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 September 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 September 30, 2000
               -----                          ---------------------------------
Common stock, $.31 par value                               6,429,460


                                       1

<PAGE>


                   FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
                                   FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 2000

                                     INDEX

                                                                            Page

PART 1 - FINANCIAL INFORMATION Page

     ITEM 1. FINANCIAL STATEMENTS:

     Consolidated Balance Sheets - September 30, 2000 (unaudited) and
          December 31, 1999                                                   1

     Consolidated Statements of Income - Three Months and Nine Months
          Ended September 30, 2000 and 1999 (unaudited)                       2

     Consolidated Statements of Cash Flows
          Nine Months Ended September 30, 2000 and 1999 (unaudited)           3

     Notes to Consolidated Financial Statements                               4

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



                                       2

<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)
<TABLE>
<S>                                                                     <C>                 <C>
--------------------------------------------------------------------------------------------------------------
                                                                        September 30,         December 31,
Assets                                                                      2000                  1999
--------------------------------------------------------------------------------------------------------------
                                                                         (unaudited)

Cash and due from banks                                              $     14,243                 26,023
Securities available for sale                                             169,266                185,908
Loans, gross                                                              435,112                417,249
Less: Unearned discount and origination fees                                 (633)                  (699)
      Allowance for loan losses                                            (5,493)                (5,107)
---------------------------------------------------------------------------------------------------------
Loans, net                                                                428,986                411,443

Accrued interest receivable                                                 4,223                  3,397
Bank premises, leasehold improvements and furniture and equipment -net     14,326                 14,431
Real estate owned other than bank premises, repossessed assets                465                    558
Other assets                                                               15,152                 11,515
---------------------------------------------------------------------------------------------------------

Total assets                                                         $    646,661                653,275
=========================================================================================================

Liabilities
---------------------------------------------------------------------------------------------------------

Deposits:
  Noninterest-bearing demand                                         $     54,641                 49,502
  Interest-bearing                                                        442,321                434,944
---------------------------------------------------------------------------------------------------------
Total deposits                                                            496,962                484,446
---------------------------------------------------------------------------------------------------------

Other borrowed money                                                       10,491                 75,567
Federal funds purchased                                                    75,890                 32,450
Accrued interest payable                                                    2,595                  2,040
Other liabilities                                                             571                  1,555
---------------------------------------------------------------------------------------------------------


Total liabilities                                                         586,509                596,058
---------------------------------------------------------------------------------------------------------

Shareholders' Equity
Common stock, $.31 par value, authorized 10,000,000 shares;                 2,009                  2,009
  Issued 6,429,460 and 6,427,804 respectively shares
Surplus                                                                     6,121                  6,107
Retained earnings                                                          55,439                 53,790
Accumulated other comprehensive income (loss)                              (3,221)                (4,493)
Less treasury stock-at cost (60,820 shares)                                  (196)                  (196)
---------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                 60,152                 57,217
---------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                           $    646,661                653,275
=========================================================================================================

</TABLE>





                                       1

<PAGE>

FIRST LIBERTY BANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income
(In thousands of dollas, except per share information)
(unaudited)
<TABLE>
<S>                                                                   <C>          <C>              <C>           <C>
--------------------------------------------------------------------------------------------------------------------------
                                                                        Three months                  Nine months
                                                                     Ended September 30            Ended September 30
                                                                   2000             1999         2000             1999
--------------------------------------------------------------------------------------------------------------------------

Interest income:
  Interest and fees on loans                                 $    8,557            7,782        25,015          22,704
  Interest on interest bearing deposits                               6               11            19             433
  Interest and dividends on securities:
     Taxable                                                      2,245            2,467         6,906           6,765
     Exempt from Federal Taxes                                      376              504         1,174           1,705
  Interest on federal funds sold                                     --               --            --              72
--------------------------------------------------------------------------------------------------------------------------

     Total interest income                                       11,184           10,764        33,114          31,679
--------------------------------------------------------------------------------------------------------------------------
Interest expense:
   Deposits                                                       5,111            4,800        14,649          14,371
   Fed Funds Purchased                                            1,067              111         1,878             114
   Capitalized lease obligations and borrowed funds                 265              709         2,238           2,108
--------------------------------------------------------------------------------------------------------------------------

     Total interest expense                                       6,443            5,620        18,765          16,593
--------------------------------------------------------------------------------------------------------------------------

Net interest income                                               4,741            5,144        14,349          15,086
Provision for loan losses 180 180 540 540
--------------------------------------------------------------------------------------------------------------------------

Net interest income after provision for loan losses               4,561            4,964        13,809          14,546
--------------------------------------------------------------------------------------------------------------------------

Noninterest income:
     Service charges and fees                                       188              169           516             513
     Gains on sale of securities                                     --              138            53             225
     Trust                                                          178              155           522             492
     Other                                                          202              237           479             530
--------------------------------------------------------------------------------------------------------------------------
     Total noninterest income                                       568              699         1,570           1,760
--------------------------------------------------------------------------------------------------------------------------

Noninterest expense:
     Salaries and benefits                                        2,001            1,837         5,912           5,380
     Net occupancy and furniture/equipment expenses                 648              625         1,941           1,794
     Data processing services                                        83               66           156             262
     Foreclosure and other real estate expense                       21               (6)           42              53
     Other expenses                                                 875            1,019         2,521           2,788
--------------------------------------------------------------------------------------------------------------------------

     Total noninterest expense                                    3,628            3,541        10,572          10,277
--------------------------------------------------------------------------------------------------------------------------

Income before federal income tax provision                        1,501            2,122         4,807           6,029
Income tax provision                                                331              430         1,056           1,280
--------------------------------------------------------------------------------------------------------------------------

Net income                                                        1,170            1,692         3,751           4,749
--------------------------------------------------------------------------------------------------------------------------

Other comprehensive income net of tax
  Unrealized gains on securities:
  Unrealized holding (loss)/gain arising during the period        1,097             (870)        1,307          (3,887)
  Reclassification adjustment for gains included
   in net income                                                    ---              (91)          (35)           (149)
Comprehensive income                                         $    2,267              731         5,023             713
==========================================================================================================================
Per share information
  Net income-basic                                                  .18              .27           .59             .75
  Net income-diluted                                                .18              .26           .59             .74

</TABLE>



                                       2

<PAGE>



FIRST LIBERTY BANK CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)
(In thousands of dollars)
<TABLE>
<S>                                                                       <C>               <C>
--------------------------------------------------------------------------------------------------------
                                                                         Nine months ended September 30
                                                                               2000            1999
                                                                               ----            ----
--------------------------------------------------------------------------------------------------------

Operating activities:
  Net income                                                                  3,751           4,749
  Adjustments to reconcile net income to net cash provided by
     operating activities :
       Gains on sales of securities                                             (53)           (225)
       Provision for loan losses                                                540             540
       Depreciation and amortization of investment securities, bank
          premises, leasehold improvements and furniture and equipment          969             812
       Increase in interest receivable and other assets                      (5,118)         (1,387)
       Decrease in interest payable and other liabilities                      (429)           (182)
--------------------------------------------------------------------------------------------------------

Net cash (used) provided by operating activities                               (340)          4,307
--------------------------------------------------------------------------------------------------------

Investing activities:
  Proceeds from maturities and paydowns of securities                        13,278          50,979
  Purchases of securities available for sale                                    ---         (72,540)
  Proceeds from sales of securities available for sale                        5,344          20,215
  Net increase in loans                                                     (18,372)        (36,959)
  Purchases of bank premises, leasehold improvements and                       (864)         (3,423)
       Furniture and equipment-net
  Sales of assets acquired through foreclosure, net                             382             629
--------------------------------------------------------------------------------------------------------

Net cash used by investing activities                                          (232)        (41,099)
--------------------------------------------------------------------------------------------------------

Financing activities:
  Net increase in deposits                                                   12,516          12,389
  Net increase in Fed Funds Purchased                                        43,440          21,500
  Principal payments on capitalized lease obligation                            (76)            (69)
  Repay Borrowed funds                                                      (65,000)         (5,000)
  Proceeds of stock issued thru exercise options                                 14             154
  Dividends paid                                                             (2,102)         (1,272)
--------------------------------------------------------------------------------------------------------

Net cash (used) provided by financing activities                            (11,208)         27,702
--------------------------------------------------------------------------------------------------------

Decrease in cash and cash equivalents                                       (11,780)         (9,090)
Cash and cash equivalents at beginning of period                             26,023          25,628
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                   14,243          16,538
========================================================================================================
Cash paid during the period:
  Interest                                                                 $ 18,210          16,467
  Federal Income Taxes                                                        1,362           1,227

Noncash transactions:
  Net unrealized gain (loss) on securities available for sale, net of tax  $  1,272          (4,036)
  Transfers of loans to real estate owned other than bank premise               289             712
========================================================================================================

</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 nine months ended  September
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 September 30         9 months ended September30
                                                2000        1999                     2000         1999
                                                ----        ----                     ----         ----

Numerator:
     Net Income                               $ 1,170     $ 1,692                  $ 3,751      $ 4,749

Denominator:
     Denominator for basic
     earnings per weighted
     average shares                             6,369       6,364                    6,368        6,360

Effect of dilutive securities:
     Employee Stock options                        21          44                       27           48
                                               ------      ------                   ------       ------

Denominator for diluted earnings                6,390       6,408                    6,395        6,408
     per share adjusted weighted
     average shares and assumed
     exercise of stock options

Basic earnings per share                          .18         .27                      .59          .75
Diluted earnings per share                        .18         .26                      .59          .74


</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 nine months ended  September 30, 2000 was $3.8
million or $.59 per diluted share  compared to $4.7 million and $.74 per diluted
share for the same nine-months period in the preceding year. The decrease in net
income was primarily attributable to a decrease in net interest income, combined
with an increase in noninterest expense.

The Company  recorded an  annualized  return on average  assets of .63 % for the
nine-month  period ended  September  30,  2000,  compared to 1.01 % for the same
period  in  1999.  Return  on  average  equity  of 6.60 % was  recorded  for the
nine-month  period ended  September  30,  2000,  compared to 10.80% for the same
period in 1999.

At September 30, 2000, the Company had total assets of $646.7  million  compared
to $653.3  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 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.

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  September  30, 2000 from $26.0  million at December  31, 1999 as the company
utilized excess liquidity to pay down other borrowed money.

Securities

Securities  available  for sale have  decreased  $16.6 million or 9.0% to $169.3
million from $185.9  million at December 31, 1999.  This  decrease was primarily
driven by the maturity of $2.1 million,  the sale of $5.3 million,  and paydowns
received of $11.2 million of the securities available for sale portfolio.  These
proceeds were used to pay down other borrowings and to fund loan growth.

Loans Receivable, Net

Aggregate  loans  receivable  totaled  $435.1  million at September 30, 2000, an
increase  of $17.9  million  from  $417.2  million at December  31,  1999.  This
increase is primarily a result of approximately  $10.4 million in commercial and
$10.6 million in commercial real estate loan originations during the nine months
ended September30, 2000.


                                       6

<PAGE>



Non-Performing Assets

The Company's total non-performing  assets decreased  approximately  $325,000 to
$1.8 million or .28% of total  assets at September  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  increased from $154,000 at December 31, 1999
to $302,000 at September  30, 2000.  Nonaccrual  loans  decreased  approximately
$380,000  to  $1.1  million  due in  part  to two  commercial  properties  being
transferred  to other real  estate  owned in addition to $229,000 in loan charge
offs.

Real estate owned and repossessed assets decreased from $558,000 at December 31,
1999 to $465,000 as of September 30, 2000,  due to the sale of five  residential
properties from the real estate owned portfolio. This was offset by the addition
of three  properties  into the real estate owned  portfolio  and the transfer of
four vehicles into repossessed assets. There were no significant gains or losses
on the sale of real estate  owned  during the nine months  ended  September  30,
2000.

<TABLE>
<S>                                                    <C>                 <C>
                                                        9/30/00             12/31/99

Nonaccrual                                           $ 1,066,000          $ 1,446,000

Loans 90 day or more delinquent                      $   302,000          $   154,000

Restructured                                                  --                   --

                                                     -----------          -----------
     Total non-performing loans                      $ 1,368,000          $ 1,600,000


Real estate owned & repossessed assets                   465,000              558,000
                                                     -----------          -----------
     Total non-performing assets                     $ 1,833,000          $ 2,158,000

</TABLE>
At September 30, 2000, the Company's  allowance for loan losses amounted to $5.5
million or 1.26% 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  September  30,  2000 is an  amount  that
management  believes  will be adequate to absorb  known and  inherent  losses on
existing  loans,  based  on  periodic  evaluations  of  the  loan  portfolio  by
management. These evaluations take into consideration such factors as changes in
the nature and volume of the loan portfolio,  overall portfolio quality,  review
of specific  problem  loans,  current  economic  conditions  that may affect the
borrower's ability to pay and other relevant matters.

Deposits

Deposits  increased  $12.5  million or 2.6% from $484.4  million at December 31,
1999 to $496.9  million at September 30, 2000. A primary reason for the increase
in deposits is the purchase of two Mellon branches in the beginning of the third
quarter.

Equity

At September  30, 2000,  total equity was $60.2  million or 9.3% or total assets
compared to $57.2

                                       7

<PAGE>



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 securities available for sale portfolio.

Results of Operations

Net Income

The Company's net income for the three months ended September 30, 2000 decreased
to $1.2 million  compared to $1.7  million for the three months ended  September
30, 1999 primarily due to declines in both net interest income and  non-interest
income.

The  Company's  net income was $3.8 million for the nine months ended  September
30, 2000, compared to $4.7 million recorded in the comparable prior period. This
$900,000 decrease was also primarily due to declines in both net interest income
and non-interest income.

Net Interest Income

Net interest  income before  provision for loan losses  amounted to $4.7 million
and $14.3 million for the three-month and nine-month periods ended September 30,
2000 versus $5.1 million and $15.1 million for the comparable prior period ended
September 30, 1999.

Total interest income increased to $11.2 million and $33.1 million for the three
and nine month  periods  ended  September  30, 2000 from $10.8 million and $31.7
million during the comparable prior periods. The average interest-earning assets
increased $10.8 million for the nine months ended September 30, 2000 compared to
the nine months ended  September  30, 1999.  In addition the yield earned on the
average interest-earning assets increased 20 basis points during the nine months
ended September 30, 2000 compared to the 1999 period.

Total interest expense increased to $6.4 million and $18.8 million for the three
and nine months ended September 30, 2000 from $5.6 million and $16.6 million for
the  comparable  prior  period.  The  increase  for the  three-month  period  is
primarily due to an increase in interest expense on fed funds purchased,  offset
by a decrease in interest expense on capitalized  lease obligations and borrowed
funds.  The increase  for the nine month period is primarily  due to the average
balance of fed funds purchased and other borrowings  increasing by $33.9 million
during the nine months ended September 30, 2000, compared to the comparable 1999
period. In addition,  for the nine-months ended September 30, 2000 average rates
paid on deposits and fed funds  purchased/other  borrowings  increased 25 and 76
basis points respectively, 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

                                       8

<PAGE>



September  30, 2000 and September 30, 1999, as well as for the nine months ended
September 30, 2000 and September 30, 1999 at $540,000.

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 nine month periods ended September 30, 2000
was $568,000 and $1.6 million compared to $699,000 and $1.8 million for the same
periods in the prior  year.  The  decrease  for the three  month  period was the
result of a $138,000  decrease in gains on sale of  securities  combined  with a
$35,000  decrease in other  noninterest  income offset by a $19,000  increase in
service  charges and fees and a $23,000  increase in Trust income.  The decrease
over the nine month  period was due to a $172,000  decrease  in gains on sale of
securities  and a  $51,000  decrease  in other  noninterest  income  offset by a
$30,000 increase in Trust income.

Noninterest Expense

Non  interest  expenses  for the three month  period  ended  September  30, 2000
increased  $87,000 to $3.6 million from the same period in the prior year, while
over the nine  month  period  ended  September  30,  2000  noninterest  expenses
increased  $295,000 to $10.6 million from the same period in the prior year. The
increase  over the three  month  period was  primarily  the result of a $164,000
increase in salaries and benefits and $27,000  increase in foreclosure and other
real  estate  expenses  offset by a $144,000  decrease  in other  expenses.  The
increase  over the nine month period was the result of the $532,000 and $147,000
increases in salaries and benefits  and net  occupancy  and  furniture/equipment
expenses,  respectively,  as a result of opening three additional branches.  The
increases were offset by a $106,000  decrease in data processing  services and a
$267,000  decrease in other expenses.  The decrease in data processing  services
was 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  $331,000  and  $1.1  million  for the  three  and
nine-month  periods  ended  September  30, 2000  compared  to $430,000  and $1.3
million for the comparable  prior periods.  These amounts  resulted in effective
tax rates calculated at 22.1% for the three-months and 22.0% for the nine-months
ended  September 30, 2000 compared to 20.3% for the three months ended September
30, 1999 and 21.2% for the nine months ended  September 30, 1999. Over the three
and nine month periods ended  September 30, 2000 the Company has decreased their
holdings of municipal securities.



                                       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  $3.0 million to $60.2 million at September 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 September 30, 2000, of which 4% must be Tier 1
capital.  The Company's total risk-based  capital ratio was 15.79 % at September
30, 2000. The Company's Tier 1 risk-based  capital ratio was 14.54% at September
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 9.19 % at September 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 September 30, 2000, the Bank's total  risk-based  capital,  Tier I risk-based
capital and Tier I leverage ratios were 15.39%, 14.14% and 9.16%, 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  corresponding  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 September 30, 2000 are as follows:
<TABLE>

          <S>                           <C>
          Change in Rate                Net Interest Income Change (After tax, in thousands)
          --------------                ----------------------------------------------------
               +300                                              (3342.2)
               +200                                              (2229.0)
               +100                                              (1110.0)
               -100                                                937.6
               -200                                               1673.0
               -300                                               2262.2
</TABLE>

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
September 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
             None

     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
September 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      November 13,2000                  By /s/ William M. Davis
               ----------------                     --------------------
                                                    William M. Davis
                                                    Chairman, President and
                                                    Director
                                                   (Principal Executive Officer)

     Date      November 13, 2000                 By /s/ Donald J. Gibbs
               -----------------                    ------------------
                                                    Donald J. Gibbs
                                                   (Principal Financial Officer
                                                    And Treasurer)
























                                       13

<PAGE>