --------
NET CASH FLOWS FROM OPERATING ACTIVITIES                                                      961                    788
                                                                                         --------               --------

CASH FLOWS FROM (USED IN) INVESTMENT ACTIVITIES:
  Capital expenditures                                                                       (185)                   (68)
  Net (increase) decrease in loans and loans held for sale                                (14,749)                 3,216 
  Principal receipts on mortgage-backed securities                                             62                     80
  Proceeds from sale of loans                                                                  --                    832
  Proceeds from maturities and calls of investment securities                               1,043                  1,790
  Purchase of investment securities                                                           (19)                  (765)
  Purchase of securities available for sale                                               (12,147)               (24,082)
  Proceeds from sale of securities available for sale                                      13,132                 24,133
  Proceeds from real estate owned                                                              --                      4
                                                                                         --------               --------

NET CASH FLOWS FROM (USED IN) INVESTMENT ACTIVITIES                                       (12,863)                 5,140
                                                                                         --------               --------

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
  Net increase in savings deposits before interest credited                                 2,114                  2,036
  Interest credited to savings accounts                                                     2,059                  2,110
  Proceeds from securities sold under agreements to repurchase                              8,503                     --
  Repayments of FHLB advances                                                                (435)                   (17)
  Decrease in advance payments by borrowers for taxes and insurance                        (1,827)                (1,884)
  Cash dividends on common stock                                                             (172)                  (134)
  Repayments of principal on ESOP debt                                                        (44)                   (45)
  Sale of common stock under the dividend reinvestment plan                                    --                     45
  Payment for fractional shares                                                               (10)                   (11)
  Stock options exercised                                                                     216                     --
  Reduction of common stock acquired by ESOP                                                   44                     45
  Stock repurchased as treasury stock                                                        (287)                    --
                                                                                         --------               --------

NET CASH FLOWS FROM FINANCING ACTIVITIES                                                   10,161                  2,145
                                                                                         --------               --------

Increase (decrease) in cash and cash equivalents                                           (1,741)                 8,073

CASH AND CASH EQUIVALENTS:

Beginning of period                                                                        10,312                  7,444
                                                                                         --------               --------
End of period                                                                            $  8,571               $ 15,517
                                                                                         ========               ========

SUPPLEMENTAL DISCLOSURES:

  Cash payments during the year for:
     Taxes                                                                               $    275               $    240
     Interest                                                                            $  2,669               $  2,686

NON-CASH ITEMS:

  Acquisition of real estate in settlement of loans                                      $     --               $    207
  Stock dividend issued                                                                  $  1,516               $  1,423
  Net unrealized loss on investment securities available for sale                        $     49               $     --
  Tax effect on unrealized loss on investment securities available for sale              $     17               $     --


</TABLE>

  SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                  5

<PAGE>


                          CHESTER VALLEY BANCORP INC.
                                 AND SUBSIDIARY
            NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

         The accompanying consolidated financial statements have been 
         prepared in accordance with instructions to Form 10-QSB.  
         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-month period ended September
         30, 1996, are not necessarily indicative of the results to be 
         expected for the fiscal year ending June 30, 1997.  The consolidated 
         financial statements presented herein should be read in conjunction 
         with the audited consolidated financial statements and the notes 
         thereto included in Chester Valley Bancorp Inc.'s Annual Report to 
         Stockholders for the fiscal year ended June 30, 1996.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the 
         accounts of Chester Valley Bancorp Inc. (the "Company" or "Chester 
         Valley"), its wholly-owned subsidiary, First Financial Savings Bank
         PaSA (the "Bank" or "First Financial"), a Pennsylvania-chartered 
         stock savings association, and the Bank's wholly-owned subsidiary, 
         D & S Service Corp., which owns D & F Projects 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.

         CASH AND CASH EQUIVALENTS

         For the purpose of the consolidated statements of cash flows, cash 
         and cash equivalents include cash and interest-bearing deposits with 
         an original maturity of generally three months or less.

                                   6

<PAGE>

         INVESTMENTS AND MORTGAGE-BACKED SECURITIES

         The Company divides its securities portfolio into three segments: 
         (a) held to maturity; (b) available for sale; and (c) trading. 
         Securities in the held to maturity category continue to be accounted 
         for at amortized cost.  Trading securities, if any, would continue 
         to be accounted for at quoted market prices with changes in market 
         values being recorded as gain or loss in the income statement.  All 
         other securities are included in the available for sale category and 
         are accounted for at fair value with unrealized gains or losses, net 
         of taxes, being reflected as adjustments to equity.

         Investments and mortgage-backed securities held for investment are 
         carried at cost, adjusted for amortization of premiums and accretion 
         of discounts using a method which approximates a level yield, based 
         on the Company's intent and ability to hold the securities until 
         maturity.  At the time of purchase, the Company makes a determination
         on whether or not it will hold the investments and mortgage-backed 
         securities to maturity, based upon an evaluation of the probability 
         of the occurrence of future events.  Investments and mortgage-backed 
         securities which the Company believes may be involved in interest 
         rate risk, liquidity, or other asset/liability management decisions 
         which might reasonably result in such securities not being held until
         maturity, are classified as available for sale.  If investments and 
         mortgage-backed securities available for sale are sold, any gain or 
         loss is determined by specific identification and reflected in the 
         operating results for the period.

         ALLOWANCE FOR POSSIBLE LOAN LOSSES

         The allowance for possible loan losses is maintained at a level that 
         management considers adequate to provide for potential losses based 
         upon an evaluation of known and inherent risks in the loan portfolio.
         Management's evaluation is based upon an analysis of the portfolio, 
         past loss experience, current economic conditions and other relevant 
         factors.  While management uses the best information available to 
         make such evaluations, such evaluations are highly subjective, and 
         future adjustments to the allowance may be necessary if conditions 
         differ substantially from the assumptions used in making the 
         evaluations.  In addition, various regulatory agencies, as an integral
         part of their examination process, periodically review the Company's 
         allowance for losses on loans.  Such agencies may require the 
         Company to recognize additions to the allowance based on their 
         judgments about information available to them at the time of their 
         examination.  The allowance is increased by the provision for possible 
         loan losses which is charged to operations.  Loan losses are charged 
         directly against the allowance and recoveries on previously 
         charged-off loans are added to the allowance.

                                    7
<PAGE>

         On July 1, 1995, the Company prospectively implemented Statement of 
         Financial Accounting Standards No. 114 ("SFAS No. 114"), "Accounting 
         by Creditors for Impairment of Loans," and SFAS No. 118, "Accounting 
         by Creditors for Impairment of a Loan-Income Recognition and 
         Disclosures," which amends SFAS No. 114 and requires certain related 
         disclosures.  SFAS No. 114, as amended, requires certain impaired 
         loans to be measured based on the present value of expected future 
         cash flows discounted at the loan's effective interest rate, the 
         loan's market price or the fair value of the collateral if the loan 
         is collateral dependent.  The implementation of these statements had 
         no effect on the Company's results of operations, financial 
         condition, or stockholders' equity.
         
         For purposes of applying the measurement criteria for impaired 
         loans under SFAS No. 114, as amended, the Company excludes large 
         groups of smaller-balance homogeneous loans, primarily consisting 
         of residential real estate loans and consumer loans as well as 
         commercial loans with balances of less than $100,000.  For 
         applicable loans, the Company evaluates the need for impairment 
         recognition when a loan becomes non-accrual or earlier if, based on 
         management's assessment of the relevant facts and circumstances, it 
         is probable that the Bank will be unable to collect all proceeds 
         due according to the contractual terms of the loan agreement.  At 
         and during the three-month period ended September 30, 1996, the 
         recorded investment in impaired loans was not material.  The 
         Company's policy for the recognition of interest income on impaired 
         loans is the same as for non-accrual loans discussed below. 
         Impaired loans are charged off when the Company determines that 
         foreclosure is probable and the fair value of the collateral is 
         less than the recorded investment of the impaired loan.

         LOANS, LOAN ORIGINATION FEES AND UNCOLLECTED INTEREST

         Loans (other than loans held for sale) are recorded at cost net of 
         unearned discounts, deferred fees and allowances.  Discounts and 
         premiums on purchased loans are amortized using the interest method 
         over the remaining contractual life of the portfolio, adjusted for 
         actual prepayments.  Loan origination fees and certain direct 
         origination costs are deferred and amortized over the life of the 
         related loans as an adjustment of the yield on the loans.

         Uncollected interest receivable on loans is accrued to income as 
         earned.  Non-accrual loans are loans on which the accrual of interest
         has ceased because the collection of principal or interest payments 
         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

                                    8

<PAGE>

         accordance with the current loan term.  Interest income on such 
         loans is not accrued  until the financial condition and payment 
         record of the borrower once again demonstrate the ability to service
         the debt.

         LOANS HELD FOR SALE

         The Company periodically identifies certain loans as held for sale 
         at the time of origination.  These loans consist primarily 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.  Loans held for sale 
         are carried at the lower of aggregate cost or fair value, with the 
         resulting gain or loss included in other income for the period.

         REAL ESTATE OWNED ("REO")

         Real estate acquired through foreclosure or by deed in lieu of 
         foreclosure is classified as REO.  REO is carried at the lower of 
         cost (lesser of carrying value of the loan or fair value of the 
         property at date of acquisition) or fair value less selling expenses.
         Costs relating to the development or improvement of the property are 
         capitalized; holding costs are charged to expense.

         PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost, less accumulated 
         depreciation.  Depreciation is computed using the straight-line 
         method over the estimated useful lives of the assets.  When assets 
         are retired or otherwise disposed of, the cost and related 
         accumulated depreciation are removed from the accounts.  The cost 
         of maintenance and repairs is charged to expense as incurred and 
         renewals and betterments are capitalized.

         DEFERRED INCOME TAXES

         The Company accounts for income taxes under the asset and liability 
         method.  Deferred tax assets and liabilities are recognized for the 
         future tax consequences attributable to differences between the 
         financial statement carrying amounts of existing assets and 
         liabilities and their respective tax bases and operating loss and 
         tax credit carryforwards.  Deferred tax assets and liabilities are 
         measured using enacted tax rates expected to apply to taxable income 
         in the years in which those temporary differences are expected to be 
         recovered or settled.  The effect on deferred tax assets and 
         liabilities of a change in tax rates is recognized in income in the 
         period that includes the enactment date. 

                                   9

<PAGE>

         EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARE

         Earnings per share have been calculated based on the weighted 
         average number of common and common equivalent shares outstanding 
         for the respective periods. Stock options are considered common 
         stock equivalents and are included in the computation of the number 
         of outstanding shares using the treasury stock method.  Earnings per 
         share and weighted average shares outstanding have been adjusted to 
         reflect the effect of the 5% stock dividend paid in September 1996.

                                    10 

<PAGE>



NOTE 3 - LOANS RECEIVABLE

         Loans receivable are summarized as follows:

                                             AT SEPTEMBER 30,     At June 30,
                                                  1996               1996
                                             ----------------     ----------
                                                (Dollars in Thousands)

         First mortgage loans:
           Residential                           $155,960          $148,530
           Construction-residential                 9,824             9,494
           Land acquisition and 
            development                             4,932             5,121
           Commercial                              25,238            22,552
           Construction-commercial                  6,472             2,413
         Commercial business                        6,451             5,701
         Consumer                                  43,475            41,486
                                                 --------          --------
         TOTAL LOANS                              252,352           235,298
                                                 --------          --------
         Less:
           Undisbursed loan proceeds:
             Construction-residential              (5,804)           (6,211)
             Construction-commercial               (3,609)             (923)
           Deferred loan fees - net                (1,605)           (1,533)
           Allowance for loan losses               (2,752)           (2,667)
                                                 --------          --------

         NET LOANS                               $238,582          $223,963
                                                 ========          ========


NOTE 4 - EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP") DEBT

         The ESOP purchased 62,500 shares of common stock in connection with 
         the Bank's conversion in 1987 at $7.20 per share, as adjusted for 
         the December 1993 five-for-four stock split effected in the form of 
         a dividend.  In 1989 the ESOP purchased an additional 81,235 shares 
         of common stock at a weighted average price of $10.86 per share, 
         also as adjusted for the December 1993 five-for-four stock split. 
         Funds necessary to purchase such shares were borrowed from an 
         independent third-party lender. Neither the Company nor the Bank has 
         guaranteed the debt, but the Company and the Bank have in the past, 
         and anticipate in the future, contributing sufficient funds to the 
         ESOP to enable it to meet its debt service requirements.  The 
         outstanding loan balance has been reflected as a liability and a 
         reduction of 

                                     11

<PAGE>


         stockholders' equity in the Company's consolidated statements of 
         financial condition.

         Contributions by the Bank to the ESOP during the three-month periods 
         ended September 30, 1996 and 1995, amounted to $52,583 and $47,909, 
         respectively, and are included in salaries and employee benefits 
         expense.  Interest expense paid by the ESOP during the three-month 
         periods ended September 30, 1996 and 1995, amounted to $9,871 and 
         $13,489, respectively, for the ESOP loan.

         The ESOP loans were refinanced in May 1996.  The interest rate on 
         the refinanced loan is fixed at 7.50% until maturity with interest 
         expense being computed on the unpaid principal balance.  As principal
         payments are made by the ESOP, the corresponding liability is reduced
         and stockholders' equity is increased.  Principal payments and cash 
         dividends paid on the common stock held by the ESOP during the 
         three-month periods ended September 30, 1996 and 1995, amounted to 
         $43,750 and $44,768, respectively, and remaining principal payments 
         are scheduled as follows:

                          FISCAL YEAR                AMOUNT
                          -----------               --------
                             1997                   $133,500
                             1998                    186,872
                             1999                    146,618

                             TOTAL                  $466,990

         At September 30, 1996, the ESOP had pledged 88,597 shares of 
         unallocated common stock held by it as collateral for the loan.

NOTE 5 - COMMITMENTS

         Commitments to potential mortgagors of the Bank amounted to $6.66 
         million as of September 30, 1996, of which $3.41 million was for 
         variable-rate loans.  The balance of the commitments represents $3.25
         million of fixed-rate loans bearing interest rates of 7.25% to 9.75%.
         At September 30, 1996, the Company had $9.41 million of undisbursed 
         construction loan funds as well as $13.13 million of undisbursed 
         remaining credit line balances.  In addition, the Company has issued 
         $101,000 of commercial letters of credit fully secured by deposit 
         accounts or real estate.

                                    12
<PAGE>


NOTE 6 - REGULATORY CAPITAL

         The Bank is required by regulations of the Office of Thrift 
         Supervision ("OTS") to maintain minimum levels of capital as 
         measured by three ratios.  Savings institutions are currently 
         required to maintain a minimum regulatory tangible capital equal 
         to 1.5% of total assets, minimum core capital of 3% of total assets,
         and risk-based capital equal to 8% of risk-weighted assets.  At 
         September 30 and June 30, 1996, the Bank exceeded all regulatory 
         capital requirements.  The following sets forth the reconciliation 
         of the Bank's compliance with each of the regulatory capital 
         requirements (in thousands):

<TABLE>

<CAPTION>

                                                    SEPTEMBER 30, 1996                          JUNE 30, 1996 
                                             ------------------------------------     ----------------------------------
                                             Tangible       Core       Risk-based    Tangible      Core      Risk-based
                                             Capital      Capital      Capital       Capital      Capital      Capital
                                             --------     -------      ----------    -------      -------    ----------

<S>                                          <C>          <C>          <C>           <C>          <C>         <C>
Total Regulatory Capital                     $25,200      $25,200      $27,348       $25,301      $25,301     $27,348
Minimum Required Regulatory Capital            4,268        8,535       13,993         4,095        8,191      13,243
                                             -------      -------      -------       -------      -------     -------
Excess Regulatory Capital                    $20,932      $16,665      $13,355       $21,206      $17,110     $14,105
                                             =======      =======      =======       =======      =======     =======
Regulatory Capital as a 
  Percentage of Assets                         8.86%        8.86%       15.64%         9.27%        9.27%      16.52%
Minimum Capital Required as a
  Percentage of Assets                         1.50         3.00         8.00          1.50         3.00        8.00
                                             -------      -------      -------       -------      -------     -------
Excess Regulatory Capital as a
  Percentage of Assets                         7.36%        5.86%        7.64%         7.77%        6.27%       8.52%
                                             =======      =======      =======       =======      =======     =======

</TABLE>

The Bank is not under any agreement with the regulatory authorities, nor is 
it aware of any current recommendations by the regulatory authorities which, 
if they were to be implemented, would have a material effect on the 
liquidity, capital resources or operations of the Company.

                                   13

<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
         CONDITION AND RESULTS OF OPERATION

                        FINANCIAL CONDITION

The Company's total assets increased to $284.39 million at September 30, 
1996, from $272.93 million at June 30, 1996, largely as the result of the 
increase in net loans and loans held for sale collectively to $238.74 million 
at September 30, 1996, from $223.96 million at June 30, 1996.  The increase 
in total assets was funded primarily by an increase in deposit accounts and 
securities sold under agreements to repurchase to $240.88 million at 
September 30, 1996, from $228.21 million at June 30, 1996.

Stockholders' equity decreased to $25.12 million at September 30, 1996, from 
$25.56 million at June 30, 1996, primarily as a result of a net loss of 
$201,000 incurred due to the imposition of a special assessment (discussed 
below), as well as due to the payment of cash dividends of $172,000, the 
recognition of net unrealized losses on securities available for sale, net of 
taxes, of $32,000, and the repurchase of $287,000 of common stock, as well as 
the payment of $10,000 for fractional shares in connection with the 5% stock 
dividend paid during the three-month period ended September 30, 1996. The 
decrease in stockholders' equity was offset, in part, by proceeds of $216,000 
from stock options exercised during the period and the reduction in the 
principal balance of the ESOP debt by $44,000.

                         RESULTS OF OPERATIONS 

Net interest income, on a fully tax equivalent basis, increased 12.0% to 
$2.70 million for the three-month period ended September 30, 1996, compared 
to $2.41 million for the same period in fiscal 1996.  Total interest income, 
on a fully tax equivalent basis, increased to $5.44 million for the 
three-month period ended September 30, 1996, compared to $5.11 million for 
the same period in fiscal 1996, primarily as a result of an increase in the 
average balance of interest-earning assets to $269.22 million or 6.5% for the 
three-month period ended September 30, 1996, compared to $252.71 million for 
the same period in 1995.  Loan originations in excess of $26 million during 
the three months ended September 30, 1996, contributed to the increase in the 
average balance of interest-earning assets.  The Bank has been focusing its 
efforts on commercial real estate and commercial construction loans which 
accounted for 27% of the loan originations for the three months ended 
September 30, 1996.  The average yield on interest-earning assets remained 
relatively unchanged at 8.08% compared to 8.09% for the three months ended 
September 30, 1996 and 1995, respectively.  Total interest expense increased 
to $2.75 million from $2.70 million during the three-month periods ended 
September 30, 1996 and 1995, respectively, largely as the result of the 
increase in the average balance on interest-bearing liabilities to $231.43 
million or 4.6% for the three-month period ended September 30, 1996, compared 
to $221.26 million for the same period in 1995.  Partially offsetting the 
effect of the increase in the average balance on 

                                 14

<PAGE>

interest-bearing liabilities was the decrease in the average rate paid on 
those liabilities to 4.74% from 4.88% for the three months ended September 
30, 1996 and 1995, respectively, in part due to the Bank lowering the rates 
paid on its interest-bearing checking accounts.

The tax equivalent interest rate spread increased to 3.34% from 3.21%, and 
the average net yield on interest-earning assets increased to 4.01% from 
3.81% for the three-month periods ended September 30, 1996 and 1995, 
respectively, primarily due to the reasons previously set forth.

PROVISION FOR POSSIBLE LOAN LOSSES

The Company provided $96,000 and $92,000 during the three-month periods ended 
September 30, 1996 and 1995, respectively, for possible loan losses.  These 
provisions have been added to the Company's allowance for possible loan 
losses due to the current economic conditions and management's assessment of 
the inherent risk of loss existing in the loan portfolio.  At September 30, 
1996, the allowance for possible loan losses totaled $2.75 million or 1.14% 
of net loans, compared to $2.67 million or 1.18% of net loans and $2.47 
million or 1.12% of net loans at June 30, 1996, and September 30, 1995, 
respectively. As a percentage of non-performing loans, the allowance for 
possible loan losses was 134.8% at September 30, 1996, compared to 120.3% at 
June 30, 1996, and further compared to 93.7% at September 30, 1995.  

Provisions for possible loan losses which are added to the allowance for 
possible loan losses are based upon, among other things, delinquency trends, 
the volume of non-performing loans, prior loss experience of the portfolio, 
current economic conditions, and other relevant factors.  Although management 
believes it has used the best information available to it in making such 
determinations and that the present allowance for possible loan losses is 
adequate, future adjustments to the allowance may be necessary, and net 
income may be adversely affected if circumstances differ substantially from 
the assumptions used in determining the level of the allowance.  In addition, 
various regulatory agencies, as an integral part of their examination 
process, periodically review the Company's allowance for possible losses on 
loans.  Such agencies may require the Company to recognize additions to the 
allowance based on their judgments about information available to them at the 
time of their examination.

OTHER INCOME

Total other income increased 10.8% to $369,000 during the three-month period 
ended September 30, 1996, as compared to $333,000 during the same period in 
1995.  Service charges and fees increased to $272,000 from $256,000 at 
September 30, 1996 and 1995, respectively, as the result of an increase in 
fees charged on safe deposit box rentals, an increase in the number of safe 
deposit boxes rented and an increase in commissions earned on the sale of 
medical and life insurance to the Bank's loan customers.

                                   15

<PAGE>

OPERATING EXPENSES

Total operating expenses for the three-month period ended September 30, 1996, 
increased to $3.34 million from $1.72 million for the same period in 1995.  
The increase was mainly due to the one-time Savings Institutions Insurance 
Fund ("SAIF") special assessment of $1.39 million.  The one-time assessment, 
which requires a payment of 65.7 basis points on SAIF-insured deposits that 
were held at March 31, 1995, was part of the Economic Growth and Regulatory 
Paperwork Reduction Act of 1996 ("Deposit Insurance Legislation") passed by 
Congress and signed by the President on September 30, 1996.  The assessment 
will bring the SAIF's reserve ratios to a comparable level of the Bank 
Insurance Fund portion of the Federal Deposit Insurance Corporation ("FDIC"), 
at 1.25 per cent of total insured deposits.  In addition, the board of the 
FDIC will be lowering the SAIF premium charged to certain well-capitalized 
institutions from 23 cents per $100 of deposits to an estimated six and 
one-half cents per $100 of deposits beginning in January 1997, which will 
result in an annual estimated pretax savings of $383,000 per year for the 
Company.  Before posting the one-time SAIF assessment, operating expenses 
increased to $1.95 million from $1.72 million for the three-month periods 
ended September 30, 1996 and 1995, respectively.  These increases were due to 
(i) normal salary increases combined with increases in benefits costs, as 
well as the cost of additional staff for the Bank's Brandywine Square branch 
which opened during the first quarter of fiscal 1997, (ii) and increase in 
office rental expense, furniture, fixture and equipment expense, and 
advertising expense in connection with the opening of the Bank's newest 
branch, Brandywine Square, in the first quarter of fiscal 1997, and (iii) an 
increase in data processing expenses related to an increased number of 
accounts and usage.

INCOME TAX EXPENSE (BENEFIT)

The income tax benefit for the three-month period ended September 30, 1996, 
was $227,000 due to the loss of $428,000 before income taxes as compared to 
income tax expense of $264,000 for the same period in 1995.

NET INCOME (LOSS)

The Company earned net income of $631,000 or $.38 per share, for the three 
months ended September 30, 1996, before posting the one-time SAIF special 
assessment, compared to $596,000 or $.36 per share for the same period in 
1995.  The pre-tax effect of the one-time special assessment was $1.39 
million resulting in an after-tax charge to earnings of approximately 
$832,000 or 50 cents per share, which charge was accrued in accordance with 
generally accepted accounting practices as of September 30, 1996.  After 
recognition of this assessment the Company had a loss of $201,000 or $.12 per 
share, for the three months ended September 30, 1996.

                                   16

<PAGE>

                              ASSET QUALITY

Non-performing assets are comprised of non-performing loans and REO and 
totaled $2.16 million at September 30, 1996.  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 term.  
Interest income is not accrued until the financial condition and payment 
record of the borrower once again demonstrate the ability to service the 
debt.  At September 30, 1996, 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 .76% and .72%, 
respectively, at September 30, 1996, compared to .86% and .81%, respectively, 
at June 30, 1996, and to 1.13% and .99%, respectively, at September 30, 1995. 
 Non-performing loans of $2.04 million at September 30, 1996, consisted of 
nine residential mortgage loans aggregating $907,000, three construction and 
land development loans aggregating $737,000, and $398,000 in consumer and 
commercial loans.

At September 30, 1996, the Company's classified assets, which consisted of 
assets classified as substandard, doubtful, loss, and REO, totaled $2.46 
million compared to $2.97 million at June 30, 1996, and further compared to 
$3.62 million at September 30, 1995.  Included in the assets classified 
substandard at September 30, 1996 and 1995, and June 30, 1996, were all loans 
90 days past due and loans which are less than 90 days delinquent but 
inadequately protected by the current paying capacity of the borrower or of 
the collateral pledged, as well as a well-defined weakness which may 
jeopardize the liquidation of the debt.

                LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of funds have historically consisted of 
deposits, regular principal payments and prepayments of outstanding loans, 
and borrowings from the Federal Home Loan Bank of Pittsburgh and other 
sources. During the first three months of fiscal 1997, the Company used its 
capital resources primarily to meet its ongoing commitments to fund maturing 
savings certificates and savings withdrawals, fund existing and continuing 
loan commitments, and maintain its liquidity. At September 30, 1996, the 
total of approved mortgage loan commitments amounted to $6.66 million.  In 
addition, at such date the Company had $9.41 million of undisbursed 
construction loan funds as well as $13.13 million of undisbursed remaining 
credit line balances, and $101,000 of commercial letters of credit fully 
secured by deposit accounts or real estate.   In addition, $49.00 million of 
certificates of deposit at the Company are scheduled to mature during the 
nine months remaining in fiscal 1997, the majority of which the Company 
believes, on the basis of prior experience, will be reinvested with the 
Company.

                                   17

<PAGE>

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 
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 August 21, 1996, the Board of Directors declared a 5% stock 
dividend and a quarterly cash dividend of $.11 per share, both of which were 
paid on September 18, 1996, to stockholders of record as of September 4, 
1996.  The Bank, which is the Company's wholly-owned subsidiary, 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 5% of its net withdrawable accounts plus short-term borrowings, of 
which short-term liquid assets must consist of not less than 1%. 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 
September 30, 1996 was 8.13%.

                      ASSET AND LIABILITY MANAGEMENT

The principal objective of the Company's asset and liability management 
function is to maximize the Company's net interest margin while maintaining 
an appropriate level of risk given the Company's business focus, operating 
environment, capital and liquidity requirements and performance objectives.  
Through such management, the Company seeks to reduce the vulnerability of its 
operations to changes in interest rates and to manage the ratio of interest 
rate-sensitive assets to interest rate-sensitive liabilities within specified 
maturities or repricing dates.  The Company's actions in this regard are 
taken under the guidance of the Asset-Liability Management Committee.  
Interest rate risk is derived from timing differences in the repricing of 
assets and liabilities, loan prepayments, deposit withdrawals, and 
differences in lending and funding rates.  One measure of interest rate risk 
is the GAP ratio, which is defined as the difference between the dollar 
volume of interest-earning assets and interest-bearing liabilities maturing 
or repricing within the same specified period of time as a percentage of 
total assets.

The Company's asset and liability management strategy currently is to 
emphasize the origination of adjustable-rate mortgages, short-term consumer 
and business loans, and floating-rate construction loans and commercial real 
estate loans.  This strategy has greatly reduced the Company's vulnerability 
to changes in interest rates.  As of September 30, 1996, adjustable-rate 
mortgages represented 60.3% of the Company's mortgage loan portfolio. At the 
same date, $125.51 million, or 45.1% of the Company's interest-sensitive 
assets were scheduled to reprice within a one-year period, and the Company's 
cumulative one-year interest rate gap was negative 2.9%.  The table on page 
22 summarizes the appropriate contractual maturities or replacement periods 
of the Company's interest-earning assets and interest-bearing liabilities as 
of September 30, 1996.  Adjustable- and floating-rate assets are included in 
the period in which interest rates are next scheduled to adjust, rather than 
in the period for which they are contractually due. Fixed-rate loans 

                                    18 

<PAGE>

are included in the periods in which they are anticipated to be repaid.  The 
analysis on page 22 takes into consideration the timing of the repricing but 
does not take into consideration any restrictions on the magnitude of the 
repricing interest-sensitive assets.

Rates of interest paid on deposits are priced to be sufficiently competitive 
in the Company's primary market area to meet its asset and liability 
management objectives and requirements.  In the past, the Company has 
generally maintained a pricing program for its certificate accounts which 
entails paying higher rates of interest on longer-term certificates to 
encourage customers to invest in certificates of deposit for longer 
maturities.  This strategy has assisted the Company in controlling its cost 
of funds and supported its goal of extending the maturity of its liabilities.

The Company periodically identifies certain loans as held for sale at the 
time of origination.  These loans consist primarily 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 the Federal Home Loan Mortgage Corporation ("FHLMC") of whole loans and 
95% participation interests in long-term, fixed-rate 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 September 30, 1996, the Company serviced $22.44 
million of mortgage loans for others.  Sales of loans produce future 
servicing income and provide funds for additional lending and other purposes. 
 In fiscal 1995 the Company entered into an agreement with a third party to 
originate and sell jumbo fixed-rate mortgage loans with servicing released 
upon sale of the loans.  In the current fiscal year the Company had no jumbo 
fixed-rate loan originations or related sales of such loans.

                   RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995 the Financial Accounting Standards Board ("FASB") issued SFAS 
No. 121, "Accounting for the Impairment of Long-lived Assets and for 
Long-lived Assets to be Disposed of."  This Statement requires that 
long-lived assets and certain identifiable intangibles to be held and used by 
the Company be reviewed for impairment whenever events or changes in 
circumstances indicate that the carrying amount of an asset may not be 
recoverable, and that any related impairment be based on the fair value of 
the asset.  In addition, long-lived assets to be disposed of must be carried 
at the lower of cost or fair value, less estimated disposal costs.  This 
statement was adopted as of July 1, 1996, and the impact was not material to 
the Company's results of operations, financial condition, or stockholders' 
equity.

In May 1995 the FASB issued SFAS No. 122 "Accounting for Mortgage Servicing 
Rights."  This Statement prospectively requires the Company, which services 
mortgage loans for others in return 

                                   19

<PAGE>

for a servicing fee, to recognize these servicing assets, regardless of how 
they were acquired. Additionally, the Company would be required to assess the 
fair value of these assets at each reporting date to determine impairment. 
This statement was adopted as of July 1, 1996, and the impact was not 
material to the Company's results of operations, financial condition, or 
stockholders' equity.

In October 1995 the FASB issued SFAS No. 123, "Accounting for Stock-based 
Compensation."  This Statement encourages the adoption of fair value 
accounting for stock-based compensation issued to employees.  In the event 
that fair value accounting is not adopted, the statement requires pro forma 
disclosure of net income and earnings per share as if fair value accounting 
had been adopted.  The Company does not anticipate adopting the fair value 
accounting provisions of SFAS 123 and will instead provide the required pro 
forma disclosures as permitted, starting with the year ending June 30, 1997.

In June 1996 the FASB issued SFAS No. 125, "Accounting for Transfers and 
Servicing of Financial Assets and Extinguishments of Liabilities."  This 
Statement provides accounting and reporting standards for transfers and 
servicing of financial assets and extinguishments of liabilities based on 
consistent application of a financial-components approach that focuses on 
control.  It distinguishes transfers of financial assets that are sales from 
transfers that are secured borrowings.  Under the financial-components 
approach, after a transfer of financial assets an entity recognizes all 
financial and servicing assets it controls and liabilities it has incurred 
and de-recognizes financial assets it no longer controls and liabilities that 
have been extinguished.  The approach focuses on the assets and liabilities 
that exist after the transfer.  If a transfer does not meet the criteria for 
a sale, the transfer is accounted for as a secured borrowing with pledge of 
collateral.  The Company does not anticipate that the adoption of SFAS 125 
will have a material impact on its financial statements and will adopt SFAS 
No. 125 prospectively, effective January 1, 1997, the required date of 
adoption.

See also Note 2 of the notes to unaudited consolidated financial statements 
for additional discussion of certain accounting pronouncements.

DEPOSIT INSURANCE PREMIUM

The deposits of the Bank are insured by the SAIF of the FDIC.  Both the SAIF 
and the BIF, the federal deposit insurance fund that covers commercial bank 
deposits, are required by law to attain and thereafter maintain a reserve 
ratio of 1.25% of insured deposits.  The BIF had achieved a fully funded 
status in contrast to the SAIF, and the FDIC had recently reduced the average 
deposit insurance premium paid by BIF-insured commercial banks to a level 
substantially below the average premium paid by SAIF-insured institutions.

In late 1995 the FDIC approved a final rule regarding deposit insurance 
premiums which, effective with the semi-annual premium assessment on January 
1, 1996, reduced deposit insurance premiums for BIF member institutions to 
zero (subject to an annual minimum of $2,000) for institutions in the 

                                   20

<PAGE>

lowest risk category.  Deposit insurance premiums for SAIF members were 
maintained at their then existing levels (23 basis points for institutions in 
the lowest risk category).  Accordingly, until the SAIF had attained a 
reserve ratio of 1.25% of insured deposits, SAIF members such as the Bank 
would have been competitively disadvantaged as compared to commercial banks 
due to this premium differential.

The Deposit Insurance Legislation passed by the U.S. House of Representatives 
and the Senate was signed into law by the President on September 30, 1996, to 
recapitalize the SAIF.  The special assessment was fully anticipated by the 
Bank because legislation had been close to enactment on several occasions 
over the past year.  As a result of such legislation, the Bank was required 
to pay a one-time assessment of 65.7 cents for every $100 of deposits, which 
amounted to $1.39 million pre-tax with an $832,000 after-tax effect.

The legislation also mandated that SAIF-insured institutions' (such as the 
Bank's) deposit insurance premiums decline from 23 basis points to 
approximately 6.4 basis points effective January 1, 1997. The mandated 
decline in the premium rate is expected to reduce the Bank's pre-tax annual 
SAIF premiums by approximately $383,000 (based on current deposit levels).  
The reduced future annual premiums will more than offset the negative impact 
on the Company's first-quarter earnings.

                                   21


<PAGE>


             INTEREST RATE SENSITIVITY ANALYSIS AT SEPTEMBER 30, 1996
                                (DOLLARS IN THOUSANDS)
<TABLE>

<CAPTION>

                                                 MORE THAN       MORE THAN     MORE THAN     MORE THAN
                                                THREE MONTHS     SIX MONTHS    ONE YEAR     THREE YEARS
                                 THREE MONTHS     THROUGH         THROUGH      THROUGH       THROUGH     MORE THAN
                                   OR LESS       SIX MONTHS      ONE YEAR    THREE YEARS    FIVE YEARS   FIVE YEARS   TOTAL
                                 ------------   ------------    ----------   -----------   -----------   ----------  -------

<S>                              <C>            <C>             <C>           <C>           <C>          <C>          <C>
INTEREST-EARNING ASSETS:
Loans (1)
  Adjustable- and 
   floating-rate 
   mortgages (2)                  $ 34,475         $15,993        $33,411       $22,936       $ 9,455      $    63    $116,333
  Balloons and fixed-rate 
   mortgages (2)                     2,158           2,093          4,018        18,312        13,166       36,933      76,680
  Consumer (2) (3)                   7,443             877          1,807         8,020         7,445       17,883      43,475
Securities and 
  interest-bearing
  deposits (4)                       4,333              99            191           690           583          555       6,451
                                     9,198           5,722          3,689        11,740         2,268        2,922      35,539
                                  --------         -------        -------       -------       -------      -------    --------

TOTAL INTEREST-EARNING 
 ASSETS                           $ 57,607         $24,784        $43,116       $61,698       $32,917      $58,356    $278,478
                                  --------         -------        -------       -------       -------      -------    --------

INTEREST-BEARING LIABILITIES:
Savings accounts (5)              $    625         $   627        $ 1,248            --            --      $20,991    $ 23,491
NOW accounts (5)                       900             900          1,800            --            --       19,405      23,005
Money market accounts (5)           24,576              --             --            --            --           --      24,576
Certificate accounts                42,547          17,811         31,307        29,472        17,683        5,921     144,741
Securities sold under 
 agreements to repurchase            8,503              --             --            --            --           --       8,503
Borrowings                           1,044              44          1,692         5,622         3,800        1,802      14,004
                                  --------         -------        -------       -------       -------      -------    --------

TOTAL INTEREST-BEARING 
 LIABILITIES                      $ 78,195         $19,382        $36,047       $35,094       $21,483      $48,119    $238,320
                                  --------         -------        -------       -------       -------      -------    --------
Cumulative excess of 
 interest-earning assets 
 to interest-bearing 
 liabilities                      ($20,588)       ($15,186)       ($8,117)      $18,487       $29,921      $40,158    $ 40,158
                                  ========        ========        =======       =======       =======      =======    ========
Cumulative ratio of interest 
 rate-sensitive assets to 
 interest rate-sensitive 
 liabilities                           74%              84%            94%          111%          116%         117%        117%
                                  ========        ========        =======       =======       =======      =======    ========

CUMULATIVE DIFFERENCE AS A 
 PERCENTAGE OF TOTAL ASSETS          (7.2%)           (5.3%)         (2.9%)         6.5%         10.5%        14.1%       14.1%
                                   ========        ========        =======       =======       =======      =======    ========

</TABLE>

    (1)  NET OF UNDISBURSED LOAN PROCEEDS

    (2)  ASSUMES MARKET PREPAYMENT RATES.

    (3)  INCLUDES HOME IMPROVEMENT, HOME EQUITY, AUTOMOBILE AND OTHER
         CONSUMER LOANS.

    (4) INCLUDES INVESTMENT SECURITIES, MORTGAGE-BACKED SECURITIES AND
        INTEREST-BEARING DEPOSITS.

    (5) BALANCES DISTRIBUTED AMONG THE VARIOUS REPRICING TIME INTERVALS BASED
        ON HISTORICAL AND ANTICIPATED REPRICING PATTERNS.


<PAGE>

Part II. Other Information

         Item 1.   Legal Proceedings

                        None

         Item 2.   Changes in Securities

                        None

         Item 3.   Defaults Upon Senior Securities

                        Not Applicable.

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

                   The Company's annual meeting of shareholders was held on 
                   October 23, 1996, for the following purposes:

                   (1)  To elect three directors for a term of three years or 
                        until their successors have been elected and qualified:

<TABLE>
<CAPTION>

                             Votes For    Votes Withheld
                             ---------    ---------------
         <S>                 <C>          <C>

         Gerard F. Griesser  1,371,603        2,554
         Richard L. Radcliff 1,371,645        2,512
         Emory S. Todd       1,371,604        2,553

</TABLE>

                   (2)  To ratify the appointment of KPMG Peat Marwick LLP as 
                        the Company's independent auditors for the fiscal year 
                        ending June 30, 1997:

<TABLE>
                             <S>         <C>
                             For:         1,367,122
                             Against:         3,981
                             Abstain:         3,054
</TABLE>

         Item 5.   Other Information

                   None

         Item 6.   Exhibits and Reports on Form 8-K

                   None

<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  11/5/96                /S/ ELLEN ANN ROBERTS
                             __________________________________________
                             Ellen Ann Roberts
                             Chairman and   Chief Executive Officer




Date  11/5/96                /S/ CHRISTINE N. DULLINGER
                             ___________________________________________
                             Christine N. Dullinger
                             Treasurer and Chief Financial Officer