UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
       SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 2000
                                        -------------

         Commission file number 0-133312
                               ---------


                            FIRST LIBERTY BANK CORP.
          (Exact name of registrant issuer as specified in its charter)

Pennsylvania                                                        23-2275242
------------                                                        -----------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                              Identification No.)

645 Washington Avenue; P.O. Box 39; Jermyn Pennsylvania              18433-0039
-------------------------------------------------------              ----------
(Address of principal executive offices)                             (Zip Code)

Issuer's telephone number 570-876-6500
                          ------------

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act of 1934  during the past 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 __
    -

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

                  Class                            Outstanding at June 30, 2000
                  -----                            ----------------------------
Common stock, $.31 par value                               6,429,460



<PAGE>






                    FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
                                    FORM 10-Q

                           QUARTER ENDED JUNE 30, 2000

                                      INDEX



                                                                           Page

PART 1 - FINANCIAL INFORMATION

         ITEM 1. FINANCIAL STATEMENTS:

         Consolidated Balance Sheets - June 30, 2000 and
                  December 31, 1999                                          1

         Consolidated Statements of Income - Three Months and Six Months
                  Ended June 30, 2000 and 1999                               2

         Consolidated Statements of Cash Flows
                  Six Months Ended June 30, 2000 and 1999                    3

         Notes to Consolidated Financial Statements                          4
                  Six Months Ended June 30, 2000 and 1999
                  and December 31, 1999

ITEM 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations              6

ITEM 3.  Quantitative and Qualitative Disclosures
                  About Market Risk                                         11

PART II - OTHER INFORMATION                                                 12

SIGNATURES                                                                  13



<PAGE>





PART I.   FINANCIAL INFORMATION
         Item I.  Financial Statements

FIRST LIBERTY BANK CORP. AND SUBSIDIARIES

Consolidated Balance Sheets
(In thousands of dollars, except per share information)
(unaudited)
<TABLE>
<S>                                                                             <C>              <C>
---------------------------------------------------------------------------------------------------------------
                                                                                June 30,          December 31,
Assets                                                                           2000                 1999
---------------------------------------------------------------------------------------------------------------


Cash and due from banks                                                $          14,187                26,023
Securities available for sale                                                    172,189               185,908

Loans, gross                                                                     434,572               417,249
Less: Unearned discount and origination fees                                        (676)                 (699)
          Allowance for loan losses                                               (5,361)               (5,107)
---------------------------------------------------------------------------------------------------------------
Loans, net                                                                       428,535               411,443

Accrued interest receivable                                                        3,054                 3,397
Bank premises, leasehold improvements and furniture and equipment -net            14,336                14,431
Real estate owned other than bank premises                                           387                   558
Other assets                                                                      12,270                11,515
---------------------------------------------------------------------------------------------------------------

Total assets                                                           $         644,958               653,275
===============================================================================================================


Liabilities
---------------------------------------------------------------------------------------------------------------
Deposits:
   Noninterest-bearing demand                                          $          52,725                49,502
   Interest-bearing                                                              428,704               434,944
--------------------------------------------------------------------------------------------------------------

Total deposits                                                                   481,429               484,446
--------------------------------------------------------------------------------------------------------------
Other borrowed money and capitalized lease obligations                            50,517                75,567
Federal Funds Purchased                                                           50,900                32,450
Accrued interest payable                                                           2,856                 2,040
Other liabilities                                                                    670                 1,555
--------------------------------------------------------------------------------------------------------------

Total liabilities                                                                586,372               596,058
--------------------------------------------------------------------------------------------------------------

Shareholders' Equity
---------------------------------------------------------------------------------------------------------------
Common stock, $.31 par value, authorized 10,000,000 shares;                        2,010                 2,009
     Issued 6,429,460 and 6,427,804 respectively shares
Surplus                                                                            6,120                 6,107
Retained earnings                                                                 54,970                53,790
Accumulated other comprehensive income (loss)                                     (4,318)               (4,493)
Less treasury stock-at cost (60,820 shares)                                         (196)                 (196)
---------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                        58,586                57,217
--------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                             $         644,958               653,275
==============================================================================================================
</TABLE>


                                       1


<PAGE>





FIRST LIBERTY BANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income
(In thousands of dollars, except per share information)
(unaudited)

<TABLE>
<S>                                                <C>              <C>                   <C>            <C>
----------------------------------------------------------------------------------------------------------------
                                                       Three months                           Six months
                                                       Ended June 30                         Ended June 30
                                                   2000            1999                  2000            1999
----------------------------------------------------------------------------------------------------------------

Interest income:
   Interest and fees on loans                  $  8,229           7,512                16,458          14,922
   Interest on interest bearing deposits              5             167                    13             422
   Interest and dividends on securities:
      Taxable                                     2,305           2,299                 4,661           4,298
      Exempt from Federal Taxes                     376             576                   798           1,201
   Interest on federal funds sold                    --              63                    --              72
----------------------------------------------------------------------------------------------------------------
     Total interest income                       10,915          10,617                21,930          20,915
----------------------------------------------------------------------------------------------------------------
Interest expense:
   Deposits                                       4,837           4,860                 9,538           9,571
   Fed Funds Purchased                              454               3                   811               3
   Capitalized lease obligations and borrowed funds 943             702                 1,973           1,399
----------------------------------------------------------------------------------------------------------------
     Total interest expense                       6,234           5,565                12,322          10,973
----------------------------------------------------------------------------------------------------------------

Net interest income                               4,681           5,052                 9,608           9,942
Provision for loan losses                           180             180                   360             360
----------------------------------------------------------------------------------------------------------------

Net interest income after
     provision for loan losses                    4,501           4,872                 9,248           9,582
----------------------------------------------------------------------------------------------------------------
Noninterest income:
     Service charges and fees                       165             161                   328             344
     Gains on sale of securities                     --              13                    53              87
     Trust                                          174             173                   344             337
     Other                                          144             178                   277             293
----------------------------------------------------------------------------------------------------------------
     Total noninterest income                       483             525                 1,002           1,061
----------------------------------------------------------------------------------------------------------------

Noninterest expense:
     Salaries and benefits                        1,934           1,762                 3,911           3,543
     Net occupancy and furniture/equipment expenses 643             618                 1,293           1,169
     Data processing services                        25              81                    73             196
     Foreclosure and other real estate expense       12               3                    21              59
        Other expenses                              812             959                 1,646           1,769
----------------------------------------------------------------------------------------------------------------

     Total noninterest expense                    3,426           3,423                 6,944           6,736
----------------------------------------------------------------------------------------------------------------
Income before federal income tax provision        1,558           1,974                 3,306           3,907
Income tax provision                                344             435                   725             850
----------------------------------------------------------------------------------------------------------------
Net income                                        1,214           1,539                 2,581           3,057
----------------------------------------------------------------------------------------------------------------
Other comprehensive income net of tax
   Unrealized gains on securities:
   Unrealized holding (loss)/gain
   arising during the period                        140          (2,622)                  210          (3,018)
   Reclassification adjustment for gains
     included in net income                           0              (9)                  (35)            (57)
 Comprehensive income (loss)                $     1,354          (1,092)                2,756             (18)
================================================================================================================

Per share information
   Net income-basic                                 .19             .24                   .41             .48
   Net income-diluted                               .19             .24                   .40             .48

</TABLE>

                                       2






<PAGE>


FIRST LIBERTY BANK CORP. AND  SUBSIDIARIES

Consolidated Statements of Cash Flows
(In thousands of dollars)
<TABLE>
<S>                                                                                <C>                        <C>
---------------------------------------------------------------------------------------------------------------------
                                                                                        Six months ended June 30
                                                                                     2000                       1999
                                                                                     ----                       ----
---------------------------------------------------------------------------------------------------------------------
Operating activities:
   Net income                                                                       2,581                      3,057
   Adjustments to reconcile net income to net cash provided by
          Operating activities   :
               Gains on sales of securities                                           (53)                       (87)
               Provision for loan losses                                              360                        360
               Depreciation and amortization of investment securities, bank
                       premises, leasehold improvements and furniture and equipment   649                        483
               Increase in interest receivable and other assets                      (450)                    (1,661)
               (Decrease)/Increase in interest payable and other liabilities          (69)                      (528)
---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                           3,018                      1,624
---------------------------------------------------------------------------------------------------------------------
Investing activities:
    Proceeds from maturities of securities                                          8,641                     41,109
    Purchases of securities available for sale                                        ---                    (72,540)
    Proceeds from sales of securities available for sale                            5,344                     13,175
    Net increase in loans                                                         (17,591)                   (11,076)
    Purchases of bank premises, leasehold improvements and                           (554)                    (2,212)
               Furniture and equipment-net
    Sales of assets acquired through foreclosure, net                                 310                        383
---------------------------------------------------------------------------------------------------------------------

Net cash used by investing activities                                              (3,850)                   (31,161)
---------------------------------------------------------------------------------------------------------------------

Financing activities:
     Net increase/(decrease) in:
     Deposits                                                                      (3,017)                    25,017
     Fed Funds Purchased                                                           18,450                     (5,000)
     Principal payments on capitalized lease obligation                               (50)                       (46)
     Repay borrowed funds                                                         (25,000)                        --
     Proceeds of stock issued thru exercise of options                                 14                        131
     Dividends paid                                                                (1,401)                    (1,272)
---------------------------------------------------------------------------------------------------------------------

Net cash (used) provided by financing activities                                  (11,004)                    18,830
---------------------------------------------------------------------------------------------------------------------

Decrease in cash and cash equivalents                                             (11,836)                   (10,707)
Cash and cash equivalents at beginning of period                                   26,023                     25,628
---------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                         14,187                     14,921
=====================================================================================================================

Cash paid during the period:
     Interest                                                               $      11,556                     10,796
     Federal Income Taxes                                                           1,042                        877
=====================================================================================================================

Noncash transactions:
    Net unrealized gain/(loss) on securities available for sale, net of tax $         175                     (3,075)
    Transfers of loans to real estate owned other than bank premise                   139                        431
=====================================================================================================================
</TABLE>
                                       3

<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)
------------------------------------------------------------------------------

(1)      Summary of Significant Accounting Policies

         Basis of Financial Statement Presentation

        The accompanying consolidated financial statements of First Liberty Bank
        Corp. and  subsidiaries  (the Company) were prepared in accordance  with
        instructions to Form 10-Q, and therefore,  do not include information or
        footnotes  necessary for a complete  presentation of financial position,
        results  of  operations  and cash  flows in  conformity  with  generally
        accepted  accounting   principles.   However,   all  normal,   recurring
        adjustments  which,  in the opinion of  management,  are necessary for a
        fair presentation of the financial statements, have been included. These
        financial  statements  should be read in  conjunction  with the  audited
        financial  statements  and the notes  thereto  included in the Company's
        Annual  Report for the period ended  December 31, 1999.  The results for
        the six months ended June 30, 2000 are not necessarily indicative of the
        results that may be expected for the year ended December 31, 2000.

         Business

        The  Company's  principal  subsidiary,  First  Liberty   Bank  &  Trust
        (the Bank), conducts business from its branch  bank  system  located in
        Lackawanna and Luzerne Counties,  Pennsylvania. The Bank  is subject to
        competition from other financial institutions and other companies which
        provide financial services.  The Bank is subject to the regulations  of
        certain federal and state agencies and undergoes  periodic examinations
        by those regulatory authorities.

         Principles of Consolidation

        On February 16, 1999, the Company merged its two principal subsidiaries,
        The First National Bank of Jermyn and NBO National Bank,  under the name
        First  Liberty Bank & Trust.  Concurrent  with this merger,  the Company
        converted the charter of the Bank to a State  chartered  commercial bank
        subject to regulation by the Pennsylvania  Department of Banking and the
        Federal Reserve Bank.

        The consolidated financial statements include the accounts of all of the
        Company's  wholly-  owned  subsidiaries.  All  significant  intercompany
        transactions  have  been  eliminated  in  consolidation.   Additionally,
        certain  reclassifications  have been made in order to conform  with the
        current year's  presentation.  The accompanying  consolidated  financial
        statements have been prepared on an accrual basis.

                                       4
<PAGE>


(2)     Earnings Per Share

        Basic earnings per share were computed based on the weighted average
        number of shares outstanding during each period.  Diluted earnings per
        share include the dilutive effect of the  Company's  weighted   average
        stock options outstanding using the Treasury Stock method.

        The  following  table  sets  forth the computation of basic and diluted
        earnings per share (in thousands)

<TABLE>
<S>                                         <C>                          <C>
                                            3 months ended June 30          6 months ended June 30
                                            2000              1999          2000              1999
                                            ----              ----          ----              ----
Numerator:
         Net Income                    $   1,214         $   1,539     $   2,581         $   3,057

Denominator:
         Denominator for basic
         earnings per weighted
         average shares                    6,367             6,364         6,367             6,356

Effect of dilutive securities:
         Employee Stock options               25                48            30                52
                                           _____            ______         _____            ______

Denominator for diluted earnings
         per share adjusted weighted
         average shares and assumed
         exercise of stock options         6,392             6,412         6,397             6,408

Basic earnings per share                     .19               .24           .41               .48
Diluted earnings per share                   .19               .24           .40               .48

</TABLE>


                                       5

<PAGE>
Item 2.

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

Overview

The Company's net income for the six months ended June 30, 2000 was $2.6 million
or $.40 per diluted  share  compared to $3.1 million and $.48 per diluted  share
for the same six-months period in the preceding year. The decrease in net income
was primarily  attributable to a decrease in net interest income,  combined with
increased noninterest expense.

The Company  recorded  an  annualized  return on average  assets of .81% for the
six-month  period ending June 30, 2000,  compared to .99% for the same period in
1999.  Return on average  equity of 9.05% was recorded for the six-month  period
ended June 30, 2000, compared to 10.40% for the same period in 1999.

At June 30, 2000, the Company had total assets of $645 million  compared to $653
million at December 31, 1999. The decline in total assets  primarily  represents
maturities and sales of securities  with the proceeds used to fund repayments of
deposits and other borrowings.

The Company is susceptible to a continued  increasing  interest rate environment
that may erode the net  interest  margin.  Strategies  to enhance  earnings  and
improve the interest  rate exposure of the Company will be  considered,  such as
the  sale  of  existing  mortgage-backed   securities  available  for  sale  and
purchasing higher yielding, rate sensitive assets with the proceeds.

The Company's wholly owned subsidiary, First Liberty Bank & Trust, is one of the
largest independent  community banks in Northeastern  Pennsylvania.  The Company
intends to increase its market  penetration  through,  among other  things,  the
purchase of additional branches.

Financial Condition

Cash and Due From Banks and Federal Funds Sold

Cash and due from banks decreased  approximately  $11.8 million to $14.2 million
at June 30, 2000 from $26 million at December  31, 1999 as the company  utilized
excess liquidity to pay down other borrowed money.

Securities

Securities  available  for sale have  decreased  $13.7 million or 7.4% to $172.2
million from $185.9  million at December 31, 1999.  This  decrease was primarily
driven by the maturity of, sale of, and paydowns  received of $4.7  million,$5.3
million and $3.7 million of securities available for sale, respectively.

Loans Receivable, Net

Aggregate loans receivable  totaled $428.5 million at June 30, 2000, an increase
of $17.1  million from $411.4  million at December 31, 1999.  This increase is a
result  of  approximately  $5.9  million  in  commercial  and  $9.5  million  in
commercial  real estate loan  origination  during the six months  ended June 30,
2000.

                                       6

<PAGE>


Non-Performing Assets
The Company's total non-performing  assets decreased  approximately  $554,000 to
$1.6  million  or .25% of total  assets  at June 30,  2000 as  compared  to $2.2
million or .33% of total assets at December 31, 1999.  Loans greater than ninety
days delinquent but still accruing  decreased from $154,000 at December 31, 1999
to $55,000 at June 30, 2000. Nonaccrual loans decreased  approximately  $284,000
to $1.2 million.
Real estate owned,  decreased  from $558,000 as of December 31, 1999 to $387,000
as of June 30,  2000,  due to four  residential  properties  sold  from the real
estate owned portfolio. There were no significant gains or losses on the sale of
real estate owned during the quarters ended June 30, 2000 and 1999.
<TABLE>
<S>                                                              <C>                                <C>
                                                                  6/30/00                             12/31/99

Nonaccrual                                                  $   1,162,000                        $   1,446,000

Loans 90 day or more delinquent                             $      55,000                        $     154,000

Restructured                                                           --                                   --
                                                             ____________                         ____________
        Total non-performing                                $   1,217,000                        $   1,600,000


Real estate owned other than

         Bank premises                                            387,000                              558,000
                                                             ____________                         ____________
         Total non-performing assets                        $   1,604,000                        $   2,158,000

</TABLE>

At June 30,  2000,  the  Company's  allowance  for loan losses  amounted to $5.4
million or 1.23% of gross loans receivable.  At December 31, 1999, the Company's
allowance for loan losses was $5.1 million or 1.22 % of gross loans  receivable.
The  allowance  for loan losses as of June 30, 2000 has been deemed  adequate by
management.  The allowance is maintained at a level  adequate to cover  inherent
losses in the loan  portfolio  given the  present  past due,  nonperforming  and
classified levels.

Deposits

Deposits  decreased $3 million or .62% from $484.4  million at December 31, 1999
to $481.4  million at June 30, 2000.  The decrease in deposits was primarily due
to  maturities  of  certificates  of  deposit  and a  decrease  in the  level of
interest-bearing demand accounts.

Equity

At June 30,  2000,  total  equity  was  $58.6  million  or 9.1% or total  assets
compared to $57.2 million or 8.8% of total assets as of December 31, 1999. Total
equity  increased  partially  due to the  retention  of net  income  during  the
intervening  period.  In addition,  there was an increase in  accumulated  other
comprehensive income due to market changes in the AFS portfolio.

                                       7

<PAGE>

Results of Operations

Net Income

The Company's  net income for the three months ended June 30, 2000  decreased to
$1.2  million  compared to $1.5 million for the three months ended June 30, 1999
primarily due to an increase of $451,000 and $241,000 in interest expense on Fed
Funds   purchased  and  capitalized   lease   obligations  and  borrowed  funds,
respectively.

The  Company's  net income was $2.6  million  for the six months  ended June 30,
2000,  compared to $3.1 million  recorded in the comparable  prior period.  This
$500,000  decrease was due, in part,  to an increase in interest  expense on Fed
Funds purchased and capitalized lease  obligations/borrowed  funds. In addition,
the Company's  noninterest  income decreased  slightly to $1 million for the six
months  ended June 30, 2000 from $1.1  million for the six months ended June 30,
1999, while  noninterest  expense increased  approximately  $208,000 for the six
months ended June 30, 2000, compared to the comparable prior period.

Net Interest Income

Net interest  income before  provision for loan losses  amounted to $4.7 million
and $9.6 million for the three-month  and six-month  periods ended June 30, 2000
versus $5.1 million and $9.9 million for the comparable  prior period ended June
30, 1999.

Total interest income increased to $10.9 million and $21.9 million for the three
and six month  periods  ended June 30, 2000 from $10.6 million and $20.9 million
during  the  comparable  prior  periods.  The  average  interest-earning  assets
increased  $9.0 million for the six months  ended June 30, 2000  compared to the
six months  ended June 30,  1999.  In addition  the yield  earned on the average
interest-earning  assets  increased 16 basis points  during the six months ended
June 30, 2000 compared to the 1999 period.

Total interest expense increased to $6.2 million and $12.3 million for the three
and six months ended June 30, 2000 from $5.6  million and $10.9  million for the
comparable prior period. These increases are the result of increases in interest
expense on Fed Funds  purchased and capitalized  lease  obligations and borrowed
funds. The average balance of deposits decreased by $22.2 million during the six
months ended June 30, 2000, compared to the comparable 1999 period. However, the
average  rates paid on  deposits  increased  17 basis  points for the six months
ended June 30, 2000 over the comparable 1999 period.  The average balance of Fed
Funds purchased and other  borrowings  increased by $40.8 million during the six
months ended June 30, 2000, compared to the comparable 1999 period. In addition,
the average rates paid on Fed Funds purchased and other borrowings  increased 57
basis points for the six months ended June 30, 2000,  compared to the comparable
1999 period.

Provision for Loan Losses

The  Company  establishes  a  provision  for loan  losses,  which is  charged to
operations,  in order to maintain the allowance for loan losses at a level which
is deemed to be appropriate  based upon an assessment of prior loss  experience,
the  volume  and type of  lending  presently  being  conducted  by the  Company,
industry standards,  past due loans, economic conditions in the Company's market
area generally and other factors related to the  collectability of the Company's
loan portfolio.  The Company's  provision for loan losses remained consistent at
$180,000 for the three months ended June 30, 2000 and June 30, 1999,  as well as
for the six months ended June 30, 2000 and June 30, 1999 at $360,000.


                                       8
<PAGE>

Although  management  utilizes  its best  judgement  in  providing  for inherent
losses, there can be no assurance that the Company will not have to increase its
provisions for loan losses in the future as a result of the future  increases in
non-performing  loans or for other  reasons  which  could  adversely  affect the
Company's results of operations. In addition, various regulatory agencies, as an
integral part of their examination  process,  periodically  review the allowance
for loan losses. Such agencies may require the Company to recognize additions to
the allowance for loan losses based on their judgements of information  which is
available to them at the time of their examination.

Noninterest Income

Noninterest  income for the three and six month periods ending June 30, 2000 was
$483,000  and $1 million  compared  to  $525,000  and $1.1  million for the same
periods in the prior  year.  The  decrease  for the three  month  period was the
result of a $13,000  decrease  in gains on sale of  securities  combined  with a
$34,000 decrease in other  noninterest  income.  The decrease over the six month
period was due to a $16,000  decrease  in service  charges and fees on loans and
deposits  combined with a $34,000  decrease in gains on sale of securities and a
$16,000 decrease in other noninterest income.

Noninterest Expense

Non interest  expenses for the three month period ended June 30, 2000  increased
$3,000 to $3.4  million  from the same period in the prior year,  while over the
six month period ended June 30, 2000 noninterest  expenses increased $208,000 to
$6.9 million from the same period in the prior year. The decrease over the three
month  period was the result of a $172,000  increase  in salaries  and  benefits
offset by a $56,000 and $147,000 decrease in data processing  services and other
expenses, respectively. The increase over the six month period was the result of
the $368,000 and $124,000  increases in salaries and benefits and net  occupancy
and  furniture/equipment  expenses,  respectively,  as a result of opening three
additional  branches subsequent to June 30, 1999. The increases were offset by a
$123,000  decrease in each data  processing  services  and other  expenses.  The
decreases in data  processing  services were primarily the result of the Company
reconfiguring certain vendor contracts to realize efficiencies  permitted by the
merger of the two predecessor banks into First Liberty Bank & Trust.

Income Taxes

Income tax expense  totaled  $344,000 and  $725,000 for the three and  six-month
periods ended June 30, 2000 compared to $435,000 and $850,000 for the comparable
prior periods. These amounts resulted in effective tax rates calculated at 22.1%
for the three  months  ended June 30, 2000 and 21.9% for the six months June 30,
2000  compared to 22.0% for the three  months  ended June 30, 1999 and 21.8% for
the six months ended June 30, 1999.  It has been the  Company's  tax strategy to
increase  tax-exempt  income  as  a  percentage  of  total  net  income  through
investments in tax-exempt securities,  bank owned life insurance, and low income
housing credits.

                                       9
<PAGE>
Liquidity & Capital Adequacy

The  Company's  primary  source of funds on long term and short  term  basis are
deposits,  principal and interest payments on loans, mortgage backed securities,
and FHLB advances.  The Company uses the funds  generated to support its lending
and  investment  activities as well as any other  demands for liquidity  such as
deposit out flows.

The Company has  continued to maintain the required  levels of liquid  assets as
defined by Federal regulations.

A strong  capital  position is important to the continued  profitability  of the
Company and promotes  depositor and investor  confidence.  The Company's capital
consists of shareholders'  equity,  which provides a basis for future growth and
expansion and also provides a buffer against unexpected losses.

Shareholders'  equity  increased $1.4 million to $58.6 million at June 30, 2000.
It  is  management's  intention  to  continue  paying  a  reasonable  return  on
shareholders'  investment while retaining  adequate earnings to allow for future
growth.

The Federal Reserve Board measures capital  adequacy for bank holding  companies
by using a risk-based  capital  frame-work  and by  monitoring  compliance  with
minimum leverage ratio guidelines. The minimum ratio of total risk-based capital
to  risk-adjusted  assets  is 8% at June  30,  2000,  of which 4% must be Tier 1
capital.  The Company's total  risk-based  capital ratio was 16.55 % at June 30,
2000. The Company's Tier 1 risk-based capital ratio was 15.30% at June 30, 2000.

In addition,  the Federal Reserve Board has established  minimum  leverage ratio
guidelines for bank holding  companies.  These guidelines  provide for a minimum
leverage  ratio of 3% for bank holding  companies  that meet  certain  criteria,
including  that they  maintain  the highest  regulatory  rating.  All other bank
holding  companies  are  required  to  maintain a  leverage  ratio of 3% plus an
additional  cushion of at least 100 to 200 basis  points.  The  Federal  Reserve
Board has not  advised  the  Company  of any  specific  minimum  leverage  ratio
applicable to it. The Company's leverage ratio was 9.81% at June 30, 2000.

The Federal Deposit Insurance  Corporation  Improvement Act (FDICIA) establishes
minimum capital  requirements  for all depository  institutions  and established
five   capital   tiers:   "well    capitalized",    "adequately    capitalized,"
"under-capitalized,    "significantly    under-capitalized,"   and   "critically
under-capitalized," FDICIA imposes significant restrictions on the operations of
a bank which is not at least adequately capitalized.  A depository institutions'
capital  tier will  depend  upon where its  capital  levels are in  relation  to
various other capital  measures which include a risk-based  capital  measure,  a
leverage ratio capital measure and other factors. Under regulations adopted, for
an institution to be well  capitalized it must have a total  risk-based  capital
ratio of at least 10%, a Tier I risk-based  capital  ratio of at least 6%, and a
Tier I leverage ratio of at least 5%, and not be subject to any specific capital
order or directive.

At June 30, 2000, the Bank's total risk-based capital, Tier I risk-based capital
and Tier I leverage ratios were 16.55%, 15.30% and 9.81%, respectively.

                                       10
<PAGE>

Market Risk and Interest Rate Risk

Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's  market risk arises  primarily from interest rate risk inherent in
its lending,  investment, and deposit taking activities. To that end, management
actively monitors and manages its interest rate risk exposure.

The Company uses  simulation  analysis to help monitor and manage  interest rate
risk. In this analysis the Company examines the result of 100, 200 and 300 basis
point change in market interest rates and the effect on net interest income.  It
is  assumed  that the  change  is  instantaneous  and that all  rates  move in a
parallel manner. In addition,  it is assumed that rates on core deposit products
such as NOWs, savings accounts, and the MMDA accounts will be adjusted by 50% of
the assumed rate change.  Assumptions are also made concerning prepayment speeds
on mortgage loans and mortgage securities.  The results of this rate shock are a
useful tool to assist the Company in assessing  interest  rate risk  inherent in
their balance sheet.

The results of this rate shock analysis as of June 30, 1999 are as follows:

Change in Rate             Net Interest Income Change (After tax, in thousands)
--------------             ----------------------------------------------------
    +300                                        (3472.5)
    +200                                        (2316.7)
    +100                                        (1153.5)
    -100                                         1011.2
    -200                                         1864.0
    -300                                         2411.6

Forward Looking Statements

These  financial   statements  include  certain  "forward  looking   statements"
concerning the future  operations of the Company.  It is management's  desire to
take  advantage  of the  "safe  harbor"  provisions  of the  Private  Securities
Litigation  Reform Act of 1995.  This  statement  is for the express  purpose of
availing the Company of the  protections of such safe harbor with respect to all
"forward looking  statements"  contained in our financial  statements.  "Forward
looking  statements"   describe  the  future  plans  and  strategies   including
expectations of the Company's future financial results.  Management's ability to
predict  results  or the  effect of  future  plans and  strategy  is  inherently
uncertain.  Factors  that could affect  results  include  interest  rate trends,
competition,  the general  economic  climate in Northeastern  Pennsylvania,  the
mid-Atlantic region and country as a whole, loan delinquency rates,, and changes
in  federal  and  state  regulation.  These  factors  should  be  considered  in
evaluating the "forward  looking  statements",  and undue reliance should not be
placed on such statements.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information set forth under the caption "Market Risk and Interest Rate Risk"
under Item 2 of Part I is incorporated herein by reference.

                                       11
<PAGE>


FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
June 30, 2000


               PART II.      OTHER INFORMATION

         ITEM 1.     LEGAL PROCEEDINGS
                     None

         ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS
                     None

         ITEM 3.     DEFAULTS UPON SENIOR SECURITIES
                     None

         ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
               The Company  held its 2000 Annual Meeting  of Shareholders  (the
        "Meeting") on May 15, 2000 for  the  purpose  of  electing six class II
        members of the Board of Directors to serve for a period of three  years
        from the date of election .

        At the Meeting, all of the nominees of the Company's Board of Directors
        were elected as follows:

             1.  Election of Class II Directors:
                 -------------------------------

                   Nominee            Votes For         Votes Withheld
                   -------            ---------         --------------

             William M. Davis         4,113,775                 30,096
             William K Nasser, Jr.    4,107,163                 36,708
             Peter A. Sabia           4,111,975                 31,896
             Thomas G. Speicher       4,113,975                 30,096
             Steven R. Tokach         4,113,855                 30,016


         ITEM 5.     OTHER INFORMATION
                     None

         ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K
                     (a):           Exhibits:
                                    Financial Data Schedule, which is submitted
                                    electronically  to   the   Securities   and
                                    Exchange Commission  for  information  only
                                    and not filed.

                     (b):           Reports on Form 8-K:
                                    None


                                       12
<PAGE>


FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
June 30, 2000



         SIGNATURES

In accordance with  requirement of the Exchange Act, the registrant  caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

                          THE FIRST LIBERTY BANK CORP.
                                  (Registrant)


        Date         August 10, 2000                By /s/ William M. Davis
                     ---------------                       ----------------
                                                    William M. Davis
                                                    Chairman, President and
                                                    Director
                                                    Principal Executive Officer)

         Date        August 10, 2000                By /s/ Donald J. Gibbs
                     ---------------                       ---------------
                                                    Donald J. Gibbs
                                                    (Principal Financial Officer
                                                    And Treasurer)



                                       13