SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
|X|  Annual Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934

For the fiscal year ended                    December 31, 2000
                          -------------------------------------------------

                                     - or -

| |  Transition  report  pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

For the transition period from                         to
                               -----------------------    ----------------------

Commission File Number 0-23230

                                PHS Bancorp, Inc.
                               -------------------
          (Name of Small Business Issuer as specified in its Charter)

                Pennsylvania                                    23-2744266
---------------------------------------------               --------------------
(State or other jurisdiction of incorporation                (I.R.S. Employer
or organization)                                             Identification No.)

744 Shenango Road, Beaver Falls, Pennsylvania                    15010
----------------------------------------------               --------------
(Address of Principal Executive Offices)                        Zip Code

Registrant's telephone number, including area code:         (724) 846-7300
                                                            ---------------

Securities registered pursuant to Section 12(b) of the Exchange Act:    None
                                                                      ----------

Securities registered pursuant to Section 12(g) of the Exchange Act:

                     Common Stock, par value $.10 per share
                    ----------------------------------------
                                (Title of class)

         Check  whether  the issuer:  (1) has filed all  reports  required to be
filed by Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or
for such shorter  period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES  X    NO
    ---      ---

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  Registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         State issuer's revenues for its most recent fiscal year.  $19,889,301

         The aggregate  market value of the voting and non-voting  stock held by
non-affiliates of the Registrant, based on the closing price of the Registrant's
Common Stock as quoted on the Nasdaq National Market, on March 9, 2001, was $8.4
million.

         As of March 9, 2001 there were 2,546,600  shares issued and outstanding
of the Registrant's Common Stock.

         Transition Small Business Disclosure Format (check one): YES     NO  X
                                                                      ---    ---
                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year Ended
     December 31, 2000. (Part II)
2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders  for
     the Fiscal Year ended December 31, 2000. (Part III)
<PAGE>

Forward-Looking Statements

         PHS Bancorp, Inc. (the "Company") may from time to time make written or
oral  "forward-looking  statements",   including  statements  contained  in  the
Company's  filings with the Securities and Exchange  Commission  (including this
annual  report on Form  10-KSB  and the  exhibits  thereto),  in its  reports to
stockholders and in other communications by the Company,  which are made in good
faith by the Company  pursuant to the "safe  harbor"  provisions  of the Private
Securities Litigation Reform Act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rate,   market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and saving habits; and the success of the Company at managing these risks.

         The  Company  cautions  that  this  list of  important  factors  is not
exclusive.  The  Company  does  not  undertake  to  update  any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the Company.

                                     PART I

Item 1.  Description of Business

General

         PHS Bancorp,  Inc. is a bank holding  company formed in connection with
the holding company  reorganization of Peoples Home Savings Bank (the "Bank") in
November 1998. The Company is a subsidiary of PHS Bancorp,  M.H.C.  (the "MHC"),
which was formed in connection with the mutual holding company reorganization in
July 1997.  The MHC is owned and  controlled  by the  depositors of the Bank and
conducts no significant  operations of its own, other than holding a majority of
the Company's  stock.  As a result,  references to the Company  throughout  this
document  generally  refers to the  consolidated  entity which includes the main
operating company, the Bank, unless the context indicates otherwise.

         The  Company  conducts  no  significant  business of its own other than
holding all the outstanding stock of the Bank. The Company principally  operates
through its main  office,  eight  branch  offices and an  administrative  office
located  throughout Beaver and Lawrence Counties,  Pennsylvania.  The Company is
primarily engaged in the business of attracting deposits from the general public
and offering traditional

                                        2
<PAGE>

mortgage loan  products,commercial  loans and consumer  loans,  which  primarily
consist of automobile loans.

Competition

         The Company is one of the many  financial  institutions  servicing  its
market area which  consists of the counties of Beaver,  Lawrence,  Allegheny and
Butler,  Pennsylvania.  The  competition  for deposit  products comes from other
insured financial  institutions such as commercial banks,  thrift  institutions,
credit unions,  and  multi-state  regional  banks in the Company's  market area.
Deposit  competition also includes a number of insurance  products sold by local
agents and investment products such as mutual funds and other securities sold by
local and  regional  brokers.  Loan  competition  varies  depending  upon market
conditions  and  comes  from  other  insured  financial   institutions  such  as
commercial  banks,  thrift  institutions,  credit unions,  multi-state  regional
banks, and mortgage bankers.

                                        3
<PAGE>

Lending Activities

         Analysis of Loan Portfolio.  The following table sets forth information
concerning the composition of the Company's loan portfolio in dollar amounts and
in percentages of the total loan portfolio as of the dates indicated.
<TABLE>
<CAPTION>
                                                                          At December 31,
                                   ------------------------------------------------------------------------------------------
                                          2000                 1999             1998              1997             1996
                                   -----------------   ----------------- -----------------   ------- -------  ----------------
                                      $         %          $        %        $         %         $       %        $        %
                                   --------  -------   --------   ------  -------  -------   -------  ------   -------  ------
                                                                        (Dollars in Thousands)
<S>                                <C>       <C>       <C>       <C>     <C>       <C>      <C>      <C>      <C>      <C>
Mortgage loans:
  One-to-four family (1)..........   57,999    44.58     53,184    44.62   49,084    48.88    45,108   44.94    41,279   42.93
  Multi-family ...................      308      .24        388      .33      554      .55       217     .22       353     .37
  Construction....................    1,778     1.37      1,614     1.36      326      .32       304     .30       150     .16
  Commercial......................      481      .37        541      .45      941      .94     1,378    1.37     1,573    1.64
                                   --------  -------   --------   ------  -------  -------   -------  ------   -------  ------
Total Mortgage loans..............   60,566    46.56     55,727    46.76   50,905    50.69    47,007   46.83    43,355   45.10
Commercial loans..................    9,815     7.54      4,728     3.97    3,617     3.60     2,464    2.46     1,967    2.04
Consumer loans:
  Automobile......................   48,361    37.18     48,026    40.29   36,618    36.47    39,569   39.42    39,215   40.79
  Consumer credit line............    6,130     4.71      5,547     4.65    5,288     5.27     5,468    5.45     5,250    5.46
  Other(2)........................    5,216     4.01      5,161     4.33    3,990     3.97     5,859    5.84     6,352    6.61
                                   --------  -------   --------   ------  -------  -------   -------  ------   -------  ------
Total Consumer loans..............   59,707    45.90     58,734    49.27   45,896    45.71    50,896   50.71    50,817   52.86
Lease financing receivables.......       -         -          -        -        -        -         -       -         4       -
                                   --------  -------   --------   ------  -------  -------   -------  ------   -------  ------
  Total loans.....................  130,088   100.00%   119,189   100.00% 100,418   100.00%  100,367  100.00%   96,143  100.00%
                                             =======              ======           =======            ======            ======
Less:
  Loans in process................    1,204                 707               219                370               105
  Deferred loan fees..............   (1,588)             (1,623)           (1,002)            (1,088)           (1,169)
  Allowance for losses on loans...    1,455               1,360             1,287              1,394             1,434
                                   --------            --------           -------            -------           -------
    Total loans, net.............. $129,017            $118,745           $99,914            $99,691           $95,773
                                   ========            ========           =======            =======            ======
</TABLE>

--------------------
(1)  Includes home equity and junior lien mortgage loans.
(2)  Consists primarily of student loans held for sale and secured and unsecured
     personal loans.

                                        4
<PAGE>

         Loan Maturity  Tables.  The following  table sets forth the maturity of
the Company's  loan  portfolio at December 31, 2000.  The table does not include
prepayments  or  scheduled  principal  repayments.   Prepayments  and  scheduled
principal repayments on loans totalled $46.2 million for the year ended December
31,  2000.  Adjustable-rate  mortgage  loans  are  shown  as  maturing  based on
contractual maturities.


                             Due        Due after
                            within      1 through      Due after
                            1 year       5 years        5 years      Total
                            ------       -------        -------      -----
                                            (In thousands)

One-to-four family........   $  235      $ 9,255       $50,287    $ 59,777
Other mortgage loans......        -          362           427         789
Commercial................      562        5,769         3,484       9,815
Consumer..................    7,527       43,777         8,403      59,707
                             ------      -------       -------    --------
Total.....................   $8,324      $59,163       $62,601    $130,088
                             ======      =======       =======    ========

         The  following  table sets forth as of December  31,  2000,  the dollar
amount of all loans due after  December  31,  2001,  based upon  fixed  rates of
interest or floating or adjustable interest rates.


                                                   Floating or
                               Fixed Rates       Adjustable Rates      Total
                               -----------       ----------------      -----
                                                   (In Thousands)

One-to-four family.........      $ 57,793            $1,749          $ 59,542
Other mortgage loans.......           789                 -               789
Commercial.................         6,782             2,471             9,253
Consumer...................        52,180                 -            52,180
                                 --------            ------          --------
    Total..................      $117,544            $4,220          $121,764
                                 ========            ======          ========

         One-to-Four  Family Loans. The Company  originates  one-to-four  family
loans with fixed rates of interest for terms of 15 to 30 years and also offers a
one-year  adjustable  rate loan with an interest  rate  indexed to the  one-year
Treasury,  with a cap on interest rate  increases of 2% per year and 6% over the
life of the loan. The original  contractual loan repayment period on residential
mortgage loans generally average 20 years.  However, the average life based upon
the Company's experience has been approximately 10 to 12 years.

         Pursuant to underwriting  guidelines  adopted by the Board of Directors
the Company's  maximum loan to value ratio is 95% of the lower of sales price or
appraised value.  Private mortgage insurance must be obtained on all residential
loans for which loan-to-value ratios exceed 80%. Property appraisals on the real
estate and improvements securing  single-family  residential loans are made by a
qualified independent

                                        5
<PAGE>

appraisers  approved by the Board of  Directors.  Appraisals  are  performed  in
accordance with applicable  regulations and policies.  The Company obtains title
insurance policies on all first mortgage real estate loans originated.

         The majority of the Company's one- to four-family residential loans are
underwritten  in  accordance  with the Federal  Home Loan  Mortgage  Corporation
("FHLMC")  or Federal  National  Mortgage  Association  ("FNMA")  guidelines  to
facilitate their sale in the secondary market (although the Bank usually retains
residential  mortgages  for  portfolio).  Substantially  all  of  the  Company's
residential mortgages include "due on sale" clauses, which are provisions giving
the Bank the right to declare a loan  immediately  payable if the borrower sells
or otherwise transfers an interest in the property to a third party.

         Included in the Company's one- to  four-family  loan portfolio are home
equity loans and second  mortgage  loans.  Home equity and second mortgage loans
are  generally  fixed rate with interest  rates based on market  rates.  In most
instances,  the Company holds the first lien on a second  mortgage.  At December
31, 2000,  such loans  totaled $9.2 million,  or 15.4% of the Company's  one- to
-four family portfolio.

         Multi-Family  Residential  Real Estate.  Multi-family  residential real
estate loans are  permanent  loans  primarily  secured by  apartment  buildings.
Multi-family  residential  real estate loans can be  originated in amounts up to
75% of the  appraised  value of the mortgaged  property.  The Company makes both
adjustable  and  fixed-rate  multi-family  residential  real estate  loans.  The
adjustable rate loans have terms of up to 15 years, the rate of interest is tied
to the Wall Street Journal prime rate.

         Construction.  The Company will occasionally originate loans to finance
the  construction  of  one-  to  four-family  residences.   Constructions  loans
typically are originated directly to the owners of pre-sold single-family houses
that are being built, and generally  convert to a permanent loan upon completion
of construction.  Construction loans require payment of interest only during the
construction period and are offered at rates comparable to the Company's one- to
four-family permanent mortgage loan rates.

         Commercial  Real Estate.  Commercial  real estate  loans are  permanent
loans secured by improved property such as office buildings,  retail stores, and
other  non-residential  buildings.  Essentially  all originated  commercial real
estate loans are within the Bank's market area. Commercial real estate loans can
be  originated  in amounts  up to 75% of the  appraised  value of the  mortgaged
property.  The Company makes both  adjustable  and  fixed-rate  commercial  real
estate loans.  Commercial real estate loans are primarily  adjustable rate loans
with  terms of up to 15  years,  with the rate tied to the Wall  Street  Journal
prime rate.

         Commercial  Loans.  Commercial  loans  generally  are  deemed to entail
significantly greater risk than that which is involved with real estate lending.
The  repayment of  commercial  loans  typically  is dependent on the  successful
operations  and income stream of the borrower.  Such risks can be  significantly
affected by economic  conditions.  In  addition,  commercial  lending  generally
requires  substantially  greater  oversight efforts compared to residential real
estate lending.

         Commercial   loans  are   generally   provided  to  various   types  of
closely-held  businesses  located  principally  in the Company's  primary market
area.  The  Company's  business  loans  may be  structured  as term  loans or as
revolving lines of credit.  Commercial loans generally have terms of seven years
or less and interest rates which are fixed or float in accordance with the prime
rate.  Commercial  loans generally are secured by equipment,  machinery or other
corporate assets and the Company generally obtains personal  guarantees from the
principals of the borrower.

                                        6
<PAGE>

         Consumer Loans. Consumer loans primarily consist of indirect automobile
loans.  Indirect automobile loans are generally originated with terms of up to 6
years depending on the age of the  automobiles.  Indirect  automobile  loans are
underwritten  by the Registrant  and a fee is remitted to the automobile  dealer
upon the successful  underwriting and closing of the loan. The fee is rebated to
the  Company,  on a pro rata basis,  if the loan is repaid  within the first six
months.  The Company  generally  does not have recourse  against the  automobile
dealer in the event of a default by the  borrower.  Each  indirect  auto loan is
originated  in  accordance  with  the  Company's   underwriting   standards  and
procedures,  which are intended to assess the  applicant's  ability to repay the
amounts due on the loan and the adequacy of the financed  vehicle as collateral.
Indirect  automobile  loans are  secured  by the new or used  automobile.  Loans
secured by assets that depreciate  rapidly,  such as automobiles,  are generally
considered to entail greater risks than one-to four-family residential loans.

         The Company's  other consumer loans include credit card loans,  student
loans,  and secured and unsecured  personal  loans.  Secured  consumer loans are
generally  collateralized by secondary liens on real estate.  Unsecured consumer
loans are only made up to $20,000.

         Loan  Solicitation  and  Processing.  The Company's  primary  source of
mortgage loan  applications  is referrals from existing or past  customers.  The
Company also solicits loan applications  from real estate brokers,  contractors,
and  call-ins  and  walk-ins to its  offices.  The Company  advertises  in local
newspapers for first mortgage and home equity loans.

         Upon receipt of any loan  application  from a prospective  borrower,  a
credit  report and  verifications  are ordered to confirm  specific  information
relating to the loan  applicant's  employment,  income and credit  standing.  An
appraisal of the real estate  intended to secure the proposed loan is undertaken
by an independent fee appraiser.  In connection with the loan approval  process,
the  Bank's  loan  officers  analyze  the  loan  applications  and the  property
involved.  All  residential,   home  equity,   multi-family,   construction  and
commercial  real estate loans are processed at the Company's  main office by the
Company's loan servicing  department.  The Board of Directors approves all loans
over $50,000.

         Loan applicants are promptly notified of the decision of the Company by
a letter  setting forth the terms and  conditions of the decision.  If approved,
these terms and conditions include the amount of the loan,  interest rate basis,
amortization  term,  a brief  description  of real estate to be mortgaged to the
Company,  tax escrow and the notice of requirement  of insurance  coverage to be
maintained  to protect  the  Company's  interest.  The  Company  requires  title
insurance  on  first  mortgage  loans  and fire and  casualty  insurance  on all
properties  securing loans, which insurance must be maintained during the entire
term of the loan.

         Loan  Commitments.  The Company,  generally grants  commitments to fund
fixed-rate  single-family  mortgage  loans  for  periods  of up to 90  days at a
specified  term and  interest  rate.  At  December  31,  2000,  total  aggregate
commitments to extend credit were $18.5 million.

Non-performing Loans and Problem Assets

         Loan  Delinquencies.  When a mortgage  loan becomes 15 days past due, a
notice of nonpayment  is sent to the  borrower.  If such payment is not received
within 15 days after the initial  notice has been sent, an additional  notice of
nonpayment  is  sent to the  borrower.  After  60  days,  if  payment  is  still
delinquent,  a notice of right to cure default is sent to the borrower giving 30
additional  days to bring the loan current before  foreclosure is commenced.  If
the loan continues in a delinquent status for 90 days past

                                        7
<PAGE>

due  and no  repayment  plan  is in  effect,  foreclosure  proceedings  will  be
initiated. The customer will be notified when foreclosure is commenced.

         Loans are reviewed on a monthly  basis and are placed on a  non-accrual
status  when the loan  becomes  more  than 90 days  delinquent  or when,  in the
Company's opinion,  the collection of additional interest is doubtful.  Interest
accrued and unpaid at the time a loan is placed on nonaccrual  status is charged
against  interest  income.  Subsequent  interest  payments,  if any,  are either
applied to the  outstanding  principal  balance or recorded as interest  income,
depending on the assessment of the ultimate collectibility of the loan.

         Non-performing  Assets.  The  following  table sets  forth  information
regarding nonaccrual loans and real estate owned, as of the dates indicated. The
Company has no loans  categorized  as troubled  debt  restructurings  within the
meaning of the Statement of Financial  Accounting  Standards  ("SFAS") 15 and no
impaired loans within the meaning of SFAS 114, as amended by SFAS 118.  Interest
income that would have been  recorded  on loans  accounted  for on a  nonaccrual
basis  under the  original  terms of such loans was  $66,000  for the year ended
December 31, 2000, of which $30,000 was collected.

<TABLE>
<CAPTION>
                                                              At December 31,
                                              ----------------------------------------------
                                               2000      1999      1998      1997      1996
                                              ------    ------    ------    ------    ------
                                                            (Dollars in Thousands)
<S>                                          <C>       <C>       <C>       <C>       <C>
Loans accounted for on a non-accrual basis:

Mortgage loans:
 One- to -four family .....................   $  201    $  214    $  204    $  347    $  769
  All other mortgage loans ................       --        --        --        --        --
Non-mortgage loans:
  Commercial ..............................      206        --        20        33        17
  Consumer ................................      175       210       168       377       367
                                              ------    ------    ------    ------    ------
Total .....................................   $  582    $  424    $  392    $  757    $1,153
                                              ------    ------    ------    ------    ------
Accruing loans which are contractually
 past due 90 days or more:

Mortgage loans:
  One- to -four family ....................   $   --    $   --    $   10    $   61    $   65
  All other mortgage loans ................       --        --        --        --        --
Non-mortgage loans:
  Commercial ..............................       --        --        --        --        --
  Consumer ................................       83        73       125        52        65
                                              ------    ------    ------    ------    ------
Total .....................................   $   83    $   73    $  135    $  113    $  130
                                              ------    ------    ------    ------    ------

Total non-performing loans ................   $  665    $  497    $  527    $  870    $1,283
Real estate owned .........................   $   --    $   --    $   --    $   33    $   42
                                              ------    ------    ------    ------    ------
Total non-performing assets ...............   $  665    $  497    $  527    $  903    $1,325
                                              ======    ======    ======    ======    ======
Total non-performing loans to total loans .     0.51%     0.42%     0.52%     0.87%     1.33%
                                              ======    ======    ======    ======    ======
Total non-performing loans to total assets      0.25%     0.19%     0.22%     0.40%     0.63%
                                              ======    ======    ======    ======    ======
</TABLE>

                                        8
<PAGE>

         Classified   Assets.   Management,   in  compliance   with   regulatory
guidelines,  has instituted an internal loan review  program,  whereby loans are
classified as special  mention,  substandard,  doubtful or loss.  When a loan is
classified  as  substandard  or doubtful  management  is required to establish a
general  valuation  reserve for loan losses in an amount that is deemed prudent.
General  allowances  represent loss  allowances  which have been  established to
recognize inherent risk associated with lending  activities,  but which,  unlike
specific allowances,  have not been allocated to particular problem assets. When
management  classifies  a loan as a loss asset,  a reserve  equal to 100% of the
loan balance is required to be established or the loan is to be charged-off.

         An asset is considered "substandard" if it is inadequately protected by
the paying capacity and net worth of the obligor or the collateral  pledged,  if
any.   "Substandard"   assets  include  those  characterized  by  the  "distinct
possibility"  that the company will sustain "some loss" if the  deficiencies are
not  corrected.  Assets  classified  as  "doubtful"  have all of the  weaknesses
inherent in those classified  "substandard," with the added  characteristic that
the  weaknesses  present  make  "collection  or  liquidation  in full,"  "highly
questionable  and  improbable,"  on  the  basis  of  currently  existing  facts,
conditions,  and  values.  Assets  classified  as "loss"  are  those  considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without the  establishment  of a specific loss reserve is not warranted.  Assets
which do not  currently  expose the  company to a  sufficient  degree of risk to
warrant  classification  in one of the  aforementioned  categories  but  possess
credit  deficiencies  or  potential  weaknesses  are  required to be  designated
"special mention" by management.

         Management's  evaluation  of  the  classification  of  assets  and  the
adequacy  of the  reserve  for loan losses is reviewed by the Board on a regular
basis and by the regulatory agencies as part of their examination process.

         The  following  table sets  forth the  Company's  classified  assets in
accordance with its classification system.


                                     At December 31, 2000
                                     --------------------
                                    (Dollars in thousands)
Special Mention..............                 $  522
Substandard..................                    740
Doubtful ....................                     33
Loss ........................                      -
                                              ------
                                              $1,295
                                              ======

         Allowance  for Loan Losses.  A provision  for loan losses is charged to
operations based on management's  evaluation of the potential losses that may be
incurred in the Company's  loan  portfolio.  Such  evaluation,  which includes a
review of all loans of which full  collectibility  of interest and principal may
not be reasonably  assured,  considers the Company's past loan loss  experience,
known and inherent risks in the portfolio,  adverse  situations  that may affect
the borrower's ability to repay,  estimated value of any underlying  collateral,
and current economic conditions.

         The Company  monitors its allowance for loan losses and makes additions
to the allowance as economic conditions dictate.  Although the Company maintains
its allowance for loan losses at a level that management  considers adequate for
the  inherent  risk of loss in the  Company's  loan  portfolio,  there can be no
assurance  that the  allowance for losses will be adequate to cover losses which
may be realized in the future and that additional provisions for losses will not
be required.

                                        9
<PAGE>

         The  following  table  sets forth  certain  information  regarding  the
Company's allowances for loan losses at the dates indicated.

<TABLE>
<CAPTION>
                                                       For the Year Ended December 31,
                                         --------------------------------------------------------
                                           2000        1999        1998        1997        1996
                                         --------    --------    --------    --------    --------
                                                            (Dollars in Thousands)
<S>                                     <C>         <C>         <C>         <C>         <C>
Total loans outstanding ..............   $130,088    $119,189    $100,418    $100,367    $ 96,143
                                         ========    ========    ========    ========    ========
Average loans outstanding ............   $125,964    $111,050    $ 99,253    $ 99,594    $ 92,834
                                         ========    ========    ========    ========    ========
Allowance balance (at beginning of
  period) ............................   $  1,360    $  1,287    $  1,394    $  1,434    $  1,274
Provision for loan losses ............        555         410         365         555         455
Charge-offs:
  Mortgage loans (except
    commercial) ......................          8          15          23         119          12
  Commercial mortgages ...............         --          --          --          --          21
  Commercial .........................         --          --           9          --           4
  Consumer ...........................        503         373         495         533         270
                                         --------    --------    --------    --------    --------
     Sub-total .......................        511         388         527         652         307
                                         --------    --------    --------    --------    --------
Recoveries
   Mortgage loans (except
     commercial) .....................          1           1          12           8           1
   Commercial mortgage loans .........         --          --          --           6          --
   Commercial ........................         --          --          --          --          --
   Consumer ..........................         50          50          43          43          11
                                         --------    --------    --------    --------    --------
     Sub-total .......................         51          51          55          57          12
                                         --------    --------    --------    --------    --------
Net loans charged-off ................        460         337         472         595         295
                                         --------    --------    --------    --------    --------
Allowance balance, at end of period ..   $  1,455    $  1,360    $  1,287    $  1,394    $  1,434
                                         ========    ========    ========    ========    ========
Allowance for loan losses as a percent
  of total loans outstanding .........       1.12%       1.14%       1.28%       1.39%       1.49%
                                         ========    ========    ========    ========    ========
Net loans charged-off as a percent of
  average loans outstanding ..........       0.37%       0.30%       0.48%       0.60%       0.32%
                                         ========    ========    ========    ========    ========
</TABLE>
                                       10
<PAGE>

Analysis of the Allowance for Loan Losses

         The following  table sets forth the breakdown of the allowance for loan
losses by loan category and the percent of loans in each category to total loans
receivable  for the periods  indicated.  The allocation of the allowance to each
category is not  necessarily  indicative  of future losses and does not restrict
the use of the allowances to absorb losses in any category.

<TABLE>
<CAPTION>
                                                                 At December 31,
                  ------------------------------------------------------------------------------------------------------------------
                         2000                   1999                   1998                    1997                   1996
                  ---------------------  --------------------- ----------------------  ---------------------- ----------------------
                         % of loans in          % of loans in          % of loans in           % of loans in          % of loans in
                         each category          each category          each category           each category          each category
                  Amount to total loans  Amount to total loans Amount  to total loans  Amount  to total loans Amount  to total loans
                  ------ --------------  ------ -------------- ------  --------------  ------  -------------- ------  --------------
                                                               (Dollars in Thousands)
<S>              <C>         <C>       <C>          <C>      <C>          <C>       <C>           <C>       <C>         <C>
Mortgage
  loans.......... $  260       46.56%    $  266       46.76%    $ 285       50.69%    $  397        46.83%    $  462       45.10%
Commercial
  loans and
  lease
  financing
  receivables....    197         7.54       122         3.97       72         3.60        71          2.46        61         2.04
Consumer
  loans..........    998        45.90       972        49.27      930        45.71       926         50.71       911        52.86
                  ------       ------    ------       ------   ------       ------    ------        ------    ------      ------
                  $1,455       100.00%   $1,360       100.00%  $1,287       100.00%   $1,394        100.00%   $1,434      100.00%
                  ======       ======    ======       ======   ======       ======    ======        ======    ======      ======
</TABLE>
                                       11
<PAGE>

Investment Activities

         The Company is required under federal regulations to maintain a minimum
amount of liquid assets which may be invested in specified short-term securities
and certain other investments.  The level of liquid assets varies depending upon
several  factors,  including:  (i) the yields on investment  alternatives,  (ii)
management's  judgment as to the  attractiveness of the yields then available in
relation to other  opportunities,  (iii) expectation of future yield levels, and
(iv)  management's  projections as to the short-term demand for funds to be used
in loan  origination  and other  activities.  Investment  securities,  including
mortgage-backed  securities,  are classified at the time of purchase, based upon
management's  intentions  and  abilities,  as  securities  held to  maturity  or
securities  available  for sale.  Debt  securities  acquired with the intent and
ability to hold to maturity are classified as held to maturity and are stated at
cost and adjusted for  amortization of premium and accretion of discount,  which
are  computed  using the level yield method and  recognized  as  adjustments  of
interest income.  All other debt securities are classified as available for sale
to serve principally as a source of liquidity. At December 31, 2000, the Company
had no securities  of a single  issuer,  excluding  U.S.  government  and agency
securities, that exceeded 10% of stockholder's equity.

         Current  regulatory  and  accounting  guidelines  regarding  investment
securities  (including  mortgage  backed  securities)  require  the  Company  to
categorize  securities as "held to maturity," "available for sale" or "trading."
As of December 31, 2000, Company had securities classified as "held to maturity"
and  "available  for sale" in the  amount of $56.6  million  and $63.2  million,
respectively  and  had  no  securities   classified  as  "trading."   Securities
classified as "available for sale" are reported for financial reporting purposes
at the fair  market  value with net  changes in the market  value from period to
period included as a separate  component of stockholders'  equity, net of income
taxes. At December 31, 2000, the Company's  securities available for sale had an
amortized cost of $62.5 million and market value of $63.2  million.  The changes
in market value in the Company's  available for sale  portfolio  reflect  normal
market conditions and vary, either positively or negatively,  based primarily on
changes in general levels of market interest rates relative to the yields of the
portfolio. Additionally, changes in the market value of securities available for
sale do not affect the Company's income nor does it affect the Bank's regulatory
capital requirements or its loan-to-one borrower limit.

         At December 31, 2000, the Company's investment portfolio policy allowed
investments in instruments  such as: (i) U.S.  Treasury  obligations,  (ii) U.S.
federal agency or federally sponsored agency obligations,  (iii) local municipal
obligations,  (iv) mortgage-backed  securities,  (v) banker's acceptances,  (vi)
certificates  of  deposit,  and (vii)  investment  grade  corporate  bonds,  and
commercial paper. The Board of Directors may authorize additional investments.

         As  a  source  of  liquidity  and  to  supplement   Company's   lending
activities, the Company has invested in residential  mortgage-backed securities.
Mortgage-backed  securities can serve as collateral for borrowings and,  through
repayments,  as a source of liquidity.  Mortgage-backed  securities  represent a
participation  interest in a pool of  single-family  or other type of mortgages.
Principal  and  interest  payments  are passed  from the  mortgage  originators,
through  intermediaries  (generally  quasi-governmental  agencies) that pool and
repackage the participation  interests in the form of securities,  to investors,
like us. The quasi-governmental  agencies guarantee the payment of principal and
interest to  investors  and include the Federal Home Loan  Mortgage  Corporation
("FHLMC"),  Government  National  Mortgage  Association  ("GNMA"),  and  Federal
National Mortgage Association ("FNMA").

                                       12
<PAGE>

         Mortgage-backed  securities  typically are issued with stated principal
amounts.  The  securities  are backed by pools of mortgages that have loans with
interest  rates that are  within a set range and have  varying  maturities.  The
underlying  pool of mortgages can be composed of either fixed rate or adjustable
rate mortgage  loans.  Mortgage-backed  securities are generally  referred to as
mortgage participation certificates or pass-through  certificates.  The interest
rate risk  characteristics of the underlying pool of mortgages (i.e., fixed rate
or adjustable  rate) and the prepayment  risk, are passed on to the  certificate
holder. The life of a mortgage-backed pass-through security is equal to the life
of the underlying  mortgages.  Expected  maturities will differ from contractual
maturities due to scheduled  repayments and because borrowers may have the right
to  call  or  prepay   obligations   with  or  without   prepayment   penalties.
Mortgage-backed securities issued by FHLMC, GNMA, and FNMA make up a majority of
the pass- through certificates market.

         The Company  also  invests in  mortgage-related  securities,  primarily
collateralized mortgage obligations ("CMOs"), issued or sponsored by GNMA, FNMA,
FHLMC,  as well as  private  issuers.  CMOs  are a type  of debt  security  that
aggregates  pools  of  mortgages  and  mortgage-backed  securities  and  creates
different  classes of CMO securities  with varying  maturities and  amortization
schedules as well as a residual  interest with each class having  different risk
characteristics.  The cash  flows from the  underlying  collateral  are  usually
divided into "tranches" or classes whereby  tranches have descending  priorities
with  respect to the  distribution  of principal  and interest  repayment of the
underlying  mortgages and mortgage backed  securities as opposed to pass through
mortgage  backed  securities  where cash flows are  distributed  pro rata to all
security  holders.  Unlike  mortgage  backed-securities  from which cash flow is
received and prepayment risk is shared pro rata by all securities holders,  cash
flows from the mortgages and mortgage backed securities underlying CMOs are paid
in  accordance  with a  predetermined  priority  to  investors  holding  various
tranches of such  securities or obligations.  A particular  tranche or class may
carry  prepayment  risk  which  may be  different  from  that of the  underlying
collateral  and other  tranches.  CMOs  attempt to  moderate  reinvestment  risk
associated  with   conventional   mortgage-backed   securities   resulting  from
unexpected prepayment activity.

                                       13
<PAGE>

         The  following  tables sets forth the carrying  value of the  Company's
investment  securities  held to maturity,  securities  available for sale,  FHLB
stock,  and interest  bearing  deposits and overnight  investments  at the dates
indicated.

                                                         At December 31,
                                               ---------------------------------
                                                 2000        1999         1998
                                                 ----        ----         ----
                                                       (In Thousands)
Investment and mortgage-backed
securities held to maturity:
  U.S. Government agency securities..........   $15,221    $ 12,554    $ 13,927
  Corporate obligations......................         -           -       2,981
  Obligations of states and political
     subdivisions............................     2,555       2,986       1,238
  Mortgage-backed securities.................    38,780      44,141      48,287
                                                 ------      ------      ------
     Total investment and
       mortgage-backed securities............    56,556      59,681      66,433
  Interest-bearing deposits..................     5,094      11,417       9,332
  FHLB stock.................................     2,615       2,615       1,545
                                                -------     -------     -------
     Total investments.......................   $64,265     $73,713     $77,310
                                                 ======      ======      ======



                                                        At December 31,
                                              ----------------------------------
                                                  2000       1999        1998
                                                  ----       ----        ----
                                                         (In Thousands)
Investment and mortgage-backed
securities available for sale:
  U.S. Government treasury securities........   $ 2,005    $ 4,959     $ 9,132
  U.S. Government agency securities..........     7,035      6,000           -
  Real estate mortgage investment conduits...        45         59         102
  Obligations of states and political
    subdivisions.............................    15,622     16,577      15,963
  Equity Securities..........................       107          -           -
  Mortgage-backed securities.................    38,415     37,426      32,878
                                                 ------     ------      ------
     Total...................................   $63,229    $65,021     $58,075
                                                 ======     ======      ======

                                       14
<PAGE>

         The  following  table  sets forth  certain  information  regarding  the
carrying  values,  weighted  average  yields  and  maturities  of the  Company's
investment and  mortgage-backed  securities  portfolio at December 31, 2000. The
table does not include interest bearing deposits or FHLB stock and does not take
into  consideration  the  effects  of  scheduled  repayments  or the  effects of
possible prepayments.

<TABLE>
<CAPTION>
                                                                                                             Total Investment and
                             One Year or Less  One to Five Years  Five to Ten Years   More than Ten Years Mortgage-backed Securities
                            ------------------ ------------------ -----------------   ------------------- --------------------------
                            Carrying  Average  Carrying  Average  Carrying Average    Carrying   Average  Carrying Average   Market
                             Value    Yield(1)   Value   Yield(1)  Value   Yield(1)    Value     Yield(1)  Value   Yield(1)  Value
                            -------   --------  ------- --------- -------- --------   --------  --------- -------  --------  ------
                                                               (Dollars in Thousands)
<S>                         <C>        <C>     <C>         <C>    <C>        <C>     <C>          <C>    <C>         <C>   <C>
Held to Maturity:
U.S. Government
  agency securities......... $2,000     5.95%   $9,572      6.32%  $3,649     6.63%   $     -         -%  $15,221     6.35% $15,366
Obligations of
  states and political
  subdivisions..............    291     8.47         -         -      245     7.07      2,019      7.36     2,555     7.46    2,552
Mortgage-backed
  securities................      -        -         -         -        -        -     38,780      7.00    38,780     7.00   38,471
                             ------             ------             ------             -------             -------           -------
    Total................... $2,291     6.27%   $9,572      6.32%  $3,894     6.66%   $40,799      7.02%  $56,556     6.84% $56,389
                             ======     ====    ======      ====   ======     ====    =======      ====   =======     ====  =======
Available for Sale:
U.S. Government
  treasury.................. $  998     5.00%   $1,007      5.61%  $    -        -%   $     -         -%  $ 2,005     5.31% $ 2,005
U.S. Government
  agency securities.........      -        -     1,050      7.29    5,985     7.85          -         -     7,035     7.77    7,035
Obligations of
  states and political
  subdivisions..............  1,118     8.79     4,657      8.19      105     7.78      9,742      7.94    15,622     8.07   15,622
Real estate mortgage
  investment conduits.......      -        -         -         -        -        -         45      7.39        45     7.39       45
Equity securities...........    107     6.28         -         -        -        -          -         -       107     6.28      107
Mortgage-backed securities..      -        -        33      8.33    2,103     7.70     36,279      7.06    38,415     7.10   38,415
                             ------             ------             ------             -------             -------           -------
    Total................... $2,223     6.97%   $6,747      7.67%  $8,193     7.81%   $46,066      7.25%  $63,229     7.35% $63,229
                             ======     ====    ======      ====   ======     ====    =======      ====   =======     ====  =======
</TABLE>

---------------------
(1)  Average  yields  on tax  exempt  obligations  have been  computed  on a tax
     equivalent basis of 34%.

                                       15
<PAGE>

Sources of Funds

         Deposits are the Company's  major external  source of funds for lending
and other  investment  purposes.  Funds are also  derived  from the  receipt  of
payments on loans and  prepayment  of loans and  maturities  of  investment  and
mortgage-backed  securities  and,  to  a  much  lesser  extent,  borrowings  and
operations.  Scheduled loan principal  repayments are a relatively stable source
of  funds,   while  deposit  inflows  and  outflows  and  loan  prepayments  are
significantly influenced by general interest rates and market conditions.

         Deposits.  Consumer and commercial  deposits are attracted  principally
from  within the  Company's  primary  market  area  through  the  offering  of a
selection of deposit  instruments  including  regular  savings  accounts,  money
market accounts,  and term certificate accounts.  IRA accounts are also offered.
Deposit account terms vary according to the minimum balance  required,  the time
period the funds must remain on deposit,  and the  interest  rate.  The interest
rates paid by us on  deposits  are set weekly at the  direction  of the Board of
Directors.  Interest  rates  are  determined  based on the  Company's  liquidity
requirements,  interest  rates  paid  by  the  Company's  competitors,  and  the
Company's growth goals and applicable regulatory  restrictions and requirements.
At December 31, 2000, the Company had no brokered deposits.

         The following table indicates the amount of the Company's  certificates
of deposit of $100,000 or more by time  remaining  until maturity as of December
31, 2000.


                                                     Certificates
        Maturity Period                              of Deposits
        ---------------                              ------------
                                                    (In thousands)

        Within three months                             $   794
        Three through six months                          2,944
        Six through twelve months                         1,533
        Over twelve months                                5,639
                                                         ------
                                                        $10,910
                                                        =======


Borrowings

         The  Company  may  obtain  advances  from  the  FHLB of  Pittsburgh  to
supplement  its supply of lendable  funds.  Advances from the FHLB of Pittsburgh
are  typically  secured  by a  pledge  of the  Company's  stock  in the  FHLB of
Pittsburgh and a portion of the Company's first mortgage loans and certain other
assets.  Each FHLB credit program has its own interest rate,  which may be fixed
or variable, and range of maturities.  The Company, if the need arises, may also
access the Federal  Reserve Bank  discount  window to  supplement  its supply of
lendable funds and to meet deposit withdrawal requirements.

                                       16
<PAGE>

         The following  table sets forth  information  concerning  FHLB advances
during the periods indicated (includes both short- and long-term advances).


                                                       At or For the Years
                                                       Ended December 31,
                                               ---------------------------------
                                                 2000        1999       1998
                                                 ----        ----       ----
                                                    (Dollars in Thousands)

FHLB advances:
  Average outstanding........................   $41,692    $ 39,829   $ 19,435
  Maximum amount outstanding at any
    month-end during the year................    44,295      50,295     30,895
  Weighted average interest rate during
     the year................................      5.77%       5.62%      5.89%
  Total FHLB advances at end of period.......    36,195      50,295     30,895
  Weighted Year End Rate.....................      5.72%       5.62%      5.59%

Personnel

         As of December 31, 2000 the Company had 75 full-time  employees  and 13
part-time  employees.   The  employees  are  not  represented  by  a  collective
bargaining unit. The Company believes its relationship  with its employees to be
satisfactory.

Regulation

         Set forth below is a brief  description of certain laws which relate to
the  regulation  and  supervision  of the Bank,  the  Company  and the MHC.  The
description  does not purport to be complete and is qualified in its entirety by
reference to applicable laws and regulations.

Regulation of the Bank

         General. As a Pennsylvania  chartered,  SAIF-insured  savings bank, the
Bank is subject to extensive regulation and examination by the Department and by
the FDIC, which insures its deposits to the maximum extent permitted by law. The
federal and state laws and regulations applicable to banks regulate, among other
things, the scope of their business, their investments, the reserves required to
be kept against deposits,  the timing of the availability of deposited funds and
the  nature  and  amount  of and  collateral  for  certain  loans.  The laws and
regulations  governing  the Bank  generally  have been  promulgated  to  protect
depositors and not for the purpose of protecting  stockholders.  This regulatory
structure also gives the federal and state banking agencies extensive discretion
in connection with their supervisory and enforcement  activities and examination
policies,  including  policies with respect to the  classification of assets and
the  establishment of adequate loan loss reserves for regulatory  purposes.  Any
change in such  regulation,  whether by the  Department,  the FDIC or the United
States Congress, could have a material impact on the Company, the Bank and their
operations.

                                       17
<PAGE>

         Pennsylvania  Savings Bank Law. The Pennsylvania Banking Code ("Banking
Code") contains  detailed  provisions  governing the  organization,  location of
offices,  rights and responsibilities of trustees,  officers, and employees,  as
well as corporate powers, savings and investment operations and other aspects of
the Bank and its affairs. The Banking Code delegates extensive rule-making power
and  administrative  discretion to the  Department so that the  supervision  and
regulation  of  state  chartered  savings  banks  may be  flexible  and  readily
responsive  to  changes  in  economic  conditions  and in  savings  and  lending
practices.

         The Banking Code provides state-chartered savings banks with all of the
powers enjoyed by federal savings and loan  associations,  subject to regulation
by the  Department.  The Federal  Deposit  Insurance  Corporation  Act ("FDIA"),
however, prohibits state chartered banks from making new investments,  loans, or
becoming  involved in activities as principal and equity  investments  which are
not permitted for national banks unless (1) the FDIC  determines the activity or
investment does not pose a significant risk of loss to the SAIF and (2) the bank
meets all applicable capital requirements. Accordingly, the additional operating
authority  provided to the Bank by the Banking Code is significantly  restricted
by the FDIA.

         Federal Deposit  Insurance.  The FDIC is an independent  federal agency
that insures the  deposits,  up to  prescribed  statutory  limits,  of federally
insured banks and savings  institutions  and safeguards the safety and soundness
of the  banking  and  savings  industries.  The FDIC  administers  two  separate
insurance  funds,  the Bank  Insurance  Fund ("BIF"),  which  generally  insures
commercial bank and state savings bank deposits,  and the SAIF,  which generally
insures savings  association  deposits.  The Bank,  which was previously a state
savings  association,  remains a member of the SAIF and its deposit accounts are
insured by the FDIC, up to prescribed limits.

         The FDIC is authorized to establish  separate annual deposit  insurance
assessment rates for members of the BIF and the SAIF, and to increase assessment
rates if it determines  such increases are  appropriate to maintain the reserves
of either insurance fund. In addition,  the FDIC is authorized to levy emergency
special  assessments  on BIF and SAIF  members.  The  FDIC  has set the  deposit
insurance  assessment  rates  for SAIF - member  institutions  for the first six
months of 2001 at 0% to .027% of insured deposits on an annualized  basis,  with
the assessment rate for most institutions set at 0%.

         In addition,  all insured  institutions of the FDIC are required to pay
assessments  at an annual rate of  approximately  .0212% of insured  deposits to
fund interest payments on bonds issued by the Financing  Corporation,  an agency
of the Federal  government  established to  recapitalize  the predecessor to the
SAIF.  These  assessments  will continue until the Financing  Corporation  bonds
mature in 2017.

         Regulatory  Capital  Requirements.  The  FDIC has  promulgated  capital
adequacy  requirements  for  state-chartered  banks that, like the Bank, are not
members of the Federal Reserve  System.  At December 31, 2000, the Bank exceeded
all regulatory capital requirements and was classified as "well capitalized."

         The FDIC's capital  regulations  establish a minimum 3% Tier I leverage
capital requirement for the most highly-rated state-chartered, non-member banks,
with an  additional  cushion  of at least 100 to 200 basis  points for all other
state-chartered,  non-member banks, which effectively increases the minimum Tier
I  leverage  ratio for such  other  banks to 4% to 5% or more.  Under the FDIC's
regulation,  the highest-rated  banks are those that the FDIC determines are not
anticipating or experiencing  significant growth and have well diversified risk,
including no undue interest rate risk exposure,  excellent  asset quality,  high
liquidity,  good earnings and, in general, which are considered a strong banking
organization,  rated composite 1 under the Uniform Financial Institutions Rating
System.  Tier I or core  capital is  defined as the sum of common  stockholders'
equity (including  retained earnings),  noncumulative  perpetual preferred stock
and

                                       18
<PAGE>

related surplus, and minority interests in consolidated subsidiaries,  minus all
intangible  assets other than certain  purchased  mortgage  servicing rights and
purchased credit and relationships.

         The FDIC's  regulations also require that  state-chartered,  non-member
banks meet a  risk-based  capital  standard.  The  risk-based  capital  standard
requires the  maintenance  of total capital  (which is defined as Tier I capital
and  supplementary  (Tier  2)  capital)  to  risk  weighted  assets  of  8%.  In
determining the amount of  risk-weighted  assets,  all assets,  plus certain off
balance sheet assets,  are multiplied by a risk- weight of 0% to 100%,  based on
the risks  the FDIC  believes  are  inherent  in the type of asset or item.  The
components of Tier I capital for the risk-based  standards are the same as those
for the leverage capital  requirement.  The components of supplementary (Tier 2)
capital include cumulative  perpetual  preferred stock,  mandatory  subordinated
debt, perpetual subordinated debt,  intermediate-term preferred stock, up to 45%
of unrealized  gains on equity  securities  and a bank's  allowance for loan and
lease losses.  Allowance for loan and lease losses  includable in  supplementary
capital is limited to a maximum of 1.25% of risk-weighted  assets.  Overall, the
amount of supplementary capital that may be included in total capital is limited
to 100% of Tier I capital.

         A bank that has less than the minimum leverage  capital  requirement is
subject to various  capital plan and activities  restriction  requirements.  The
FDIC's regulations also provide that any insured  depository  institution with a
ratio of Tier I capital to total  assets  that is less than 2.0% is deemed to be
operating in an unsafe or unsound condition pursuant to Section 8(a) of the FDIA
and could be subject to potential termination of deposit insurance.

         The Bank is also subject to minimum capital requirements imposed by the
Department  on   Pennsylvania-chartered   depository  institutions.   Under  the
Department's  capital  regulations,  a  Pennsylvania  bank or savings  bank must
maintain a minimum leverage ratio of Tier 1 capital (as defined under the FDIC's
capital regulations) to total assets of 4%. In addition,  the Department has the
supervisory  discretion to require a higher leverage ratio for any  institutions
based on the institution's  substandard performance in any of a number of areas.
The  Bank  was  in  compliance  in  both  the  FDIC  and  Pennsylvania   capital
requirements as of December 31, 2000.

         Affiliate  Transaction  Restrictions.  Federal laws strictly  limit the
ability  of banks to engage in  transactions  with their  affiliates,  including
their bank holding  companies.  Such transactions  between a subsidiary bank and
its parent company or the nonbank  subsidiaries  of the bank holding company are
limited to 10% of a bank  subsidiary's  capital and surplus and, with respect to
such parent company and all such nonbank subsidiaries, to an aggregate of 20% of
the bank  subsidiary's  capital and surplus.  Further,  loans and  extensions of
credit generally are required to be secured by eligible  collateral in specified
amounts.  Federal law also requires that all transactions between a bank and its
affiliates  be  on  terms  as  favorable  to  the  bank  as  transactions   with
non-affiliates.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Pittsburgh,  which is one of 12 regional FHLBs. Each FHLB serves as a reserve or
central bank for its members within its assigned region.  It is funded primarily
from  funds  deposited  by member  institutions  and  proceeds  from the sale of
consolidated  obligations  of the FHLB System.  It makes loans to members (i.e.,
advances) in accordance with policies and procedures established by the Board of
Trustees of the FHLB.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Pittsburgh  in an amount  equal to the  greater of 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations  at the  beginning  of  each  year or 5% of the  Bank's  outstanding
advances  from the FHLB. At December 31, 2000,  the Bank was in compliance  with
this requirement.

                                       19
<PAGE>

         Federal  Reserve System.  The Federal  Reserve  requires all depository
institutions  to maintain non-  interest  bearing  reserves at specified  levels
against their  transaction  accounts  (primarily  checking and NOW accounts) and
non-personal  time  deposits.  The  balances  maintained  to  meet  the  reserve
requirements imposed by the Federal Reserve may be used to satisfy the liquidity
requirements that are imposed by the Department.  At December 31, 2000, the Bank
met its reserve requirements.

         Loans to One  Borrower.  Under  Pennsylvania  and federal law,  savings
banks have, subject to certain exemptions,  lending limits to one borrower in an
amount equal to 15% of the  institution's  capital  accounts.  An  institution's
capital  account  includes  the  aggregate of all  capital,  surplus,  undivided
profits, capital securities and general reserves for loan losses. As of December
31, 2000, the Bank's  loans-to-one  borrower limitation was $4.3 million and the
Bank was in compliance with such limitation.

Regulation of the Company

         General.  The Company, as a bank holding company under the Bank Holding
Company  Act of  1956,  as  amended  ("BHCA"),  is  subject  to  regulation  and
supervision  by the  Board  of  Governors  of  the  Federal  Reserve  and by the
Department.  The Company is required to file annually a report of its operations
with, and is subject to examination  by, the Federal Reserve and the Department.
This  regulation and oversight is generally  intended to ensure that the Company
limits its activities to those allowed by law and that it operates in a safe and
sound manner without endangering the financial health of its subsidiary banks.

         Under the BHCA,  the  Company  must  obtain the prior  approval  of the
Federal  Reserve  before it may acquire  control of another bank or bank holding
company, merge or consolidate with another bank holding company,  acquire all or
substantially  all of the assets of another  bank or bank  holding  company,  or
acquire direct or indirect ownership or control of any voting shares of any bank
or bank holding  company if, after such  acquisition,  the bank holding  company
would directly or indirectly own or control more than 5% of such shares.

         Federal  statutes impose  restrictions on the ability of a bank holding
company and its nonbank  subsidiaries  to obtain  extensions  of credit from its
subsidiary bank, on the subsidiary bank's investments in the stock or securities
of the  holding  company,  and on the  subsidiary  bank's  taking of the holding
company's  stock or securities as collateral  for loans to any borrower.  A bank
holding company and its subsidiaries are also prevented from engaging in certain
tie-in arrangements in connection with any extension of credit, lease or sale of
property, or furnishing of services by the subsidiary bank.

         A bank  holding  company is required to serve as a source of  financial
and  managerial  strength  to its  subsidiary  banks  and  may not  conduct  its
operations in an unsafe or unsound manner. In addition,  it is the policy of the
Federal  Reserve that a bank holding company should stand ready to use available
resources to provide  adequate capital to its subsidiary banks during periods of
financial stress or adversity and should maintain the financial  flexibility and
capital-raising  capacity  to obtain  additional  resources  for  assisting  its
subsidiary  banks. A bank holding  company's  failure to meet its obligations to
serve  as a source  of  strength  to its  subsidiary  banks  will  generally  be
considered by the Federal Reserve to be an unsafe and unsound  banking  practice
or a violation of the Federal Reserve regulations, or both.

         Non-Banking  Activities.  The business  activities of the Company, as a
bank holding company, are restricted by the BHCA. Under the BHCA and the Federal
Reserve's bank holding company  regulations,  the Company may only engage in, or
acquire or control voting securities or assets of a company engaged

                                       20
<PAGE>

in,  (1)  banking  or  managing  or  controlling  banks and  other  subsidiaries
authorized  under the BHCA and (2) any BHCA  activity  the  Federal  Reserve has
determined to be so closely related to banking or managing or controlling  banks
to be a  proper  incident  thereto.  These  include  any  incidental  activities
necessary to carry on those activities,  as well as a lengthy list of activities
that the Federal Reserve has determined to be so closely related to the business
of banking as to be a proper incident thereto.

         Financial Modernization.  The Gramm-Leach-Bliley Act, which was enacted
in November  1999 and most  provisions  of which became  effective in March 2000
(the  "Act"),  permits  greater  affiliation  among  banks,   securities  firms,
insurance companies,  and other companies under a new type of financial services
company  known as a "financial  holding  company." A financial  holding  company
essentially  is a bank  holding  company  with  significantly  expanded  powers.
Financial  holding  companies are authorized by statute to engage in a number of
financial  activities  previously  impermissible  for  bank  holding  companies,
including securities underwriting,  dealing and market making; sponsoring mutual
funds and investment companies;  insurance underwriting and agency; and merchant
banking  activities.  The Act also permits the Federal  Reserve and the Treasury
Department to authorize additional activities for financial holding companies if
they are "financial in nature" or "incidental" to financial  activities.  A bank
holding  company may become a financial  holding  company ("FHC") if each of its
subsidiary  banks  is  well  capitalized,  well  managed,  and  has at  least  a
"satisfactory"  CRA rating.  A financial  holding company must provide notice to
the  Federal  Reserve  within 30 days  after  commencing  activities  previously
determined by statute or by the Federal  Reserve and  Department of the Treasury
to be permissible. The Company has not, to date, submitted notice to the Federal
Reserve of its intent to be deemed a financial holding company.

         Activities  Restrictions  Applicable to  Pennsylvania-Chartered  Mutual
Holding  Companies.  Pursuant to Pennsylvania  law, a mutual holding company may
engage only in the  following  activities:  (i) investing in the stock of one or
more financial institution  subsidiaries;  (ii) acquiring one or more additional
financial  institution  subsidiaries  into a subsidiary of the holding  company;
(iii)  merging  with  or  acquiring  another  holding  company,   one  of  whose
subsidiaries  is  a  financial  institution  subsidiary;  (iv)  investing  in  a
corporation  the capital  stock of which is available  for purchase by a savings
bank  under  federal  law or  under  the  Banking  Code;  (v)  engaging  in such
activities as are permitted, by statute or regulation, to a holding company of a
federally  chartered  insured  mutual  institution  under  federal law; and (vi)
engaging in such other  activities as may be permitted by the  Department.  If a
mutual holding  company  acquires or merges with another  holding  company,  the
holding company  acquired or the holding  company  resulting from such merger or
acquisition  may only  invest in assets and engage in  activities  listed in (i)
through  (vi) above,  and has a period of two years to cease any  non-conforming
activities and divest any non-conforming investment.

         The Company will be subject to such  regulations  as the Department may
from time to time  prescribe.  The  Department  has not  issued  mutual  holding
company regulations to date.

         Regulatory  Capital  Requirements.  The  Federal  Reserve  has  adopted
capital  adequacy  guidelines  pursuant  to which it  assesses  the  adequacy of
capital in examining  and  supervising  a bank holding  company and in analyzing
applications  to it under the  BHCA.  The  Federal  Reserve's  capital  adequacy
guidelines are similar to those imposed on the Bank by the FDIC. See "Regulation
of the Bank - Regulatory Capital Requirements."

                                       21
<PAGE>

Item  2.  Description of Property
---------------------------------

         (a)      Properties

                  At  December  31,  2000,  the Company  operated  from its main
office, 8 branch offices and an administrative office located in the counties of
Beaver and Lawrence,  Pennsylvania.  All offices are owned except for one branch
office.  The lease has an initial  term of 10 years,  with a renewal  option for
additional years.

                  The  Bank  purchased  property  located  in  Center  Township,
Pennsylvania  for the purpose of construction  of a new branch office.  The Bank
has obtained all necessary  regulatory  approvals  related to the new branch and
expects to open the branch in the third quarter of 2001.

         (b) Investment  Policies.  See "Item 1.  Business"  above for a general
description of the Registrant's  investment policies and any regulatory or Board
of Directors'  percentage of assets limitations  regarding certain  investments.
The Registrant's  investments are primarily acquired to produce income, and to a
lesser extent, possible capital gain.

                  (1)    Investments in Real Estate or Interests in Real Estate.
See "Item 1.  Business - Lending  Activities  and - Regulation of the Bank," and
"Item 2. Description of Property."

                  (2)    Investments  in  Real  Estate  Mortgages.  See "Item 1.
Business - Lending Activities and - Regulation of the Bank."

                  (3)    Investments  in  Securities  of or Interests in Persons
Primarily  Engaged in Real Estate  Activities.  See "Item 1.  Business - Lending
Activities and - Regulation of the Bank."

         (c) Description of Real Estate and Operating Data. Not applicable.

Item 3.  Legal Proceedings
--------------------------

         There are various  claims and lawsuits in which the Company or the Bank
are  periodically  involved,  such as  claims  to  enforce  liens,  condemnation
proceedings  on properties in which the Bank holds  security  interests,  claims
involving  the making and  servicing of real  property  loans,  and other issues
incident to the Bank's business. In the opinion of management,  no material loss
is expected from any of such pending claims or lawsuits.

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

         None.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters
-----------------------------------------------------------------

         Information  relating to the market for Registrant's  common equity and
related  stockholder  matters  appears under " Stock Market  Information" in the
Registrant's  Annual Report to  Stockholders  for the fiscal year ended December
31, 2000 ("Annual Report") and is incorporated herein by reference.

                                       22
<PAGE>

Item 6.  Management's Discussion and Analysis or Plan of Operation
------------------------------------------------------------------

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

Item 7.  Financial Statements
-----------------------------

         The   Registrant's   financial   statements   listed  in  Item  13  are
incorporated herein by reference.

Item 8.  Changes  In  and  Disagreements  with  Accountants  on  Accounting  and
--------------------------------------------------------------------------------
         Financial Disclosure
         --------------------

         None.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
--------------------------------------------------------------------------------
        with Section 16(a) of the Exchange Act.
        ---------------------------------------

         The  information  required  under this item is  incorporated  herein by
reference  to the  Proxy  Statement  for the 2001  Annual  Meeting  (the  "Proxy
Statement")  contained under the sections  captioned  "Section 16(a)  Beneficial
Ownership  Reporting  Compliance,"  "Proposal I - Election of Directors," and "-
Biographical Information."

Item 10.  Executive Compensation
--------------------------------

         The  information  required by this item is incorporated by reference to
the  Proxy  Statement  contained  under  the  section  captioned  "Director  and
Executive Officer Compensation."

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners
         (b)      Security Ownership of Management
                  The information  required by items (a) and (b) is incorporated
                  herein by reference to the Proxy Statement contained under the
                  sections  captioned  "Principal  Holders"  and  "Proposal  I -
                  Election of Directors."

         (c)      Management of the Company knows of no arrangements,  including
                  any pledge by any person of  securities  of the  Company,  the
                  operation of which may at a subsequent date result in a change
                  in control of the Company.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" in the Proxy Statement.

                                       23
<PAGE>

Item 13.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------

         (a) Listed below are all  financial  statements  and exhibits  filed as
part of this report.

          1.   The  consolidated  statements  of  financial  conditions  of  PHS
               Bancorp,  Inc. and  subsidiary  as of December 31, 2000 and 1999,
               and the related  consolidated  statements  of income,  changes in
               stockholders'  equity and cash flows for each of the three  years
               in the period ended December 31, 2000,  together with the related
               notes and the independent  accountants' report of S.R. Snodgrass,
               A.C., independent accountants.

          2.   The   following   exhibits   are   included  in  this  Report  or
               incorporated herein by reference:
<TABLE>
<CAPTION>
                  (3)      Exhibits
<S>             <C>
                  (a)      The following exhibits are filed as part of this report.

                   3.1     Articles of Incorporation of PHS Bancorp, Inc.*
                   3.2     Bylaws of PHS Bancorp, Inc.*
                   4.0     Stock Certificate of PHS Bancorp, Inc.*
                  10.1     Amended Employment Agreement between Peoples Home Savings Bank and
                           James P. Wetzel, Jr.*
                  10.2     1998 Restricted Stock Plan*
                  10.3     1998 Stock Option Plan*
                  13.0     Portions of Annual Report to Stockholders for the fiscal year ended December
                           31, 2000
                  20.1     Dividend Reinvestment Plan**
                  21.0     Subsidiary of the Registrant (see "Item 1 Business)
                  23.0     Consent of Accountants
</TABLE>

*                 Incorporated by reference to Registrant's  Quarterly report on
                  form 10-Q for the Quarter  Ended  September 30, 1998 and filed
                  with the  Securities  and Exchange  Commission on November 13,
                  1998.
 **               Incorporated by reference to Registrant's  Quarterly report on
                  form 10-Q for the  Quarter  Ended June 30, 1999 and filed with
                  the Securities and Exchange Commission on July 23, 1999.

                  (b)      Reports on Form 8-K.

                  None

                                       24
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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 as of March 23, 2001.

                                       PHS BANCORP, INC.


                                        By:     /s/James P. Wetzel, Jr.
                                                --------------------------------
                                                James P. Wetzel, Jr.
                                                President, Chief Executive
                                                Officer and Director
                                                (Duly Authorized Representative)

         Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities indicated as of March 23, 2001.


/s/James P. Wetzel, Jr.                       /s/Richard E. Canonge
----------------------------------            ----------------------------------
James P. Wetzel, Jr.                          Richard E. Canonge
President, Chief Executive Officer            Vice President and Treasurer
  and Director                                (Principal Financial Officer)
(Principal Executive Officer)


/s/Joseph D. Belas                            /s/Douglas K. Brooks
----------------------------------            ----------------------------------
Joseph D. Belas                               Douglas K. Brooks
Director                                      Director


/s/Emlyn Charles                              /s/John C. Kelly
----------------------------------            ----------------------------------
Emlyn Charles                                 John C. Kelly
Director                                      Director


/s/Earl F. Klear                              /s/Howard B. Lenox
----------------------------------            ----------------------------------
Earl F. Klear                                 Howard B. Lenox
Director                                      Director


/s/John M. Rowse
----------------------------------
John M. Rowse
Director