<PAGE>   1
                     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 March 31, 1999

                                     OR

(  ) Transition report pursuant to Section 13 or 15(d) of the Securities   
     Exchange Act of 1934 for the transition period from ______to______


                        Commission File No. 0-13882


                        FIRST WESTERN BANCORP, INC.
                        ---------------------------  
           (Exact name of Registrant as specified in its charter)



 Commonwealth of Pennsylvania                    25-1461570
(State or other jurisdiction of      (I.R.S. Employer Identification  No.)
 incorporation or organization)


          101 East Washington Street, New Castle, Pennsylvania  16101
         (Address of principal executive offices)           (Zip Code)


                             (724) 652-8550
            (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                             YES    X     NO______


The number of shares outstanding of the Registrant's common stock as of May 13,
1999 was:

          Common Stock, $5.00 par value - 11,172,200 shares outstanding

<PAGE>   2


                        FIRST WESTERN BANCORP, INC.

                                   INDEX
<TABLE>
<CAPTION>
                                                                    Page
                                                                   Number
                                                                   ------
<S>  <C>     <C>                                                     <C>   
Part I.  Financial Information:

     Item 1. Financial Statements:                                

             Independent Accountants' Report.......................    3

             Consolidated Balance Sheets:
              March 31, 1999, December 31, 1998 and 
              March 31, 1998.......................................    4

             Consolidated Statements of Income: 
              Three months ended March 31, 1999 
              and three months ended March 31, 1998................    5

             Consolidated Statements of Comprehensive Income:
              Three months ended March 31, 1999 
              and three months ended March 31, 1998................    6

             Consolidated Statements of Changes
              in Shareholders' Equity:
              Three months ended March 31, 1999 
              and three months ended March 31, 1998................    7

             Consolidated Statements of Cash Flows:
              Three months ended March 31, 1999 
              and three months ended March 31, 1998................    8

             Notes to Consolidated Financial Statements............   10

     Item 2. Management's Discussion and Analysis of 
             Financial Condition and Results of Operations.........   13

     Item 3. Quantitative and Qualitative Disclosures about 
             Market Risk...........................................   28

Part II.  Other Information:

     Item 1. - Item 6..............................................   28

     Signature.....................................................   29

</TABLE>

<PAGE>   3



INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Shareholders
 of First Western Bancorp, Inc.

We have reviewed the accompanying consolidated balance sheets of First Western
Bancorp, Inc. and subsidiaries as of March 31, 1999 and 1998, and the related
consolidated statements of income, comprehensive income, changes in
shareholders' equity, and cash flows for the three-month periods then ended.
These financial statements are the responsibility of the Corporation's
management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of First Western Bancorp, Inc. and
subsidiaries as of December 31, 1998, and the related consolidated statements of
income, changes in shareholders' equity, and cash flows for the year then ended
(not presented herein); and in our report dated January 25, 1999, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1998 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.


/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
April 14, 1999
                                     3            

<PAGE>   4



Part I. Item 1. Financial Information

                                   FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                                           CONSOLIDATED BALANCE SHEETS
                                              (Dollars in thousands)
                                                   (Unaudited)

<TABLE> 
<CAPTION>
                                                                     March 31,     December 31,     March 31,
                                                                       1999            1998           1998 
                                                                   -------------   ------------   -------------
<S>                                                                <C>             <C>            <C>          
ASSETS:                                                                       
-------
Cash and due from banks........................................    $      46,973   $     45,997   $      38,149
                                                                   -------------   ------------   -------------
Interest-bearing deposits with other banks.....................            3,967          2,960           1,727
                                                                   -------------   ------------   -------------
Securities available for sale, at market value                          
    (amortized cost of $747,922, $860,338 and $366,926)........          752,136        868,699         376,245
                                                                   -------------   ------------   -------------
Investment securities, held to maturity
    (market value of $217,208 at March 31, 1998)...............                -              -         216,750
                                                                   -------------   ------------   -------------
Loans held for sale............................................            3,951         15,475          20,601
                                                                   -------------   ------------   -------------
Loans (net of unearned income of $35,280, $37,821 and $39,658).        1,109,379      1,131,206       1,001,977
Less: Allowance for possible loan losses.......................           18,312         18,297          18,133
                                                                   -------------   ------------   -------------
    Net loans..................................................        1,091,067      1,112,909         983,844
                                                                   -------------   ------------   -------------
Premises and equipment.........................................           22,292         23,163          20,290
                                                                   -------------   ------------   -------------
Bank-owned life insurance......................................           26,765         26,410          25,351
                                                                   -------------   ------------   -------------
Intangible assets..............................................           44,316         60,389           4,836
                                                                   -------------   ------------   -------------
Other assets...................................................           21,242         71,349          16,864
                                                                   -------------   ------------   -------------
            Total Assets.......................................    $   2,012,709   $  2,227,351   $   1,704,657
                                                                   =============   ============   =============
LIABILITIES:            
------------                                                      
Deposits:                                                                     
    Noninterest-bearing demand.................................    $     165,162   $    142,162   $     100,118
    Interest-bearing demand....................................           48,448         54,668          43,434
    Savings....................................................          417,038        479,644         360,020
    Time.......................................................          718,304        812,282         634,460
                                                                   -------------   ------------   -------------
            Total deposits.....................................        1,348,952      1,488,756       1,138,032
                                                                   -------------   ------------   -------------

Borrowed funds:                                                               
    Federal funds purchased and other short-term borrowings....            2,305         61,078          80,874
    Repurchase agreements and secured lines of credit..........          224,227        222,620         111,964
    Advances from the Federal Home Loan Bank...................          218,400        178,400         177,400
                                                                   -------------   ------------   -------------
            Total borrowed funds...............................          444,932        462,098         370,238
                                                                   -------------   ------------   -------------

Long-term debt.................................................           23,600         23,600           3,868
                                                                   -------------   ------------   -------------
Due to paying agent............................................              478         53,385           1,133
                                                                   -------------   ------------   -------------
Other liabilities..............................................           20,627         26,614          23,349
                                                                   -------------   ------------   -------------
            Total Liabilities..................................        1,838,589      2,054,453       1,536,620
                                                                   -------------   ------------   -------------

Corporation-obligated mandatorily redeemable capital securities 
    of subsidiary trust holding solely junior subordinated 
    debentures of the Corporation..............................           23,887         23,877          23,847
                                                                   -------------   ------------   -------------
SHAREHOLDERS' EQUITY:                                                         
---------------------
Preferred stock, no stated value, 4,000,000                                   
    shares authorized, none issued                                             -              -               -
Common stock, $5.00 par value, 20,000,000 shares authorized,                                
    11,877,044, 11,866,002 and 11,815,398 shares issued and         
    11,157,485, 11,146,443 and 11,162,267 shares outstanding...           59,385         59,330          59,077
Additional paid-in capital.....................................            4,449          4,239           3,225
Retained earnings..............................................           98,410         94,767          88,596
Accumulated other comprehensive income.........................            2,739          5,435           6,057 
Treasury stock, 685,273, 685,273 and 610,273 shares at cost....          (14,150)       (14,150)        (12,015)
Unallocated common stock held by ESOP (at cost)................             (600)          (600)           (750)
                                                                   -------------   ------------   -------------
            Total Shareholders' Equity.........................          150,233        149,021         144,190
                                                                   -------------   ------------   -------------
            Total Liabilities and Shareholders' Equity.........    $   2,012,709   $  2,227,351   $   1,704,657
                                                                   =============   ============   =============

                  See Notes to Consolidated Financial Statements.
</TABLE>

                                       4

<PAGE>   5



Part I. Item 1. Financial Information

                                   FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF INCOME
                                       (In thousands, except per share data)
                                                   (Unaudited)

<TABLE>
<CAPTION>                                                           
                                                                        For the Three Months Ended
                                                                      -----------------------------
                                                                        March 31,       March 31,
                                                                          1999            1998
                                                                      -------------   -------------
<S>                                                                   <C>             <C>
INTEREST INCOME:                                                 
----------------
Interest and fees on loans........................................    $      22,588   $      22,619
Interest on deposits with other banks.............................               19              29
Interest on securities available for sale.........................           12,790           5,587
Interest and dividends on investment securities:
     Taxable interest.............................................                -           2,162
     Tax-exempt interest..........................................                -             996
Interest on federal funds sold....................................               86               1
                                                                      -------------   -------------
         Total Interest Income....................................           35,483          31,394
                                                                      -------------   -------------
INTEREST EXPENSE:                                               
-----------------
Interest on deposits:                                            
     Demand.......................................................              229             313
     Savings......................................................            2,590           1,940
     Time.........................................................            9,674           8,946
Interest on borrowed funds:                                      
     Federal funds purchased and other short-term borrowings......              223           1,265
     Repurchase agreements and secured lines of credit............            3,075           1,819
     Advances from the Federal Home Loan Bank.....................            2,618           2,396
Interest on long-term debt........................................              347              77
                                                                      -------------   -------------
         Total Interest Expense...................................           18,756          16,756
                                                                      -------------   -------------

NET INTEREST INCOME...............................................           16,727          14,638
     Provision for loan losses....................................            1,125           1,000
                                                                      -------------   -------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES...............           15,602          13,638
                                                                      -------------   -------------
OTHER INCOME:                                                    
-------------
Trust fees........................................................              811             804
Service charges on deposit accounts...............................            1,558           1,016
Net securities gains..............................................              216              49
Net gains on loan sales...........................................              193           1,419
Other operating income............................................            1,402           2,340
                                                                      -------------   -------------
         Total Other Income.......................................            4,180           5,628
                                                                      -------------   -------------
OTHER EXPENSES:                                                  
---------------
Salaries and wages................................................            4,066           4,144
Employee benefits.................................................            1,377           1,335
Net occupancy expense.............................................              981             820
Equipment rentals, depreciation and maintenance...................              705             668
Amortization of intangible assets.................................            1,199             196
Professional fees.................................................              489             451
Data processing expense...........................................              483             375
Marketing.........................................................              171             623
Minority interest expense.........................................              620             584
Other operating expense...........................................            2,250           2,232
                                                                      -------------   -------------
        Total Other Expenses......................................           12,341          11,428
                                                                      -------------   -------------

INCOME BEFORE INCOME TAXES........................................            7,441           7,838
        Income Taxes..............................................            2,128           2,219
                                                                      -------------   -------------
NET INCOME........................................................    $       5,313   $       5,619
                                                                      =============   =============

BASIC EARNINGS PER SHARE..........................................    $        0.48   $        0.50
                                                                      =============   =============
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING.........................           11,155          11,149
                                                                      =============   =============
DILUTED EARNINGS PER SHARE........................................    $        0.47   $        0.49
                                                                      =============   =============
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING.......................           11,390          11,376
                                                                      =============   =============
DIVIDENDS PER SHARE...............................................    $        0.15   $        0.15
                                                                      =============   =============
</TABLE>

                                See Notes To Consolidated Financial Statements.

                                       5

<PAGE>   6



Part I. Item 1. Financial Information

                                  FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                      (In thousands, except per share data)
                                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                        For the Three Months Ended
                                                                      -----------------------------
                                                                        March 31,       March 31,
                                                                          1999            1998
                                                                      -------------   -------------
<S>                                                                   <C>             <C>
Net income........................................................    $       5,313   $       5,619

Other comprehensive income, net of tax:

     Unrealized holding gains (losses) arising during period......           (2,556)            646 

     Less: reclassification adjustment for (gains) losses                                          
           included in net income.................................             (140)            (32)
                                                                      -------------   -------------
Other comprehensive income........................................           (2,696)            614 
                                                                      -------------   -------------
Comprehensive income..............................................    $       2,617   $       6,233
                                                                      =============   =============

</TABLE>
                   See Notes To Consolidated Financial Statements.

                                       6

<PAGE>   7



Part I. Item 1. Financial Information

                           FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (In thousands, except per share amounts)
                                           (Unaudited)
<TABLE>
<CAPTION>
                                                      For the Three Months Ended March 31, 1999                     
                                  ------------------------------------------------------------------------------
                                                                                                  Common Stock
                                                                         Accumulated              Held by ESOP 
                                   Common Stock                             Other                   (at cost)     
                                  ---------------              Retained  Comprehensive Treasury  ---------------
                                  Shares   Amount    Surplus   Earnings     Income       Stock   Shares   Amount
                                  ------------------------------------------------------------------------------
<S>                               <C>      <C>       <C>       <C>         <C>        <C>         <C>     <C>
Balance - January 1, 1999......   11,866   $59,330   $ 4,239   $94,767     $ 5,435    ($14,150)   (34)    ($600)

Net income.....................        -         -         -     5,313           -           -      -         -

Cash dividends paid 
   ($0.15 per share)...........        -         -         -    (1,670)          -           -      -         -

Exercise of options, net of 
   shares redeemed.............        3        17       (17)        -           -           -      -         -

Common stock issued for 
   dividend reinvestment.......        7        33       172         -           -           -      -         -

Value of ESOP shares to be 
   allocated in excess of cost.        -         -        29         -           -           -      -         -

Restricted shares issued.......        1         5        26         -           -           -      -         -

Net change in accumulated 
   other comprehensive income..        -         -         -         -      (2,696)          -      -         -
                                 ------------------------------------------------------------------------------
Balance - March 31, 1999.......   11,877   $59,385    $4,449   $98,410      $2,739    ($14,150)   (34)    ($600)
                                 ==============================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                      For the Three Months Ended March 31, 1998                     
                                  ------------------------------------------------------------------------------
                                                                                                  Common Stock
                                                                         Accumulated              Held by ESOP 
                                   Common Stock                             Other                   (at cost)     
                                  ---------------              Retained  Comprehensive Treasury  ---------------
                                  Shares   Amount    Surplus   Earnings     Income       Stock   Shares   Amount
                                  ------------------------------------------------------------------------------
<S>                               <C>      <C>       <C>       <C>         <C>        <C>         <C>     <C>   
Balance - January 1, 1998......   11,787   $58,934   $ 2,611   $84,647     $ 5,443    ($12,043)   (43)    ($750)

Net income.....................        -         -         -     5,619           -           -      -         -

Cash dividends paid 
   ($0.15 per share)...........        -         -         -    (1,670)          -           -      -         -

Exercise of options, net of 
   shares redeemed.............        3        17       (17)        -           -           -      -         -

Common stock issued for
   dividend reinvestment.......       25       126       594         -           -           -      -         -

Value of ESOP shares to be 
   allocated in excess of cost.        -         -        23         -           -           -      -         -

Treasury stock issued..........        -         -        14         -           -          28      -         -

Net change in accumulated 
   other comprehensive income..        -         -         -         -         614           -      -         -
                                 ------------------------------------------------------------------------------
Balance - March 31, 1998.......   11,815   $59,077    $3,225   $88,596      $6,057    ($12,015)   (43)    ($750)
                                 ==============================================================================
</TABLE>

                See Notes To Consolidated Financial Statements.

                                       7

<PAGE>   8



Part I. Item 1. Financial Information

                                    FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (In thousands)
                                                    (Unaudited)
<TABLE>
<CAPTION>
                                                                                 For the Three Months Ended
                                                                                -----------------------------
                                                                                  March 31,       March 31,
                                                                                    1999            1998
                                                                                -------------   -------------
<S>                                                                             <C>             <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:                                       
-------------------------------------
Net income..................................................................     $      5,313    $      5,619
                                                                                -------------   -------------
Adjustments to reconcile net income to net cash provided by operating
   activities:
      Depreciation..........................................................              704             629
      Amortization and accretion............................................            1,615             555
      Income from bank-owned life insurance.................................             (355)           (351)
      Provision for loan losses.............................................            1,125           1,000
      Gain on sale of securities............................................             (216)            (49)
      Gain on sale of loans.................................................             (193)         (1,419)
      Gain on sale of branch offices........................................                -          (1,071)
      Proceeds from loan sales..............................................           19,698          94,784
      Increase in interest receivable.......................................           (1,360)           (227)
      Decrease in interest payable..........................................           (4,041)           (521)
      Other - net...........................................................           (2,276)           (429)
                                                                                -------------   -------------
   Total adjustments........................................................           14,701          92,901
                                                                                -------------   -------------
Net cash provided by operating activities...................................           20,014          98,520
                                                                                -------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES:                                       
- -------------------------------------
Proceeds from sales of securities available for sale........................          108,856           3,869
Proceeds from maturity or paydown of securities available for sale..........           71,555          44,171
Purchase of securities available for sale...................................          (67,896)        (99,552)
Proceeds from maturity or paydown of investment securities..................                -          25,827
Purchase of investment securities...........................................                -          (9,783)
Net increase in loans.......................................................           (8,324)        (31,172)
Decrease (increase) in deposits with other banks............................           (1,007)          5,109 
Purchase of premises and equipment..........................................             (207)           (901)
Proceeds from sale of premises and equipment................................               61              94
Proceeds from sale of other real estate owned...............................               93              69
Cash received in branch office purchase.....................................            4,765               -
Cash paid for branch office sales...........................................          (95,917)        (40,884)
                                                                                -------------   -------------
Net cash provided by (used in) investing activities.........................           11,979        (103,153)
                                                                                -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:                                        
- ------------------------------------
Net decrease in deposits....................................................          (12,417)         (7,602)
Net decrease in federal funds purchased and other 
   short-term borrowings....................................................          (58,773)           (899)
Net increase (decrease) in repurchase agreements and secured 
   lines of credit..........................................................            1,607          (9,792)
Net increase in advances from the Federal Home Loan Bank....................           40,000          21,400
Payments on long-term debt..................................................                -            (390)
Proceeds from common stock issued...........................................              205             720
Restricted stock issued.....................................................               31               - 
Treasury stock issued.......................................................                -              42
Dividends paid on common stock..............................................           (1,670)         (1,670)
                                                                                -------------   -------------
Net cash (used in) provided by financing activities.........................          (31,017)          1,809
                                                                                -------------   -------------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS..........................              976          (2,824)

CASH AND DUE FROM BANKS - Beginning of year.................................           45,997          40,973
                                                                                -------------   -------------
CASH AND DUE FROM BANKS - End of period.....................................     $     46,973    $     38,149
                                                                                =============   =============
</TABLE>
                 See Notes To Consolidated Financial Statements

                                      8

<PAGE>   9



Part I. Item 1. Financial Information

                                  FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                                                  (In thousands)
                                                    (Unaudited)
<TABLE>
<CAPTION>
                                                                                 For the Three Months Ended
                                                                                -----------------------------
                                                                                  March 31,       March 31,
                                                                                    1999            1998
                                                                                -------------   -------------
<S>                                                                             <C>             <C>          
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

   Cash paid during the period for:

      Interest..............................................................    $      22,797   $      17,277
                                                                                =============   =============
      Income taxes..........................................................    $           -   $         268
                                                                                =============   =============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:

   Deposits sold in branch dispositions.....................................    $     135,486   $      46,702
                                                                                =============   =============
   Deposits assumed in branch acquisition...................................    $       8,101   $           -
                                                                                =============   =============
   Securities purchased settling after March 31.............................    $         478   $       1,133
                                                                                =============   =============
   Securities sold settling after March 31..................................    $           -   $         263
                                                                                =============   =============
   Transfers to other real estate owned.....................................    $         125   $         452
                                                                                =============   =============
   Net change in accumulated other comprehensive income.....................    $      (2,696)  $         614 
                                                                                =============   =============

</TABLE>

              See Notes To Consolidated Financial Statements.


                                      9

<PAGE>   10



                 FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                 (Unaudited)

1.  Principles of Consolidation:

The consolidated financial statements include the accounts of First Western
Bancorp, Inc. ("First Western") and its wholly-owned subsidiaries: First Western
Bank, National Association ("First Western Bank, N.A."); First Western
Investment Services Company ("Investment Services") and First Western Capital
Trust I ("Capital Trust"). All significant intercompany transactions have been
eliminated in consolidation.

The consolidated balance sheets as of March 31, 1999 and March 31, 1998, and the
related consolidated statements of income, comprehensive income, changes in
shareholders' equity, and cash flows for the three month periods ended March 31,
1999 and 1998 are unaudited. In the opinion of management, all adjustments
necessary for a fair presentation of such financial statements have been
included. Such adjustments consisted only of normal recurring items. Interim
results are not necessarily indicative of results for a full year.

The financial statements and notes are presented as permitted by Form 10-Q. The
interim statements are unaudited and should be read in conjunction with the
financial statements and notes thereto contained in First Western's 1998 Annual
Report on Form 10-K.


2.  Earnings Per Share:

Earnings per common share are based on the weighted average number of common
shares outstanding and common share equivalents in each period. Weighted average
shares outstanding include common share equivalents under First Western's
Incentive Stock Option Plan for Key Officers.


3. Recent Accounting Pronouncements:

In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Management is in the
process of evaluating the impact of this statement on First Western's financial
statements. This statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.


4. Branch Purchases and Sales:

In January 1998, First Western completed the sale of its three Lake County, Ohio
branches to FirstMerit Bank. These branches had approximately $47 million in
deposits. First Western realized a net gain of $1.1 million on this transaction.

                                     10

<PAGE>   11



On June 19, 1998, First Western Bank, N.A. completed the purchase of 16

branches in western Pennsylvania from PNC Bank. The purchase included branches,
related deposits, consumer loans, small business banking relationships and
certain brokerage relationships of the following branches: Farrell, Grove City,
Hermitage, Sharon, Transfer and West Middlesex (Mercer County); Beaver,
Chippewa, Midland and New Brighton (Beaver County); Ebensburg and Barnesboro
(Cambria County); Evans City (Butler County); McDonald (Washington County);
Punxsutawney (Jefferson County); and Kiski Valley (Westmoreland County). First
Western acquired approximately $384 million in deposits, $74 million in consumer
and small business loans, and $11 million in brokerage assets, along with
related fixed assets, leases, safe deposit business and other agreements. First
Western paid consideration of approximately $59 million for the deposit and
brokerage relationships and the right to acquire, at book value, the loan
portfolio and the real estate and related assets of the 16 branches. This
premium was recorded as an intangible asset and is being amortized over twelve
years.

In February 1999, First Western sold the recently acquired Punxsutawney,
Ebensburg, Barnesboro and Kiski Valley branches to three banks that are
unrelated to First Western. As part of this transaction, First Western acquired
the deposits and consumer loans of a branch in Moon Township, Allegheny County,
Pennsylvania from one of these banks. First Western sold these branches because
they were not located near First Western's core banking markets. These branches
were acquired in June 1998 from PNC Bank as part of a 16 branch purchase. The
remaining twelve branches from the PNC branch purchase are located within First
Western's strategic market. The four branches that were sold had approximately
$135 million of deposits and $23 million of consumer loans. The Moon Township
branch acquired by First Western had approximately $8 million of deposits and $2
million of consumer loans. The premium that First Western received from the sale
of these branches, $15.8 million, was used to write-off the intangible assets
that were created when these branches were purchased. First Western did not
recognize either a gain or a loss on the sales of these branches.

                                     11 

<PAGE>   12


5. Comprehensive Income:

First Western has chosen to disclose comprehensive income in a separate income
statement, in which the components of comprehensive income are displayed net of
income taxes. The following tables set forth the related tax effects allocated
to each element of comprehensive income for the three months ended March 31,
1999 and 1998 (in thousands):


<TABLE>
<CAPTION>
                                                          Three Months Ended March 31, 1999
                                                  ---------------------------------------------
                                                    Pre-tax       Tax (Expense)    Net-of-tax  
                                                     Amount        or Benefit        Amount    
                                                  -------------   -------------   -------------
<S>                                               <C>             <C>             <C>          
Unrealized gains (losses) on securities:                                                       

  Unrealized holding gains (losses) arising 
     during period                                 $      (3,931)  $       1,375   $      (2,556)

  Less: reclassification adjustment for 
     (gains) losses realized in net income                  (216)             76            (140)
                                                   -------------   -------------   -------------
  Net unrealized gains (losses)                           (4,147)          1,451          (2,696)
                                                   -------------   -------------   -------------
Other comprehensive income                         $      (4,147)  $       1,451   $      (2,696)
                                                   =============   =============   =============
</TABLE>

<TABLE>
<CAPTION>
                                                          Three Months Ended March 31, 1998
                                                   ---------------------------------------------
                                                     Pre-tax       Tax (Expense)    Net-of-tax  
                                                      Amount        or Benefit        Amount    
                                                   -------------   -------------   -------------
<S>                                                <C>             <C>             <C>          
Unrealized gains (losses) on securities:                                                        

  Unrealized holding gains (losses) arising 
     during period                                 $         993   $        (347)  $         646 

  Less: reclassification adjustment for 
     (gains) losses realized in net income                   (49)             17             (32)
                                                   -------------   -------------   -------------
  Net unrealized gains (losses)                              944            (330)            614
                                                   -------------   -------------   -------------
Other comprehensive income                         $         944   $        (330)  $         614
                                                   =============   =============   =============

</TABLE>

                                     12 

<PAGE>   13



Part 1. Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.


FORWARD-LOOKING STATEMENTS

Except for historical information contained herein, the matters discussed in
this report contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
that involve substantial risks and uncertainties. When used in this report, or
in the documents incorporated by reference herein, the words "anticipate,"
"believe," "estimate," "may," "intend," "expect" and similar expressions
identify certain of such forward-looking statements. Actual results, performance
or achievements could differ materially from those contemplated, expressed or
implied by the forward-looking statements contained herein. Factors that could
cause future results to vary from current expectations include, but are not
limited to, the following: changes in economic conditions (both generally and
more specifically in the markets in which First Western operates); changes in
interest rates, deposit flows, loan demand, real estate values and competition;
changes in accounting principles, policies or guidelines and in government
legislation and regulation (which change from time to time and over which First
Western has no control); other factors affecting First Western's operations,
markets, products and services, including but not limited to, year 2000
compliance issues; and other risks detailed in this Form 10-Q and in First
Western's other Securities and Exchange Commission filings. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date hereof.


RECENT DEVELOPMENTS

On December 13, 1998, First Western's Board of Directors approved a definitive
agreement pursuant to which First Western will be merged with and into Sky
Financial Group, Inc. ("Sky Financial"). Under the terms of the agreement, First
Western's shareholders will receive 1.211 shares of Sky Financial common stock
for each share of First Western common stock in a transaction intended to be a
tax-free exchange. The merger is intended to be accounted for as a pooling of
interests. In connection with this agreement, First Western has issued an option
to Sky Financial to purchase up to 19.9% of outstanding shares of First Western,
at an exercise price of $28.50 per share, which is exercisable only upon the
occurrence of certain events. The merger is subject to shareholder and
regulatory approval and is expected to be completed during the third quarter of
1999.

                                     13

<PAGE>   14



RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH
THE THREE MONTHS ENDED MARCH 31, 1998:

For the three months ended March 31, 1999, First Western's net income was $5.3
million compared with $5.6 million for the three months ended March 31, 1998.
First Western's net income decreased $306,000 or 5.4% from the first three
months of 1998 to the first three months of 1999 primarily due to a decrease in
net gains realized on loan sales along with a decrease in gains realized on the
sales of branches. Excluding gains on sales of loans, branches and securities,
First Western's core earnings increased approximately $1.1 million or 27.2% for
the first quarter of 1999 compared with the first quarter of 1998. The
improvement in First Western's core earnings was the result of increased net
interest income combined with reduced non-interest expense, excluding the
amortization of intangible assets expense, as a result of the Profit Improvement
Initiative undertaken during the fourth quarter of 1998. First Western's basic
and diluted earnings per share for the first quarter of 1999 were $0.48 and
$0.47, respectively, compared with $0.50 and $0.49 for the first quarter of
1998. First Western's return on average assets and return on average equity for
the first three months of 1999 were 1.03% and 14.36%, respectively, compared
with 1.32% and 16.15% for the first three months of 1998, with the decrease in
these ratios primarily attributable to the lower gains on loan sales and branch
sales.


Net Interest Income:

First Western's net interest income was $16.7 million for the three months ended
March 31, 1999, increasing $2.1 million or 14.3% from $14.6 million for the
first three months of 1998. The increase in net interest income was generated by
an increase in First Western's average earning assets resulting from the
purchase of 16 branches from PNC Bank during the second quarter of 1998. First
Western's average earning assets increased $299.4 million or 18.4% for the first
quarter of 1999 compared with the first quarter of 1998.


First Western's net interest margin or net interest income expressed as a
percentage of average earning assets was 3.64% for the first three months of
1999 compared with 3.80% for the first three months of 1998. The decrease in
First Western's net interest margin was due to a decrease in net funds provided
by noninterest-bearing sources. The increase in intangible assets resulting from
the premium paid for the branches acquired during 1998 contributed to a net
decrease in First Western's funding from noninterest-bearing sources. These
"free funds" decreased from 12.4% of First Western's average earning assets for
the first quarter of 1998 to 9.8% for the first quarter of 1999. First Western's
net interest margin also decreased due in part to an interest recovery on a
nonaccrual loan that paid- off during the first quarter of 1998. This interest
recovery accounted for approximately five basis points of the decrease in First
Western's net interest margin compared with the prior year. First Western's
yield on earning assets decreased 38 basis points primarily due to the continued
downward repricing of loans throughout 1998. First Western's cost of funds
decreased 39 basis points for the first three months of 1999 compared with the
prior year due to decreases in the rates paid for time deposits and borrowed
funds.


Provision for Possible Loan Losses:

First Western's provision for possible loan losses was $1.1 million for the
first three months of 1999, increasing $125,000 from $1.0 million for the first

                                     14

<PAGE>   15



three months of 1998. The increase in the provision for possible loan losses for
the first quarter of 1999 compared with the first quarter of 1998 reflects the
increase in net charge-offs along with an increase in specific reserves as
determined by First Western's loan review program. First Western's net
charge-offs for the first three months of 1999 were $1.1 million or 0.40% of
average loans, compared with $944,000 or 0.36% of average loans for the first
three months of 1998. Substantially all of First Western's charge-offs for the
first three months of 1999 and 1998 were consumer loans, primarily indirect
automobile loans. First Western's net charge-offs (recoveries) by loan type are
as follows (in thousands):


<TABLE>
<CAPTION>
                                                                  Three months ended March 31,
                                                                -------------------------------
                                                                   1999                 1998
                                                                ----------           ----------
    <S>                                                         <C>                  <C>
    Commercial, financial and agricultural loans...........     $       15           $       (5)
    Real estate construction loans.........................              -                    -
    Real estate mortgage loans.............................             16                  (64)
    Installment loans......................................          1,079                1,013
                                                                ----------           ----------
       Total net charge-offs...............................     $    1,110           $      944
                                                                ==========           ==========
    Net charge-offs as a percentage of
       average loans.......................................           0.40%                0.36%
                                                                ==========           ==========

</TABLE>

Other Income and Other Expenses:

Other income decreased $1.4 million or 25.7% from $5.6 million for the first
three months of 1998 to $4.2 million for the first three months of 1999
primarily due to a $1.2 million decrease in net gains on loan sales along with a
$1.1 million gain realized on the sale of the three Lake County, Ohio branches
during the first quarter of 1998. Partially offsetting these decreases in other
income was a $542,000 increase in service charges on deposit accounts and a
$167,000 increase in securities gains. Excluding the gains on sales of loans,
branches and securities, First Western's other income from operations increased
$682,000 or 22.1% for the first quarter of 1999 compared with the prior year.

First Western's service charges on deposit accounts increased $542,000 or 53.3%
for the first quarter of 1999 compared with the prior year. The branches that
were acquired in June 1998 contributed approximately one-half of the increase
with the remaining increase due to First Western increasing its service charges
beginning in March 1998.

During the first three months of 1999, First Western realized net gains on loan
sales of $193,000 compared with a gain of $1.4 million for the first three
months of 1998. The gains on loan sales realized by First Western during the
first quarter of 1998 were primarily the result of First Western selling $92.3
million of residential mortgage loans. The gains on loan sales realized by First
Western during the first quarter of 1999 resulted from the sale of ongoing
residential mortgage loan production and did not include any large sales from
First Western's loan portfolio.

Other operating income decreased $938,000 from $2.3 million for the first three
months of 1998 to $1.4 million for the first three months of 1999 primarily due
to a $1.1 million gain realized on the sale of First Western's Lake County
branches during the first quarter of 1998. First Western's Lake County branches
had deposits of $47 million when they were sold and First Western received a
total
                                     15

<PAGE>   16



premium of approximately $5.3 million on this sale with $4.2 million of this
premium used to eliminate the remaining intangible assets related to those
branches. First Western sold four branches during the first quarter of 1999 with
no gains or losses recognized on these sales.

Total other expenses for the first three months of 1999 were $12.3 million,
increasing $913,000 or 8.0%, from $11.4 million due to an increase in the
amortization of intangible assets expense. Excluding the amortization of
intangible assets expense, First Western's other expenses decreased $90,000 due
to the impact of First Western's fourth quarter 1998 Profit Improvement
Initiative which reduced operating expenses, primarily through the elimination
of approximately 70 positions.

First Western's salaries and employee benefits expense decreased slightly from
$5.5 million for the first quarter of 1998 to $5.4 million for the first quarter
of 1999 due to the reduction of First Western's workforce as a result of the
Profit Improvement Initiative with this decrease partially offset by normal
salary and wage increases along with the additional staffing related to the
branches acquired in June 1998.

First Western's occupancy and equipment expense increased a combined $198,000 or
13.3% primarily due to the acquisition of the 16 branches in June 1998.

For the three month period ended March 31, 1999, First Western's marketing
expense decreased $452,000 compared with the prior year due to First Western
undertaking a $1.5 million corporate image campaign in late 1997 and early 1998.

First Western's amortization of intangible assets expense increased $1.0 million
from $196,000 for the first quarter of 1998 to $1.2 million for the first
quarter of 1999 due to the premium paid for the branches that were acquired from
PNC Bank. First Western recorded an intangible asset of $59 million in June 1998
related to these branches with this intangible asset being amortized over a 12
year period on a straight-line basis. In February 1999, First Western sold four
of these branches and the premium that First Western received from the sale of
these branches, $15.8 million, was used to write-off the intangible assets that
were created when these four branches were purchased.

Income Taxes:

First Western's income tax expense was $2.1 million for the first three months
of 1999 compared with $2.2 million for the first three months of 1998. The
decrease in First Western's income tax expense was due to a decrease in pre-tax
earnings. First Western's effective tax rate for the three months ended March
31, 1999 was 28.6% compared with 28.3% for the first three months of 1998.

                                     16

<PAGE>   17



FINANCIAL CONDITION AS OF MARCH 31, 1999 AS COMPARED WITH DECEMBER 31, 1998 AND
MARCH 31, 1998.

As of March 31, 1999, First Western's total assets were $2.013 billion compared
with $2.227 billion at December 31, 1998 and $1.705 billion at March 31, 1998.
During the first three months of 1999, First Western's total assets decreased
$214.6 million primarily due to the sales of four branches along with the
related deposits and loans. Total average assets for the first three months of
1999 were $2.098 billion compared with $1.722 billion for the first three months
of 1998, an increase of 21.8% with this increase primarily due to the June 1998
branch acquisitions.


                                      17

<PAGE>   18


Loan Portfolio:

Net loans, including loans held for sale, decreased $33.4 million or 2.9% during
the first three months of 1999 with this decrease in loans primarily due to the
sale of approximately $23 million of residential mortgage loans and consumer
loans in connection with the first quarter 1999 branch sales. The following
table shows the composition of First Western's loan portfolio, including loans
held for sale, at March 31, 1999, December 31, 1998 and March 31, 1998:


<TABLE>
<CAPTION>
                             March 31, 1999          December 31, 1998        March 31, 1998
                         ----------------------    ---------------------    ---------------------
                            Amount     Percent       Amount     Percent       Amount     Percent
                         ------------  --------    -----------  --------    -----------  --------
                             (Dollars in Thousands)
<S>                      <C>           <C>         <C>          <C>         <C>          <C>
Commercial, financial 
   and agricultural:

Automobile floorplan 
   loans..............   $     39,008      3.5%    $    41,995      3.7%    $    30,827      3.0%
Loans to 
   municipalities.....          6,945      0.6           3,643      0.3           6,202      0.6
Other commercial 
   loans..............        154,712     13.9         141,492     12.3         106,560     10.4
                         ------------  --------    -----------  --------    -----------  --------
      Subtotal........        200,665     18.0         187,130     16.3         143,589     14.0
                         ------------  --------    -----------  --------    -----------  --------
Real estate-
   construction.......         10,506      0.9          11,239      1.0          13,121      1.3
                         ------------  --------    -----------  --------    -----------  --------
Real estate-mortgage: 

1-4 Family 
   residential........        360,945     32.4         383,429     33.4         321,574     31.4
Multi-family 
   residential........         25,616      2.3          25,902      2.3          29,322      2.9
Home equity...........         68,590      6.2          72,008      6.3          58,200      5.7
Commercial and other..        179,583     16.1         183,987     16.0         172,015     16.8
                         ------------  --------    -----------  --------    -----------  --------
    Subtotal..........        634,734     57.0         665,326     58.0         581,111     56.8
                         ------------  --------    -----------  --------    -----------  --------
Installment and 
   other..............        267,425     24.1         282,986     24.7         284,757     27.9
                         ------------  --------    -----------  --------    -----------  --------
    Total.............   $  1,113,330    100.0%    $ 1,146,681    100.0%    $ 1,022,578    100.0%
                         ============  ========    ===========  ========    ===========  ========

</TABLE>

                                     18

<PAGE>   19



First Western has several policies and procedures in place to assist in
maintaining and monitoring the overall quality of its loan portfolio. First
Western has established underwriting guidelines to be followed by its banking
subsidiary. In addition, a formal, ongoing loan review program (discussed
below), which concentrates principally on commercial credits, has been
established to help monitor the loan portfolio of the banking subsidiary. First
Western also regularly monitors its delinquency and nonperforming levels for any
negative or adverse trends and particularly monitors credits which have total
exposure of $1.5 million or more. However, there can be no assurance that First
Western's loan portfolio will not become subject to increasing pressures from
deteriorating borrower credit due to general economic conditions.

First Western's delinquent loans, nonaccrual loans and nonperforming assets
consisted of the following at March 31, 1999, December 31, 1998 and March 31,
1998:

<TABLE>
<CAPTION>
                                                      March 31,     December 31,     March 31,
                                                        1999            1998           1998 
                                                   -------------   ------------   -------------
                                                               (Dollars in Thousands)
<S>                                                <C>             <C>            <C>          
Loans delinquent and still accruing interest:             
      Loans past due 30 to 89 days ..............  $       4,475   $      6,419   $       5,777
      Loans past due 90 days or more ............          2,710          2,879           2,150
                                                   -------------   ------------   -------------
        Total loan delinquencies ................  $       7,185   $      9,298   $       7,927
                                                   =============   ============   =============

Nonaccrual loans ................................  $       2,339   $      1,928   $       2,913
Other real estate owned .........................            642            617             777
                                                   -------------   ------------   -------------
        Total nonperforming assets ..............  $       2,981   $      2,545   $       3,690
                                                   =============   ============   =============

        Total nonperforming assets and loans                                                     
           past due 90 days or more .............  $       5,691   $      5,424   $       5,840
                                                   =============   ============   =============

Nonaccrual loans to total loans .................           0.21 %         0.17 %          0.28 %

Nonperforming assets to total loans                                                      
   and other real estate owned ..................           0.27 %         0.22 %          0.36 %

Nonperforming assets to total assets ............           0.15 %         0.11 %          0.22 %

Nonperforming assets and loans past due                                                  
   90 days or more to total assets ..............           0.28 %         0.24 %          0.34 %

Nonaccrual loans and loans past due                                                      
   90 days or more to total loans ...............           0.45 %         0.42 %          0.50 %

Allowance for possible loan losses                                                       
   to nonaccrual loans ..........................         782.80 %       949.01 %        622.39 %

Allowance for possible loan losses                                                       
   to loans past due 90 days or more                                                        
   and nonaccrual loans .........................         362.65 %       380.61 %        358.10 %

Allowance for possible loan losses to                                                    
   total loans ..................................           1.64 %         1.60 %          1.77 %

</TABLE>

First Western's total delinquencies decreased $2.1 million, or 22.7%, from $9.3
million at December 31, 1998 to $7.2 million at March 31, 1998. First Western's
coverage ratio of the allowance for loan losses to nonaccrual loans decreased
from
                                      19

<PAGE>   20



949% at December 31, 1998 to 783% at March 31, 1999, due to an increase in
nonaccrual loans during the first quarter of 1999.

Commercial and mortgage loans are placed on nonaccrual status when, in the
opinion of management, collection of principal or interest is doubtful and the
loan is not both well secured and in the process of collection. Installment
loans are generally charged off between 90 and 120 days past due or when deemed
uncollectible in the opinion of management. Cash payments received while a loan
is classified as nonaccrual are recorded as a reduction to principal as long as
doubt exists as to collection.

First Western maintains a loan review program to evaluate the credit risk in its
commercial loan portfolio for substantially all commercial loans and commercial
real estate loans greater than $200,000. Through the loan review process, First
Western maintains a classified account list which, along with the nonperforming
and delinquency lists of loans, helps management assess the overall quality of
the loan portfolio and the adequacy of the allowance for loan losses. Loans
classified as "substandard" are those loans with clear and defined weaknesses,
such as highly leveraged positions, unfavorable financial ratios, uncertain
repayment sources or poor financial condition, which may jeopardize collection
of the debt. Loans classified as "doubtful" are those loans which have
characteristics similar to the sub-standard accounts but with an increased risk
that a loss may occur, or at least a portion of the loan may require a
charge-off if liquidated at present. First Western reviews these loans in
assessing the adequacy of the allowance for loan losses. Substandard loans
include some loans that are delinquent or on nonaccrual status. All doubtful
loans are on nonaccrual status. As of March 31, 1999, substandard and doubtful
loans, including unfunded commitments, totaled $4.6 million.

In addition to its classified account list and delinquency list of loans, First
Western maintains a separate list of "Other Loans Especially Mentioned"
("OLEM"), which further aids First Western in monitoring its loan portfolio.
These OLEM loans do not have all the characteristics of a classified loan
(substandard or doubtful), but do show potentially weak elements as compared
with those of a satisfactory credit. First Western reviews these loans in
assessing the adequacy of the allowance for loan losses. Substantially all of
the loans on the OLEM list as of March 31, 1999 are current and paying in
accordance with loan terms. As of March 31, 1999, OLEM list loans, including
unfunded commitments, totaled $15.7 million.

First Western maintains an allowance for possible loan losses to absorb losses
inherent in the loan portfolio. The allowance is based on a quarterly assessment
of the probable estimated losses inherent in the loan portfolio. First Western's
methodology for assessing the appropriateness of the allowance for loan losses
consists of several key elements which include:

* specific allowances for identified problem loans and portfolio segments, *
formula allowances, and * an unallocated reserve

First Western establishes specific reserves for potential problem loans as
determined by its loan review program described above. The specific reserves on
these loans are determined in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan,"
and SFAS No. 118,"Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures" taking into account the credit's current operating
status, pledged

                                     20

<PAGE>   21


collateral and plans of action for resolving any deficiencies. The specific
reserves are usually only considered for First Western's commercial loan
portfolio.

First Western maintains formula reserves for all loans not considered by the
specific reserve method. The loans that have been assigned specific reserves are
excluded from the calculation of the formula reserves. First Western's formula
reserves are calculated for each pool of homogeneous loans. First Western
establishes formula reserves based on a loan's risk rating according to First
Western's loan review program, delinquency status and historical charge-off
experience by loan type. The loss factors used in determining the formula
reserves for substandard, doubtful and OLEM credits are based on management's
judgment of inherent losses from these classifications of loans. First Western
establishes formula reserves based on a loan's delinquency status based on a
credit's loan type and delinquency aging. The loss factors applied by loan type
and delinquency aging are based on management's judgment of inherent losses from
these delinquency categories. First Western also establishes formula based
reserves for all loan types based on the historical charge-off percentages for
each loan type as calculated by pool of homogeneous loans. The historical
charge-off percentage used by First Western is based on the greater of First
Western's one year or three year historical charge-off averages for each
homogeneous loan pool.

These formula reserves are based on First Western's historical charge-off
experience. If current charge-off levels deviate from First Western's historical
charge-off levels this deviation will be reflected in First Western's ongoing
formula reserves and will adjust the allowance for loan losses accordingly.

First Western maintains an unallocated reserve which takes the following factors
into consideration:

* Concentrations of credit * Delinquency and nonaccrual trends * Local and
national economic conditions * Changes in lending and collection practices *
Trends in volume and terms of loans
* Other external factors that could affect the ability of First Western's
  customers to repay their obligations

Executive management reviews these conditions quarterly with our senior credit
officers. If any of these conditions is evidenced by a specifically identified
problem credit or portfolio segment as of the evaluation date, management's
estimate of this condition may be reflected as a specific allowance applicable
to this credit or portfolio segment. Where any of these conditions is not
evidenced by a specifically identifiable problem credit or portfolio segment as
of the evaluation date, management's evaluation of the probable loss concerning
this condition is reflected in the unallocated allowance.

                                    21

<PAGE>   22


The composition of First Western's allowance for loan losses was as follows at
March 31, 1999 and December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
                                March 31,         December 31,          March 31, 
                                  1999                1998                1998    
                              ------------        ------------        ------------
<S>                           <C>                 <C>                 <C>         
Specific reserves..........   $      1,669        $      1,343        $      1,720
Formula reserves...........          6,623               7,355               6,647
Unallocated reserves.......         10,020               9,599               9,766
                              ------------        ------------        ------------
Total......................   $     18,312        $     18,297        $     18,133
                              ============        ============        ============

</TABLE>


First Western's specific reserves increased $326,000 from December 31, 1998 to
March 31, 1999 primarily due to an increase in the loans that are classified as
OLEM. The formula reserve portion of First Western's allowance for loan losses
decreased $732,000 primarily due to a decrease in First Western's delinquent
loans and a decrease in First Western's consumer installment loans outstanding.
The unallocated reserve portion of First Western's allowance for loan losses
increased $421,000 or 4.4% during the first quarter of 1999 due to First Western
increasing its reserve for market pressures on credit underwriting standards.

At March 31, 1999, First Western's average annual net charge-offs for the past
five years were $3.6 million, compared with $3.5 million at December 31, 1998.
These net charge-offs represented 5.0 years of losses based on the level of the
allowance for loan losses at March 31, 1999 and 5.2 years based on the level of
the allowance for loan losses at December 31, 1998. Historical net charge-offs
are not necessarily indicative of the amount of net charge-offs that First
Western will realize in the future.

First Western believes that the allowance for loan losses of $18.3 million at
March 31, 1999 is adequate to cover losses inherent in the portfolio as of such
date. However, there can be no assurance that First Western will not sustain
losses in future periods, which could be substantial in relation to the size of
the allowance at March 31, 1999.


Investment Securities, Mortgage-Backed Securities, and Securities Available
for Sale:

Securities available for sale decreased $116.6 million during the first three
months of 1999 with this decrease the result of First Western liquidating
securities available for sale with the proceeds used to fund the first quarter
1999 branch sales. Securities available for sale and investment securities
increased a combined $159.1 million from $593.0 million at March 31, 1998 to
$752.1 million at March 31, 1999 with this increase due to the purchase of
securities using the funds provided by the June 1998 branch purchases. At March
31, 1999, First Western had net unrealized appreciation on securities available
for sale of $4.2 million or 0.6% compared with unrealized appreciation of $8.4
million or 1.0% and unrealized appreciation of $9.3 million or 2.5% at December
31, 1998 and March 31, 1998, respectively.
                                     22

<PAGE>   23


Deposits:

Total deposits decreased $139.8 million or 9.4% from $1.489 billion at December
31, 1998 to $1.349 billion at March 31, 1999. Deposits decreased during the
first three months of 1999 primarily due to the sale of branches. First
Western's deposits increased $210.9 million from March 31, 1998 to March 31,
1999 with most of this increase attributable to the purchase of 16 branches in
June 1998.


Borrowed Funds:

First Western's borrowed funds decreased $17.2 million during the first three
months of 1999 from $462.1 million at December 31, 1998 to $444.9 million at
March 31, 1999. Total borrowed funds increased $74.7 million from March 31, 1998
to March 31, 1999 as these borrowings were increased primarily as a result of an
investment strategy implemented by First Western during the second quarter of
1998.


Shareholders' Equity:

Shareholders' equity increased $1.2 million during the first three months of
1999 primarily due to the retention of earnings with this increase partially
offset by a $2.7 million decrease in the market value of securities available
for sale, net of income tax effects. First Western's capital ratios improved
from December 31, 1998 to March 31, 1999 as a result of the retention of
earnings along with a $16.1 million reduction in intangible assets resulting
primarily from the sale of the four branches in February 1999.

                                     23

<PAGE>   24



The following table presents First Western's capital ratios at March 31, 1999
and December 31, 1998:

<TABLE>
<CAPTION>
                                                           March 31,                December 31,
                                                             1999                       1998
                                                         -------------              ------------
                                                                  (Dollars in Thousands)
<S>                                                      <C>                        <C>         
Tier I:  
  Common shareholders' equity .....................      $     150,233              $    149,021
  Non-exempt intangible assets ....................            (44,316)                  (60,389)
  Trust preferred capital securities...............             23,887                    23,877
  Unrealized appreciation in securities              
    available for sale ............................             (2,739)                   (5,435)
                                                         -------------              ------------
      Total Tier I ................................            127,065                   107,074
                                                         -------------              ------------
Tier II:...........................................             16,208                    17,349
                                                         -------------              ------------
Total capital .....................................      $     143,273              $    124,423
                                                         =============              ============
Risk weighted assets ..............................      $   1,186,216              $  1,271,390
                                                         =============              ============

Tier I capital ratio ..............................              10.71%                     8.42%
                                                         =============              ============

Required Tier I capital ratio .....................               4.00%                     4.00%
                                                         =============              ============

Total capital ratio ...............................              12.08%                     9.79%
                                                         =============              ============

Required total capital ratio ......................               8.00%                     8.00%
                                                         =============              ============

Tier I leverage ratio ..............................              6.19%                     5.00%
                                                         =============              ============

Required Tier I leverage ratio * ...................              3.00%                     3.00%
                                                         =============              ============
<FN>
* For all but the most highly rated, low risk profile organizations, the  minimum Tier I leverage ratio is to be 3% plus a
  cushion of 100 to 200 basis points.
</FN>
</TABLE>


Liquidity and Cash Flows:

Liquidity is the ability to provide the cash necessary to meet customer credit
needs, satisfy depositor withdrawal requirements and to pay-off short-term
borrowings. One source of liquidity is cash and due from banks and short-term
assets such as interest-bearing deposits in other banks and federal funds sold,
which totaled $50.9 million at March 31, 1999 as compared with $47.8 million at
December 31, 1998 and $39.9 million at March 31, 1998. Another source of
liquidity is borrowing capability. First Western's banking subsidiaries have a
variety of sources of short-term liquidity available to them, including federal
funds purchased from correspondent banks, sales of securities available for
sale, sales of securities under agreements to repurchase, the Federal Reserve
discount window, interbank deposits, FHLB advances and loan participations or
sales. First Western also generates liquidity from the regular principal
payments and prepayments made on its portfolio of loans and mortgage-backed
securities. First Western's banking subsidiaries had $48.0 million of unused
overnight credit lines available at March 31, 1999.

                                    24

<PAGE>   25



First Western's operating activities provided cash flows of $20.0 million during
the first three months of 1999 compared with $98.5 million during the first
three months of 1998. Loan sales provided $19.7 million and $94.8 million of the
cash flows from operating activities for the three months ended March 31, 1999
and 1998, respectively.

Investing activities provided cash flows of $12.0 million during the first three
months of 1999 compared with using cash flows of $103.2 million for the first
three months of 1998. During the first quarter of 1999, net securities
activities provided $112.5 million of cash flows with most of these cash flows
used to fund the branch sales which used cash flows of $95.9 million. During the
first quarter of 1998, net securities activities used cash flows of $35.5
million and branch sales used cash flows of $40.9 million.

Financing activities used cash flows of $31.0 million during the first three
months of 1999 primarily due to a decrease in borrowings using net cash flows of
$17.2 million and a net decrease in deposits, exclusive of the deposits that
were sold, using cash flows of $12.4 million. During the first quarter of 1998,
financing activities provided $1.8 million of cash flows with increases in
borrowings providing cash flows of $10.3 million and a net decrease in deposits
using $7.6 million of cash flows.


YEAR 2000 CONSIDERATIONS

First Western has reviewed its mission critical systems to determine its
readiness for the year 2000. The mission critical systems identified by First
Western include: the mainframe computer hardware and operating system, the item
capture system, the core banking software applications and the trust department
accounting system.

First Western performs its own data processing for most bank operations using an
IBM AS/400 computer and the OS/400 operating system. First Western has completed
testing on its AS/400 computer and OS/400 operating system and has determined
that they will process year 2000 dates correctly.

First Western processes its own checks for collection from other financial
institutions ("item capture"). The hardware and software used to perform First
Western's item capture have been tested for year 2000 compliance and certain
minor modifications were required. These modifications were made and tested
during the fourth quarter of 1998 with no additional modifications necessary.

First Western uses the Fiserve CBS software for its core banking systems such as
loan and deposit processing. First Western's core banking system software
provider has provided First Western with year 2000 compliant software.
Installation of this software was completed during the fourth quarter of 1998.
First Western has received reports from other financial institutions that use
this software that it has passed their year 2000 testing. First Western tested
its version of this software during the fourth quarter of 1998 and has
determined that it will process year 2000 dates correctly.

First Western's trust department uses an outside vendor for data processing. The
trust department will be changing data processing vendors during the second
quarter of 1999, therefore, First Western has not tested the year 2000 readiness
of its current trust data processing provider. The trust data processing
provider that First Western will be changing to in 1999 has certified its year
2000 compliance.

                                    25

<PAGE>   26


Although First Western believes that its mission critical systems will be year
2000 compliant, any undetected flaws could result in a business interruption
that could have a material adverse effect on First Western's financial condition
or results of operations.

First Western has prepared a remediation contingency plan to be followed if any
of its mission critical systems cannot be updated to achieve year 2000
compliance. As of March 31, 1999, progress in correcting the mission critical
systems was sufficient that none of the actions in the contingency plan have
been triggered. First Western is in the process of preparing a year 2000
business recovery plan to address potential failures of automated information
systems; intermittent and isolated failures in public infrastructure (electric,
telephone, water, gas, etc.) and liquidity concerns due to public demand for
cash.

First Western is currently in the process of testing its non-mission critical
systems for year 2000 compliance. Any systems that are found to be non-compliant
will be replaced.

First Western has reviewed its non-information technology ("non-IT") systems and
has not found any significant year 2000 problems. Most of the non-IT year 2000
problems discovered by First Western consisted of non-compliant security systems
and automated teller machines. This non-compliant equipment has either already
been replaced or will be replaced before the year 2000. The estimated cost of
replacing the non-compliant equipment is less than $100,000.

First Western has contacted all of its significant commercial loan customers to
alert them to the importance of being prepared for year 2000 issues and to
determine the state of their year 2000 readiness. If a loan customer suffers a
business interruption as a result of a year 2000 problem it could result in a
loss for First Western which could be material. First Western is not aware of
any of its loan customers having a significant year 2000 compliance problem.
However, there is no assurance that these customers will not have year 2000
related business interruptions that may have a material adverse effect on First
Western's financial condition or results of operations.

First Western has contacted all of its material vendors and correspondent banks
to determine their year 2000 readiness. First Western has not been notified by
any third party vendor or correspondent bank of a year 2000 compliance problem.
However, there is still a risk that a provider of services to First Western,
such as telecommunications or electricity, may suffer a business interruption
which, may in turn, result in a business interruption for First Western that may
have a material adverse effect on First Western's financial condition or results
of operations.

As of March 31, 1999, First Western has incurred cumulative year 2000 compliance
costs of approximately $487,000, of which $16,000 was for outside consultants to
test First Western's mission critical systems and the remaining $471,000
represented the salaries and benefit costs of First Western's employees working
on year 2000 issues. For the past 15 months, approximately one-half of First
Western's computer programming and systems personnel have been working on year
2000 testing and remediation. First Western estimates that the remaining year
2000 testing will result in additional expenditures of approximately $287,000
over the next nine months with this amount consisting primarily of the salaries
and benefits of First Western's employees. Since the amount expended by First
Western for year 2000 compliance consisted primarily of the salaries and
benefits of existing First Western employees, First Western has not experienced
a significant increase in other

                                    26

<PAGE>   27


operating expenses as a result of year 2000 remediation efforts. Most of the
corrections to First Western's year 2000 problems were incorporated into
regularly scheduled software and hardware upgrades, therefore there were not
significant expenditures above First Western's regular software and hardware
costs. First Western did not postpone any specific projects as a result of
dedicating certain employees to year 2000 concerns. However, it is impossible to
measure what these employees could have accomplished if they had not been
dedicated to year 2000 concerns.

                                    27

<PAGE>   28



Part I. Item 3. Quantitative and Qualitative Disclosures about Market Risk

Since December 31, 1998, there have been no significant changes in First
Western's exposure to interest rate risk. The interest rate environment has
remained relatively flat since year-end 1998 and there have been no significant
changes in market risk. A complete discussion of market risk is included in
First Western's 1998 report on Form 10-K.


Part II. Other Information

Item 1-5. Not Applicable.

Item 6. Exhibits and Reports on Form 8-K:

     a. Exhibits: 

        2.1  Agreement and Plan of Merger dated as of December 14, 1998 as
             amended and restated as of April 19, 1999 by and among Sky
             Financial Group, Inc., First Western Bancorp, Inc. and First
             Western Acquisition Corporation

        15.1 Letter re: Unaudited Interim Financial Information

        27.1 Financial Data Schedule

     b. Reports on Form 8-K: None.

                                     28

<PAGE>   29

     c. Signature

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



                           FIRST WESTERN BANCORP, INC.
                                  (Registrant)


May 13, 1999                                 /s/ Kenneth J. Romig 
                                             -----------------------
                                             Kenneth J. Romig
                                             Chief Financial Officer,
                                             (Principal Financial Officer)

                                     29

<PAGE>   30



                           FIRST WESTERN BANCORP, INC.

                             EXHIBITS TO FORM 10-Q

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999

                                EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit                                                Method of
Number                   Description                   Filing  
-------     --------------------------------------     ---------
<S>         <C>                                        <C>
2.1         Agreement and Plan of Merger dated as      Filed
            of December 14, 1998 as amended and        Herewith
            restated as of April 19, 1999 by and
            among Sky Financial Group, Inc., 
            First Western Bancorp, Inc. and First 
            Western Acquisition Corporation

15.1        Letter re: Unaudited Interim Financial     Filed
            Information                                herewith

27.1        Financial Data Schedule                    Filed 
                                                       herewith

</TABLE>