<PAGE>


                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                          
                                  FORM 10-Q
                                           
                                           
{MARK ONE}
[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 NUMBER:  0-25348
                                            
                            FED ONE BANCORP, INC.
            (Exact name of registrant as specified in its charter)
                                           
               DELAWARE                                  55-0736264
    (State or Other Jurisdiction of                  (I.R.S. Employer
    Incorporation or Organization)                Identification Number)

                   21 TWELFTH STREET, WHEELING, WV 26003-3295
                    (Address of principal executive offices)
                                           
       Registrant's telephone number, including area code: (304) 234-1100 
                                           
      Former name, former address, and former fiscal year, if changed since 
                                   last report
                                           
  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     
                                                    ---     ---

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
                                           
 Indicate by check mark whether the Registrant has filed all documents and 
reports required to be filed by Sections 12, 13 or 15(d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a 
plan confirmed by a court.  Yes        No 
                                ------    ------

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date:  Common Stock, $.10 par value--2,467,799 shares as of November 6, 1996.


<PAGE>
                                FED ONE BANCORP, INC.
                                           
                                        INDEX
                                           
                                           
                                           



                                                                PAGE
PART I  FINANCIAL INFORMATION
    Item 1.  Financial Statements 

    Consolidated Statements of Financial Condition at             1
    September 30, 1996 (unaudited) and December 31, 1995

    Consolidated Statements of Income for the Three and           2
    Nine Months ended September 30, 1996 and 1995 (unaudited)  

    Consolidated Statement of Changes in Shareholders' Equity     3
    for the Nine Months ended September 30, 1996 (unaudited)

    Consolidated Statements of Cash Flows for the Nine Months     4
    ended September 30, 1996 and 1995 (unaudited)

    Notes to Consolidated Financial Statements                    5

    Financial Highlights                                          9

    Item 2.   Management's Discussion and Analysis of            10
              Financial Condition and Results of Operations

PART II.  OTHER INFORMATION                                      15

<PAGE>

                     FED ONE BANCORP, INC. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


<TABLE>
<CAPTION>

                                                     SEPTEMBER 30,    DECEMBER 31
                                                         1996            1995
                                                         ----            ----
                                                     (Dollars In Thousands Except 
                                                              For Shares)
<S>                                                  <C>               <C>

ASSETS
 CASH ON HAND AND NONINTEREST-EARNING
  DEPOSITS IN OTHER INSTITUTIONS                       $  1,111        $  1,429
 SHORT-TERM INVESTMENTS:
  INTEREST-EARNING DEPOSITS IN OTHER 
   INSTITUTIONS                                           5,125          10,269
 CERTIFICATES OF DEPOSIT                                    595           3,994
 INVESTMENT SECURITIES HELD TO MATURITY, AT COST
  (market value of $39,309 and $28,172)                  39,797          27,877
 INVESTMENT SECURITIES AVAILABLE FOR SALE
  (cost of $24,607 and $40,799)                          24,556          40,850
 MORTGAGE-BACKED SECURITIES HELD TO MATURITY, 
  AT COST (market value of $129,340 and $121,582)       129,146         119,501
 LOANS RECEIVABLE, NET OF ALLOWANCE FOR LOAN
  LOSSES OF $1,398 AND $1,457                           129,833         119,493
 REAL ESTATE OWNED                                           57              26
 PREMISES AND EQUIPMENT, NET                              5,532           5,355
 ACCRUED INTEREST RECEIVABLE:
   INVESTMENT SECURITIES                                    935           1,154
   MORTGAGE-BACKED SECURITIES                               887             846
   LOANS RECEIVABLE                                       1,023             952
 PREPAID EXPENSES AND OTHER ASSETS                        2,931           2,551
                                                       --------        --------
  TOTAL ASSETS                                         $341,528        $334,297
                                                       --------        --------
                                                       --------        --------
 LIABILITIES AND SHAREHOLDERS' EQUITY
  LIABILITIES:
   DEPOSITS                                            $244,489        $241,567
   BORROWED FUNDS                                        53,720          48,044
   ADVANCES BY BORROWERS FOR TAXES AND INSURANCE            415             830
   ACCRUED INTEREST PAYABLE                                 421             453
   ACCRUED EXPENSES AND OTHER LIABILITIES                 2,608           1,303
                                                       --------        --------
   TOTAL LIABILITIES                                    301,653         292,197

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
 PREFERRED STOCK: 5,000,000 SHARES AUTHORIZED --
  NONE ISSUED                                             --              --
 COMMON STOCK, $.10 PAR VALUE: 15,000,000 SHARES
   AUTHORIZED -- 2,818,762 ISSUED AT SEPTEMBER 30, 
   1996 AND DECEMBER 31, 1995                               282             282
 ADDITIONAL PAID-IN CAPITAL                              19,367          19,330
 UNEARNED EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) 
   SHARES                                                  (931)         (1,016)
 RETAINED EARNINGS -- SUBSTANTIALLY RESTRICTED           26,754          26,358
 TREASURY STOCK AT COST:  325,963 AND 139,938 
   SHARES AT SEPTEMBER 30, 1996 AND DECEMBER 31, 
   1995, RESPECTIVELY                                    (4,907)         (2,088)
 UNEARNED COMMON STOCK HELD BY THE RECOGNITION
   AND RETENTION PLAN (RRP)                                (659)           (797)
 NET UNREALIZED GAIN (LOSS) ON INVESTMENT 
   SECURITIES AVAILABLE FOR SALE                            (31)             31
                                                       --------        --------
TOTAL SHAREHOLDERS' EQUITY                               39,875          42,100
                                                       --------        --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $341,528        $334,297
                                                       --------        --------
                                                       --------        --------

</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                   1

<PAGE>

                    FED ONE BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                        THREE MONTHS ENDED    NINE MONTHS ENDED
                                           SEPTEMBER 30,        SEPTEMBER 30,
                                       ---------------------  -----------------
                                           1996      1995       1996     1995
                                           ----      ----       ----     ----
                                          (In Thousands except per share data)
<S>                                    <C>        <C>        <C>       <C> 
INTEREST INCOME:
 LOANS RECEIVABLE                        $2,964     $2,771   $ 8,699   $ 8,103
 MORTGAGE-BACKED SECURITIES               2,103      2,014     6,139     5,760
 INVESTMENT SECURITIES                    1,028        801     3,211     2,271
 SHORT-TERM INVESTMENTS                      75        262       345       875
                                        -------     ------   -------   -------
  TOTAL INTEREST INCOME                   6,170      5,848    18,394    17,009

INTEREST EXPENSE:
 DEPOSITS                                 2,518      2,341     7,496     6,642
 BORROWED FUNDS                             723        558     2,037     1,604
                                        -------     ------   -------   -------
  TOTAL INTEREST EXPENSE                  3,241      2,899     9,533     8,246

NET INTEREST INCOME                       2,929      2,949     8,861     8,763
PROVISION FOR LOAN LOSSES                    20         30        70        90
                                        -------     ------   -------   -------
NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                         2,909      2,919     8,791     8,673

NON-INTEREST INCOME:
 FEES AND SERVICE CHARGES                   145        151       435       443
 NET GAIN ON SALE OF INVESTMENT
  SECURITIES -- AFS                        --            2         3         2
 OTHER                                        4         10        20        27
                                        -------     ------   -------   -------
 TOTAL NON-INTEREST INCOME                  149        163       458       472

NON-INTEREST EXPENSE:
 SALARIES AND EMPLOYEE BENEFITS             894        918     2,758     2,710
 PREMISES AND EQUIPMENT EXPENSE             323        330     1,021       981
 DATA PROCESSING                             48         49       158       146
 FEDERAL INSURANCE PREMIUMS                 141        134       414       404
 FDIC-SAIF ASSESSMENT                     1,519         --      1,519       --
 AMORTIZATION EXPENSE                        70         70        211      211
 REO EXPENSE                                  3          2          9        3
 OTHER                                      305        319        866      944
                                        -------    -------     ------   ------
   TOTAL NON-INTEREST EXPENSE             3,303      1,822      6,956    5,399

INCOME (LOSS) BEFORE INCOME TAXES          (245)     1,260      2,293    3,746
PROVISION (BENEFIT) FOR INCOME TAXES       (106)       455        811    1,379
                                        -------    -------     ------   ------
NET INCOME (LOSS)                         $(139)      $805      1,482   $2,367
                                        -------    -------     ------   ------
                                        -------    -------     ------   ------
PRIMARY/FULY DILUTED
 EARNINGS (LOSS) PER SHARE                $(0.06)     $0.29      $0.58    $0.85

DIVIDENDS DECLARED PER SHARE             $0.145     $0.135     $0.415   $0.385

AVERAGE NUMBER OF SHARES
  OUTSTANDING (000's omitted):
    PRIMARY                               2,514      2,760      2,569    2,767
    FULLY DILUTED                         2,523      2,771      2,574    2,778

</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                   2

<PAGE>


                       FED ONE BANCORP, INC. AND SUBSIDIARY
              CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                         NINE MONTHS ENDED SEPTEMBER 30, 1996


<TABLE>
<CAPTION>                                                                                                   UNREALIZED
                                                                                            UNEARNED      GAIN (LOSS) ON
                                                                                             COMMON         INVESTMENT
                                       ADDITIONAL    UNEARNED                                 STOCK         SECURITIES
                             COMMON     PAID-IN        ESOP       RETAINED     TREASURY       HELD          AVAILABLE
                              STOCK     CAPITAL       SHARES      EARNINGS      STOCK       BY THE REP       FOR SALE     TOTAL
                              -----     -------       ------      --------      -----       ----------       --------     -----
<S>                           <C>       <C>           <C>         <C>           <C>         <C>               <C>        <C>

BALANCE AT
December 31, 1995             $282      $19,330       $(1,016)    $26,358       $(2,088)      $(797)          $31        $42,100

NET INCOME                      --           --            --       1,482            --          --            --          1,482

AMORTIZATION OF
  RECOGNITION AND
  RETENTION PLAN                --           --            --          --            --         138            --            138

COMMON STOCK ISSUED
  UPON EXERCISE OF STOCK
  OPTIONS - 8,082 SHARES        --           --            --         (73)          119          --            --             46

CASH DIVIDEND DECLARED          --            5            --      (1,013)           --          --            --         (1,008)

PRINCIPAL REPAYMENT OF
  ESOP DEBT                     --           32            85          --            --          --            --            117

PURCHASE OF TREASURY
  STOCK - 194,117 SHARES        --           --            --          --        (2,938)         --            --         (2,938)

CHANGE IN NET UNREALIZED GAIN
  (LOSS) ON INVESTMENT
  SECURITIES AVAILABLE
  FOR SALE                      --           --            --          --            --          --           (62)          (62)
                              ----       ------         -----     -------       -------       -----         -----      --------

BALANCE AT
September 30, 1996            $282      $19,367         $(931)    $26,754       $(4,907)      $(659)         $(31)      $39,875
                              ----       ------         -----     -------       -------       -----         -----      --------
                              ----       ------         -----     -------       -------       -----         -----      --------



</TABLE>

     See accompanying notes to unaudited consolidated financial statements

                                   3

<PAGE>


                     FED ONE BANCORP, INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                 FOR THE NINE MONTHS ENDED
                                                       SEPTEMBER 30,
                                                 -------------------------
                                                  1996               1995
                                                  ----               ----
                                                       (In Thousands)
<S>                                              <C>              <C> 
OPERATING ACTIVITIES:
  NET INCOME                                     $1,482           $2,367
  ADJUSTMENTS TO RECONCILE NET INCOME TO NET
   CASH PROVIDED BY OPERATING ACTIVITIES:
     PROVISION FOR LOAN LOSSES                       70               90
     DEPRECIATION AND AMORTIZATION                  685              646
     NON-CASH COMPENSATION EXPENSE RELATED 
      TO ESOP BENEFIT                               117              114
     NET GAIN ON SALES OF:
        INVESTMENT SECURITIES                        (3)              (2)
        REO                                          (2)              (1)
     (INCREASE) DECREASE IN ACCRUED INTEREST 
       RECEIVABLE                                   107             (572)
     INCREASE IN ACCRUED EXPENSES                 1,552               55
     DECREASE IN TAXES PAYABLE                     (694)             (42)
     OTHER, NET                                     (73)             613
                                                 ------           ------
NET CASH PROVIDED BY OPERATING ACTIVITIES         3,241            3,268

INVESTING ACTIVITIES:
  PURCHASES OF:
    CERTIFICATES OF DEPOSIT                        (595)          (2,994)
    INVESTMENT SECURITIES HELD TO MATURITY      (19,971)         (10,770)
    INVESTMENT SECURITIES AVAILABLE FOR SALE     (7,127)          (7,580)
    MORTGAGE-BACKED SECURITIES HELD TO 
     MATURITY                                   (26,017)         (16,549)
    LOANS                                       (13,484)          (5,906)
    PREMISES AND EQUIPMENT, NET                    (526)            (523)
  PROCEEDS FROM SALES OF:
    INVESTMENT SECURITIES AVAILABLE FOR SALE      5,000            3,000
    LOANS                                           152              687
    REO                                              12               31
  PRINCIPAL REPAYMENTS AND MATURITIES OF:
    CERTIFICATES OF DEPOSIT                       3,994            4,000
    INVESTMENT SECURITIES HELD TO MATURITY        8,057            4,556
    INVESTMENT SECURITIES AVAILABLE FOR SALE     18,323            4,174
    MORTGAGE-BACKED SECURITIES HELD TO 
     MATURITY                                    16,378           10,063
    (INCREASE) DECREASE IN LOANS 
      RECEIVABLE, NET                             2,818           (1,157)
                                                -------          -------
NET CASH USED BY INVESTING ACTIVITIES           (12,986)         (18,968)
FINANCING ACTIVITIES:
  INCREASE (DECREASE) IN DEPOSITS, NET            2,922           (1,153)
  INCREASE IN BORROWINGS, NET                     5,676            7,999
  DECREASE IN ADVANCES BY BORROWERS
    FOR TAXES AND INSURANCE                        (415)            (242)
  PROCEEDS FROM ISSUANCE OF COMMON STOCK             46           14,815
  STOCK ACQUIRED FOR ESOP                            --           (1,129)
  PURCHASE OF COMMON STOCK FOR RECOGNITON 
   AND RETENTION PLAN                                --             (919)
  PURCHASE OF TREASURY STOCK                     (2,938)          (1,684)
  CASH DIVIDENDS PAID                            (1,008)            (827)
                                                 ------           ------
NET CASH PROVIDED BY FINANCING ACTIVITIES         4,283           16,860
                                                 ------           ------
INCREASE (DECREASE) IN CASH AND CASH 
 EQUIVALENTS                                     (5,462)           1,160

CASH AND CASH EQUIVALENTS AT BEGINNING 
 OF PERIOD                                       11,698            9,743
                                                -------          -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD       $6,236          $10,903
                                                -------          -------
                                                -------          -------
</TABLE>


See accompanying notes to unaudited consolidated financial statements.

                                    4

<PAGE>


                         FED ONE BANCORP, INC. AND SUBSIDIARY
                 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION
    ---------------------

    The accompanying unaudited consolidated condensed financial statements
    have been prepared in accordance with the instructions for Form 10-Q
    and, therefore, do not include all the information or footnotes
    necessary for a complete presentation of financial condition, results
    of operations and cash flows in conformity with generally accepted
    accounting principles. However, all adjustments, consisting only of
    normal recurring accruals which, in the opinion of management, are
    necessary for a fair presentation have been included.  The results of
    operations for the three and nine months ended September 30, 1996 are
    not necessarily indicative of the results which may be expected for
    the entire fiscal year.
    

2.  PRINCIPLES OF CONSOLIDATION
    --------------------------- 

    The consolidated financial statements include the accounts of Fed One
    Bancorp, Inc. (the "Company"), and its wholly owned subsidiary, Fed
    One Bank (the "Bank").  All significant intercompany balances and
    transactions have been eliminated in consolidation.
    

3.  RECLASSIFICATION OF PRIOR YEAR'S STATEMENTS
    -------------------------------------------
    
    Certain items previously reported have been reclassified to conform
    with the current year's reporting format.
    

4.  CONVERSION AND REORGANIZATION
    -----------------------------

    The Company is a Delaware corporation which is the holding company for
    the Bank.  The Company was organized by the Bank for the purpose of
    acquiring all of the capital stock of the Bank in connection with the
    conversion of Fed One Bancorp, M.H.C. ("MHC"), the former parent
    mutual holding company of the Bank, and the reorganization of the Bank
    to the stock holding company form, which was completed on January 19,
    1995 (the "Conversion and Reorganization").

    In the offering, 1,612,402 shares of common stock were sold at a
    subscription price of $10.00 per share resulting in net proceeds of
    approximately $13.5 million after taking into consideration the $1.1
    million for the establishment of an ESOP and the $1.5 million in
    expenses.  In addition to the shares sold in the offering, 1,194,064
    shares of the Company's stock were issued in exchange for shares of
    the Bank's stock previously held by public shareholders at an exchange
    ratio of 2.239447, resulting in 2,806,466 total shares of the
    Company's common stock outstanding as of January 19, 1995.

                                    5

<PAGE>
    
    
5.  EARNINGS PER SHARE
    ------------------
    
    Earnings(loss) for the three and nine months ended September 30, 1996
    were a $.06 loss per share and income of $.58 per share, respectively,
    compared to income of $.29 per share and $.85 per share for the three
    and nine months ended September 30, 1995, respectively.  Earnings per
    share were computed by dividing net income(loss) for the three and
    nine months ended September 30, 1996 and 1995 by the weighted average
    number of common shares and common stock equivalents outstanding. 
    Shares outstanding for the three and nine months ended September 30,
    1996 and 1995 do not include ESOP shares that have not been committed
    to be released in accordance with SOP 93-6 "Employers' Accounting for
    Employee Stock Ownership Plans."  Reported primary per share amounts
    are based on 2,514,388 and 2,568,682 common shares and common stock
    equivalents for the three and nine months ended September 30, 1996,
    and 2,759,710 and 2,766,901 common shares and common stock equivalents
    for the three and nine months ended September 30, 1995, respectively.
    Reported fully diluted per share amounts are based on 2,522,724 and
    2,574,365 common shares and common stock equivalents for three and
    nine months ended September 30, 1996, and 2,770,525 and 2,778,153
    common shares and common stock equivalents for the three and nine
    months ended September 30, 1995, respectively.  Shares granted but not
    yet issued under the Company's stock option plan are considered common
    stock equivalents for earnings per share calculations.  Without the
    one-time special FDIC assessment, earnings per share for the three and
    nine months ended September 30, 1996 would have been income of $.32
    and $.95 per share, respectively.  See Management's discussion and
    analysis.


6.  DIVIDENDS ON COMMON STOCK
    -------------------------
    
    On September 18, 1996, the Company declared a quarterly cash dividend
    of $.145 per share payable on October 19, 1996 to shareholders of
    record on September 30, 1996.


7.  INCOME TAXES
    ------------
    
    Income taxes are accounted for under the asset and liability method
    pursuant to Statement of Financial Accounting Standards No. 109 ("SFAS
    No. 109"), "Accounting for Income Taxes."
    
    Total income tax expense through the nine months ended September 30,
    1996 consists of (in thousands):

                                 Current      Deferred       Total
                                 -------      --------       -----

              Federal              $712          $27           $739
              State                  64            8             72
                                   ----          ---           ----
                                   $776          $35           $811
                                   ----          ---           ----
                                   ----          ---           ----

                                    6

<PAGE>


    The tax effects of temporary differences that give rise to significant
    portions of the deferred tax assets and deferred tax liabilities at
    September 30, 1996 are presented below (in thousands):



            Deferred tax assets:
              Allowance for loan losses               $235
              Unrealized losses of securities
               available for sale                       20
              Deposit-based intangibles                 36
              Other                                     70
                                                      ----
               Total gross deferred tax assets        $361
            
            Deferred tax liabilities:
              Plant and equipment, principally
                due to differences in depreciation 
                and capitalized interest              (127)
              Deferred loan fees                      (247)
            
            Other                                      (12)
                                                     -----
               Total gross deferred tax liabilities   (386)
                                                     -----
               Net deferred tax asset (liability)     $(25)
                                                     -----
                                                     -----



    The effective tax rate computed pursuant to SFAS No. 109 and the items
    which cause differences between the effective tax rate and the
    statutory U.S. Federal income tax rate of 34% are not significantly
    different from such amounts disclosed in prior years' audited
    financial statements.
    
    The Company has determined that it is not required to establish a
    valuation allowance for deferred tax assets since it is management's
    belief that it is more likely than not that the deferred tax assets
    will be realized.
    
    
8.  CONTINGENCIES:
    --------------
    
    The Company is involved in various claims and legal actions arising in
    the ordinary course of business.  The outcome of these claims and
    actions are not presently determinable; however, in the opinion of the
    Company's management after consulting with their legal counsel, the
    ultimate disposition of these matters will not have a material adverse
    effect on the accompanying consolidated financial statements.

    
9.  EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
    -----------------------------------

    In connection with the Conversion and Reorganization, the Company
    formed an ESOP.  The ESOP covers employees which have completed at
    least one year of service and have attained the age of 21.  The ESOP
    Trust borrowed $1.1 million from the Company and purchased 112,868
    shares, equal to 7% of the total number of shares issued in the
    offering.  The Bank makes scheduled discretionary contributions to the
    ESOP sufficient to service the debt.  The cost of shares not committed
    to be released and unallocated (suspense shares) is reported as a

                                   7


<PAGE>

    reduction in shareholders' equity.  Dividends on allocated and
    unallocated shares are used for debt service.  Shares are released to
    participants based on a compensation formula.

    In connection with the formation of the ESOP, the Company adopted SOP
    93-6.  SOP 93-6 requires that (1) compensation expense be recognized
    based on the average fair value of the ESOP shares committed to be
    released; (2) dividends on unallocated shares used to pay debt service
    be reported as a reduction of debt or of accrued interest payable and
    that dividends on allocated shares be charged to retained earnings;
    and (3) ESOP shares which have not been committed to be released not
    be considered outstanding for purposes of computing earnings per share
    and book value per share.

    Compensation expense related to the ESOP amounted to $39,000 and
    $122,000 for the three and nine months ended September 30, 1996
    compared to $46,000 and $113,000 for the three and nine months ended
    September 30, 1995, respectively.  The fair value of unearned ESOP
    shares at September 30, 1996 totaled $1.4 million.  At September 30,
    1996, there were 8,463 ESOP shares committed to be released and 93,119
    suspense shares.  ESOP shares totaling 11,286 were allocated as of
    September 30, 1996.
    
    
10. RECENT ACCOUNTING DEVELOPMENTS
    ------------------------------ 

    The Financial Accounting Standards Board released Statement of
    Financial Accounting Standard No. 123, "Accounting for Stock-Based
    Compensation" ("SFAS 123") in October 1995.  Effective for fiscal
    years beginning after December 15, 1995, SFAS 123 outlines preferable
    accounting treatment and reporting guidelines for employee stock
    option plans.  The Company plans to continue to measure compensation
    cost using the method of accounting prescribed by Accounting
    Principles Board ("APB") Opinion No. 25.

    The Financial Accounting Standards Board released Statement of
    Financial Accounting Standard No. 125, "Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities"
    ("SFAS 125") in June 1996.  SFAS 125 is effective for transfers and
    servicing of financial assets and extinguishments of liabilities
    occurring after December 31, 1996 and is to be applied prospectively. 
    SFAS 125 establishes standards for resolving issues related to the
    circumstances under which the transfer of financial assets should be
    considered as sales of all or part of the assets or as secured
    borrowings and about when a liability should be considered
    extinguished.  The Company has not yet determined the effect that the
    adoption of this Standard will have on its financial position or
    results of operations.

                                    8
<PAGE>

                      FED ONE BANCORP, INC. AND SUBSIDIARY
                              FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                              AT OR FOR THE       AT OR FOR THE
                                            NINE MONTHS ENDED      YEAR ENDED
                                               SEPTEMBER 30,       DECEMBER 31,
                                                   1996                1995
                                            -----------------     -------------
                                                    (Dollars In Thousands)
<S>                                         <C>                   <C>

FINANCIAL CONDITION DATA: 

AVERAGE INTEREST-EARNING ASSETS                  $327,421            $308,965
AVERAGE INTEREST-BEARING LIABILITIES              286,838             267,471
NET AVERAGE EARNING ASSETS                         40,583              41,494
NON-PERFORMING ASSETS                                 924               1,144
NON-PERFORMING LOANS                                  867               1,118
ALLOWANCE FOR LOAN LOSSES                           1,398               1,457
AVERAGE INTEREST-EARNING ASSETS TO
  AVERAGE INTEREST-BEARING LIABILITIES             114.15%             115.51%
ALLOWANCE FOR LOAN LOSSES TO
  NON-PERFORMING LOANS                             161.25%             130.32%
ALLOWANCE FOR LOAN LOSSES TO
  TOTAL LOANS                                        1.07%               1.21%
NON-PERFORMING LOANS TO TOTAL LOANS                  0.66%               0.93%
NON-PERFORMING ASSETS TO TOTAL ASSETS                0.27%               0.34%
CUMULATIVE ONE-YEAR GAP                              8.39%              11.62%
SHAREHOLDERS' EQUITY TO ASSETS                      11.68%              12.59%
EFFICIENCY RATIO                                    72.38%              55.56%
COVERAGE RATIO                                     127.39%             164.12%
NUMBER OF BANKING FACILITIES                            9                   9
</TABLE>


<TABLE>
<CAPTION>

                                                   FOR THE                    FOR THE
                                              THREE MONTHS ENDED         NINE MONTHS ENDED
                                                 SEPTEMBER 30,              SEPTEMBER 30,
                                              ------------------         -----------------
                                              1996          1995         1996         1995
                                              ----          ----         ----         ----
<S>                                           <C>           <C>          <C>          <C>

SELECTED OPERATING ACTIVITIES (1):

RETURN ON AVERAGE ASSETS (2)                  -0.16%        1.01%        0.58%        1.00%
RETURN ON AVERAGE EQUITY (2)                  -1.36%        7.60%        4.79%        7.49%
NET INTEREST RATE SPREAD                       3.02%        3.23%        3.06%        3.25%
NET INTEREST MARGIN                            3.55%        3.82%        3.61%        3.82%

</TABLE>

(1) AMOUNTS ARE ANNUALIZED
(2) REFLECTS THE FDIC-SAIF ASSESSMENT


<TABLE>
<CAPTION>
                                        AT OR FOR THE        AT OR FOR THE
                                      THREE MONTHS ENDED   NINE MONTHS ENDED
                                      SEPTEMBER 30, 1996   SEPTEMBER 30, 1996
                                      ------------------   ------------------
<S>                                   <C>                  <C> 
PER SHARE DATA:

PRIMARY/FULLY DILUTED 
 EARNINGS(LOSS) PER SHARE (3)              $ (.06)             $  .58
BOOK VALUE PER SHARE (4)                    16.62               16.62
TANGIBLE BOOK VALUE PER SHARE (4)           15.78               15.78
MARKET PRICE PER SHARE:
  HIGH FOR THE QUARTER/YEAR                 16.00               16.25
  LOW FOR THE QUARTER/YEAR                  13.00               13.00
  CLOSE 09/30/96                            15.50               15.50
CASH DIVIDENDS DECLARED PER SHARE             .145                .415
AVERAGE NUMBER OF SHARES 
 OUTSTANDING (3):
   PRIMARY                               2,514,388           2,568,682
   FULLY DILUTED                         2,522,724           2,574,365

</TABLE>

(3)  Amounts calculated exclude ESOP shares not committed to be released 
     and include common stock equivalents.

(4) Amounts calculated exclude ESOP shares not committed to be released.

                                    9

<PAGE>



                                    ITEM 2.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                       CONDITION AND RESULTS OF OPERATIONS
                                           
                                           
    On September 30, 1996, President Clinton signed into law the Deposit
    Insurance Funds Act of 1996 which included legislation to resolve the
    deposit insurance premium disparity which included a one-time special
    assessment to recapitalize the Savings Association Insurance Fund
    ("SAIF"), the deposit insurance fund of our subsidiary Fed One Bank. 
    This industry wide assessment, which requires a one-time payment of
    65.7 basis points on SAIF insured deposits that the Bank held on March
    31, 1995, results in a non-recurring pre-tax expense of $1.5 million
    payable November 27, 1996.  On an after-tax basis, the charge is
    $956,000 or the equivalent of 38 cents per share.  Beginning January
    1, 1997, the annual deposit insurance premium of the Bank will be
    reduced from 23 basis points to about 6 basis points which will result
    in an annual savings of about $400,000.
    
    
    Financial Condition
    ------------------- 
    
    Total assets increased $7.2 million or 2.2% to $341.5 million at
    September 30, 1996 compared to $334.3 million at December 31, 1995. 
    Short-term investments decreased and investment securities increased
    to $5.7 million and $39.8 million, respectively, at September 30, 1996
    compared to $14.3 million and $27.9 million, respectively at December
    31, 1995.  The $8.5 million decrease in short-term investments was the
    result of maturities and the $11.9 million increase in investment
    securities was the result of the reinvestment of those maturing
    short-term investments and the use of available cash.  At September
    30, 1996 the Company had $24.6 million of investment securities
    classified as available for sale compared to $40.9 million at December
    31, 1995.  The after-tax net unrealized loss on these securities
    amounted to $31,000 at September 30, 1996, which is reflected as a
    separate component of shareholders' equity.  The reduction in
    available for sale securities was the result of both maturities and
    sales for which the proceeds were used to purchase loans. 
    Mortgage-backed securities increased $9.6 million to $129.1 million at
    September 30, 1996 compared to $119.5 million at December 31, 1995. 
    Loans receivable increased $10.3 million or 8.7% to $129.8 million at
    September 30, 1996 compared to $119.5 million at December 31, 1995, as
    originations exceeded principal repayments and management invested
    available funds in an effort to increase loans outstanding.  The
    Company purchased approximately $8.3 million of adjustable rate
    residential mortgage loans during the second quarter of 1996.  
    
    Total liabilities increased by $9.5 million or 3.2% to $301.7 million
    at September 30, 1996 compared to $292.2 million at December 31, 1995. 
    Deposits increased $2.9 million or 1.2% to $244.5 million at September
    30, 1996 compared to $241.6 million at December 31, 1995.  Deposits
    increased primarily due to the Company being competitively priced in
    certificates of deposit during the first, second and third quarters of
    1996.  Borrowed funds increased $5.7 million to $53.7 million at
    September 30, 1996 compared to $48.0 million at December 31, 1995,
    which funds were used to invest in assets yielding higher rates than
    those rates paid on the borrowings.

                                   10

<PAGE>


    Total shareholders' equity decreased $2.2 million to $39.9 million at
    September 30, 1996 compared to $42.1 million at December 31, 1995. 
    This decrease was primarily the result of the Company repurchasing
    $2.9 million of its common stock.  In January 1996, the Company
    announced a repurchase of up to 5% or 133,941 shares of the Company's
    outstanding common stock. This program was completed in July 1996. 
    Shares were purchased at ranges between $14.56 and $15.81 per share. 
    In July 1996 the Company announced another 5% program representing
    127,567 shares to be repurchased over the next six months, of which
    there were 60,176 shares purchased in the open market at ranges
    between $13.81 and $15.50 during the quarter.  These repurchased
    shares are held as treasury shares.  An additional reduction in equity
    was caused by the Company also paying quarterly cash dividends of
    approximately $336,000, $331,000 and $346,000 for the quarters ended
    March 31, 1996, June 30, 1996 and September 30, 1996, respectively. 
    In addition, during the nine months ended September 30, 1996  the
    market value of investment securities available for sale declined
    $62,000 from a net gain position of $31,000 at December 31, 1995 to a
    net loss position of $31,000 at September 30, 1996.  These decreases
    were partially offset by net income of $1.5 million and the
    amortization of the expense of our Recognition and Retention Plan of
    $83,000.
    
    
    RESULTS OF OPERATIONS
    
    
    Net Income
    ----------
    
    The Company had a net loss of $139,000 or $.06 per share loss for the
    three months ended September 30, 1996 compared to earnings of $805,000
    or $.29 per share for the three months ended September 30, 1995.  The
    net loss for the three months ended September 30, 1996 was the result
    of a $1.5 million pre-tax charge for the amount of the Federal Deposit
    Insurance Corporation ("FDIC") special assessment to recapitalize the
    Savings Association Insurance Fund ("SAIF").  On an after-tax basis
    this one-time special assessment of $956,000 resulted in a decrease in
    earnings per share of $.38 for the quarter ended September 30, 1996. 
    Without the assessment, net income for the quarter would have been
    $818,000 or $.32 per share, an increase of $13,000 compared to the
    three months ended September 30, 1995.  Net income was $1.5 million or
    $.58 per share for the nine months ended September 30, 1996 compared
    to $2.4 million or $.85 per share for the same period in 1995.  The
    decrease in earnings for the nine months ended September 30, 1996
    compared to the year-earlier period was also the result of the FDIC
    special assessment.  Without the special assessment, net income for
    the nine months ended September 30, 1996 would have been $2.4 million
    or $.95 per share.
    
    
    Interest Income
    ---------------
    
    Interest income amounted to $6.2 million for the three month period
    ended September 30, 1996,  compared to $5.8 million  during the same
    period in 1995.  The $322,000 increase was due to an increase in
    average interest-earning assets of $20.9 million offset by a decrease
    of 8 basis points in the weighted average yield on interest-earning
    assets.  The increase in average balances occurred in investment
    securities, loans receivable and mortgage-backed securities and was
    partially offset by reductions in short-term investments.  The
    decrease in the weighted average yield occurred in short-term
    investments and loans with offsetting increases 

                                   11
<PAGE>

    in the yield on investments and mortgage-backed securities.  
    Interest income amounted to $18.4 million for the nine months ended 
    September 30, 1996 compared to $17.0 million during the same period in 
    1995.  The $1.4 million increase was due to an increase in average 
    interest-earning assets of $21.6 million and an increase of 8 basis 
    points in the weighted average yield on interest-earning assets.  The 
    increase in the balances of average interest-earning assets was the 
    result of a $19.1 million aggregate increase in average investment 
    securities and investment securities available for sale, a $12.6 million 
    increase in average loans receivable and a $1.5 million increase in 
    average mortgage-backed securities partially offset by a $11.7 million 
    decrease in short-term investments.  The increase in the weighted 
    average yield occurred in investments and mortgage backed securities and 
    decreases in yield occurred in loans and short-term investments.

    Interest Expense
    ----------------
    
    Interest expense increased to $3.2 million for the three month period
    ended September 30, 1996,  compared to $2.9 million  during the same
    period  in 1995.  This $342,000 increase in interest expense was due
    to a $22.7 million increase in the balance of average interest-bearing
    liabilities and an increase of 13 basis points in the average cost of
    funds.  Average balances of certificates of deposit and borrowed funds
    increased, which were partially offset by decreases in the balances of
    passbook accounts.  The cost of funds increase was a result of an
    increase in the cost of funds in time deposits partially offset by
    decreases in the cost of funds in NOW, money market and borrowed
    funds.  Interest expense increased to $9.5 million for the nine months
    ended September 30, 1996 compared to $8.2 million for the same period
    in 1995.  This $1.3 million increase in interest expense was due to a
    $22.6 million increase in the balance of average interest-bearing
    liabilities and an increase of 27 basis points in the average cost of
    funds.  Average deposits increased $10.2 million for the nine month
    period ended September 30, 1996 compared to the same period in 1995 as
    a result of the Company being competitively priced in certificates of
    deposit which increases were partially offset by decreases in the
    average balance of passbook accounts.  Average borrowed funds
    increased $12.4 million for the nine month period ended September 30,
    1996 compared to the same period in 1995 due to the Company increasing
    its short-term FHLB advances.  The increase in the average cost  of
    funds occurred in time deposits and decreases occurred in the average
    cost of borrowed funds.  NOW, money market, and passbook accounts cost
    of funds remained relatively stable.

    Net Interest Income
    -------------------
    
    Net interest income amounted to $2.9 million and $8.9 million for the
    three and nine months ended September 30, 1996, respectively, compared
    to $2.9 million and $8.8 million during the same time periods in 1995. 
    Net interest income increased mainly because of higher average
    balances.  Average interest-earning assets increased $20.9 million and
    $21.6 million during the three and nine months ended September 30,
    1996 compared to the year-earlier period.  Average interest-bearing
    liabilities increased $22.7 million and $22.6 million during the same
    comparative time period.  The Company repurchased $2.9 million of its
    common stock during the first nine months of this year.  A shift from
    lower yielding assets into higher yielding assets for the nine months
    ended September 30, 1996 compared to the year-earlier period, was
    offset by a corresponding shift from lower yielding deposits into
    higher yielding deposits during the same comparative time period.  The
    net interest margin declined 27 basis 

                                   12

<PAGE>

    points to 3.55% for the three months ended September 30, 1996 from 3.82% 
    for the year-earlier period and declined 21 basis points to 3.61% for the 
    nine months ended September 30, 1996 from 3.82% for the same period last 
    year.  The decline in the net interest margin was partially attributable 
    to an increase in average rates earned on interest-earning assets being 
    more than offset by an increase in rates paid on average interest-bearing
    liabilities.
    
    Provision for Loan Losses
    -------------------------
    
    The provision for loan losses decreased to $70,000 for the nine month
    period ended September 30, 1996 compared to $90,000 during the same
    time period in 1995.  This reflected management's evaluation of the
    underlying credit risk of the loan portfolio and the level of
    allowance for loan losses. 
    
    The allowance for loan losses amounted to $1.4 million or 1.07% and
    161.25% of total loans and total non-performing loans, respectively,
    at September 30, 1996, as compared to $1.5 million or 1.21% and
    130.32% , respectively, at December 31, 1995
    
    Non-performing loans (non-accrual loans and accruing loans 90 days or
    more overdue) were $867,000 and  $1.1 million at September 30, 1996
    and December 31, 1995, respectively, which represented .66% and .93%
    of the Company's total loans, respectively.  The Company's real estate
    owned, which consists of real estate acquired through foreclosure or
    by deed-in-lieu thereof, amounted to $57,000 and $26,000 at September
    30, 1996 and December 31, 1995, respectively.  As a percentage of
    total assets, the Company's total non-performing assets amounted to
    $924,000 or .27% at September 30, 1996 and $1.1 million or .34% at
    December 31, 1995.
    
    
    Non-Interest Income
    -------------------
    
    Non-interest income amounted to $149,000 and $458,000 for the three
    and nine month periods ended September 30, 1996, as compared to
    $163,000  and $472,000 for the same time periods in 1995.  The
    decrease of $14,000 or 3.0% for the nine month period ended September
    30, 1996, was due primarily to a decrease in loan fees and charges.
    
    
    Non-interest Expense
    --------------------
    
    Non-interest expense increased $1.5 million for the three month period
    ended September 30, 1996 compared to the same time period in 1995,
    primarily as a result of the $1.5 million one-time FDIC special
    assessment which was offset by decreases in salaries and employee
    benefits of $24,000, premises and equipment expense of $7,000 and
    other expenses of $14,000.  Non-interest expense increased $1.6
    million for the nine months ended September 30, 1996 compared to the
    same period in 1995, primarily as a result of the $1.5 million
    one-time FDIC special assessment and increases in salaries and
    employee benefits of $48,000, premises and equipment of $40,000, data
    processing expense of $12,000 offset by a decrease in other expenses
    of $78,000.  Increases in salaries and employee benefits were the
    result of normal salary adjustments, and expenses related to the
    establishment of a Recognition and Retention Plan in the second
    quarter of 1995.  Increases in premises and equipment expense were
    primarily the result of expenses related to renovation of a branch
    office and expenses

                                   13

<PAGE>

    caused by severe weather conditions in the first quarter of 1996.  
    Decreases in other expenses were primarily due to decreases in 
    advertising, supply and other expenses.
    
    Provision for Income Taxes
    --------------------------
    
    Provision(benefit) for income taxes was ($106,000) and $455,000 for
    the three months ended September 30, 1996 and 1995, respectively, and
    $811,000 and $1.4 million for the nine months ended September 30, 1996
    and 1995, respectively.  The Company's effective tax rate amounted to
    35.4% and 36.8% during the nine months ended September 30, 1996 and
    1995, respectively.  The benefit received for the three months ended
    September 30, 1996 resulted from the one-time FDIC special assessment
    incurred during the quarter.  Without this one-time special
    assessment, income taxes would have been $456,000 or an effective tax
    rate of 35.8% for the three months ended September 30, 1996 compared
    to an effective tax rate of 36.1% for the three months ended September
    30, 1995.
    
    
    Liquidity
    ---------
    
    Office of Thrift Supervision ("OTS") regulations require the Bank to
    maintain an average daily balance of liquid assets (cash, certain time
    deposits, banker's acceptances and specified United States Government,
    state or federal agency obligations) equal to a monthly average of not
    less than 5% of its net withdrawable deposits plus short-term
    borrowings.  For the month of September 1996, the Bank's average
    liquidity position was $40.7 million or 14.21% compared to $59.0 
    million or 21.03% for the month of December 1995.
    
    Regulatory Capital Requirements
    -------------------------------
    
    The Bank is required to maintain specified amounts of capital pursuant
    to the Financial Institutions Reform, Recovery and Enforcement Act of
    1989 and regulations thereunder.  Savings associations are required to
    maintain tangible capital (shareholders' equity less goodwill)
    amounting to not less than 1.5% of adjusted total assets and core
    capital (tangible capital plus 90% of purchased mortgage servicing
    rights) amounting to not less than 3% of adjusted total assets.  In
    addition, savings associations are required to maintain risk-based
    capital in an amount equal to 8.0% of total assets and off-balance
    sheet instruments, as adjusted to reflect their relative credit risks. 
    At September 30, 1996, the Bank's tangible, core and risk-based
    capital ratios amounted to 10.15%, 10.15% and 26.05%, respectively,
    which substantially exceeded applicable requirements.

                                   14
<PAGE>

    PART II.  OTHER INFORMATION

    Item 1.  Legal Proceedings
    --------------------------    

    There are various claims and lawsuits in which the Company is
    periodically involved incidental to the Company's business.  In the
    opinion of management, no material loss is expected from any of such
    pending claims or lawsuits.
    
    
    Item 5.  Other Information
    --------------------------
    
    Under Section 593 of the Internal Revenue Code of 1986 (the "Code"),
    thrift institutions such as the Bank, which meet certain definitional
    tests primarily relating to their assets and the nature of their
    business, are permitted to establish a tax reserve for bad debts and
    to make annual additions, thereto, which additions may, within
    specified limitations, be deducted in arriving at their taxable
    income.  The Bank's deduction with respect to "qualifying loans,"
    which are generally loans secured by certain interests in real
    property, may currently be computed using an amount based on the
    Bank's actual loss experience (the "experience method"), or a
    percentage equal to 8.0% of the Bank's taxable income (the "percentage
    of taxable income method"), computed without regard to this deduction
    and with additional modifications and reduced by the amount of any
    permitted addition to the non-qualifying reserve.  The Bank has
    generally used the percentage of taxable income method in the past.
    
    Recent legislation adopted in early August 1996 generally (i) repeals
    the provisions of Section 593 of the Code which authorizes use of the
    percentage of taxable income method by qualifying savings institutions
    to determine deductions for bad debts, effective for taxable years
    beginning after 1995, and (ii) require that a savings institution
    recapture for tax purposes (i.e. take into income) over a six-year
    period the excess of the balance of its bad debt reserves over the
    balance of such reserves as of December 31, 1987, which recapture
    would be suspended for any tax year that begins after December 31,
    1995 and before January 1, 1998 (thus a maximum of two years) in which
    a savings institution originates an amount of residential loans which
    is not less than the average of the principal amount of such loans
    made by a savings institution during its six taxable years preceding
    1996.  As the Company has previously provided deferred taxes on this
    amount, no additional financial statement tax expense will result from
    this legislation.

                                   15

<PAGE>

    SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934,
    the Registrant has duly caused this report to be signed by the
    undersigned thereunto duly authorized.
    
    
                                   FED ONE BANCORP, INC.
    
    
    Date: November 8, 1996         By: /s/Alan E. Groover
          ---------------------        ------------------------------
                                       Alan E. Groover
                                       Chairman, President and
                                       Chief Executive Officer
                                      (Principal Executive Officer)

    Date: November 8, 1996         By: /s/Lisa K. DiCarlo
          ----------------------       -------------------------------
                                       Lisa K. DiCarlo
                                       Senior Vice President 
                                       and Treasurer
                                       (Principal Financial and
                                       Accounting Officer)