U.S. Securities and Exchange Commission


                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended December 31, 1997

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

   For the transition period from ____________________ to ____________________ 

                         Commission file number 0-22288

                             Fidelity Bancorp, Inc.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

  Pennsylvania                                          25-1705405  
--------------------------------------------------------------------------------
 (State  or  other  jurisdiction  of          (IRS Employer Identification No.)
 incorporation  or organization
 
 1009 Perry Highway, Pittsburgh, Pennsylvania             15237 
--------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip code)

                                  412-367-3300
--------------------------------------------------------------------------------
                           (Issuer's telephone number) 

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

Check  whether the issuer (1) 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 [   ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [   ]  No [   ]

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [   ]  No [   ]
<PAGE>

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,564,757 shares, par value $0.01, at
January 31, 1998

         Transitional Small Business Disclosure Format (Check one):
          Yes [   ]  No [ X ]
<PAGE>


                     FIDELITY BANCORP, INC. AND SUBSIDIARIES

                                      Index


Part I - Financial Information                    

Item 1.  Financial Statements

          Statements of Financial Condition as of September 30, 1997
               and December 31, 1997 (Unaudited)                                

          Statements of Income (Unaudited) for the Three Month Periods
               Ended December 31, 1996 and 1997                                 

          Statements of Cash Flows (Unaudited) for the Three Months Ended
               December 31, 1996 and 1997                                       

          Statement of Changes in Stockholders' Equity (Unaudited) for the Three
               Months Ended December 31, 1996 and 1997                          

          Notes to Financial Statements                                         

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


Part II - Other Information

Item 1.  Legal Proceedings                                                      

Item 2.  Changes in Securities                                                  

Item 3.  Defaults Upon Senior Securities                                        

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

Item 5.  Other Information                                                      

Item 6.  Exhibits and Reports on Form 8-K                                       

Signatures                                                                      
<PAGE>
Part I - Financial Information
<TABLE>
<CAPTION>

                        FIDELITY BANCORP, INC. AND SUBSIDIARIES
                           Statements of Financial Condition

                                                        December 31,    September 30, 
                                                            1997            1997
                                                       ------------     ------------
<S>                                                    <C>              <C>
         Assets                                         (Unaudited)
Cash and amounts due from
  depository institutions ........................     $  4,915,650     $  3,731,344
Interest-earning demand deposits with
 other institutions ..............................          288,498          243,361

Investment securities held-to-maturity ...........        7,470,021        8,541,067
Investment securities available-for-sale .........       47,198,319       44,572,994
Loans receivable, net (Notes 6 and 7) ............      191,392,805      182,869,072
Mortgage-backed securities held-to-maturity ......       32,602,553       34,064,540
Mortgage-backed securities available-for-sale ....       92,587,497       93,850,692
Real estate owned, net ...........................           20,989             --

Federal Home Loan Bank stock - at  cost ..........        4,912,500        4,885,000
Accrued interest receivable, net:
    Loans ........................................          982,888          932,107
    Mortgage-backed securities ...................          744,191          758,407
    Investments ..................................          829,329          724,037
Office premises and equipment, net ...............        3,441,313        3,467,058
Deferred tax asset ...............................        1,027,952          852,209
Prepaid expenses and sundry assets ...............        4,661,660        1,471,749
                                                       ------------     ------------

              Total Assets .......................     $393,076,165     $380,963,637
                                                       ============     ============

     Liabilities and Net Worth
Liabilities:
    Savings deposits .............................     $252,867,967     $244,192,275
    Federal Home Loan Bank advances ..............       97,050,000       96,700,000
    Reverse repurchase agreements ................        1,487,168        1,182,792
    Advance deposits by borrowers for
      taxes and insurance ........................        2,179,417        1,097,244
    Accrued interest on savings and
      other deposits .............................           15,919          159,333
    Accrued interest on trust preferred securities          210,979          210,979
    Accrued income taxes payable .................          730,109          204,227
    Other accrued expenses and sundry liabilities         1,403,478        1,085,576  
    Guaranteed preferred beneficial interest in
       Company's debentures (Note 8) ..............      10,250,000       10,250,000
                                                       ------------     ------------

            Total Liabilities ....................      366,195,037      355,082,426
                                                       ------------     ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                        FIDELITY BANCORP, INC. AND SUBSIDIARIES
                           Statements of Financial Condition

                                                        December 31,    September 30, 
                                                            1997            1997
                                                       ------------     ------------
<S>                                                    <C>              <C>
Stockholders' equity (Notes 4 and 5):
    Common stock, $0.01 par value per share;
      10,000,000 shares authorized; 1,561,677
      and 1,554,775 shares issued and outstanding,
      respectively ...............................           15,617           15,548
    Additional paid-in capital ...................       13,887,632       13,810,691
    Retained earnings - substantially restricted .       12,349,925       11,822,079
    Unrealized gain (loss) on securities
      available-for-sale .........................          627,954          232,893
                                                       ------------     ------------

    Total stockholders' equity ...................       26,881,128       25,881,211
                                                       ------------     ------------

Total Liabilities and Stockholders' Equity .......     $393,076,165     $380,963,637
                                                       ============     ============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
                        FIDELITY BANCORP, INC. AND SUBSIDIARIES
                            Statements of Income (Unaudited)



                                                                Three Months Ended
                                                                   December 31,
                                                           ---------------------------
                                                               1997            1996
                                                           -----------     -----------
<S>                                                        <C>             <C>                  
Interest Income:
     Loans ...........................................     $ 4,000,372     $ 3,185,792
     Mortgage-backed securities ......................       2,068,452       1,554,579
     Investment securities ...........................         923,243         859,840
     Deposits with other institutions ................           4,526           2,654
                                                           -----------     -----------
         Total interest income .......................       6,996,593       5,602,865
                                                           -----------     -----------

Interest Expense:
     Savings deposits ................................       2,671,008       2,363,252
     Guaranteed preferred beneficial interest
            in Company's debentures (Note 8) .........         256,279            --
      Borrowed funds .................................       1,383,974         788,800
                                                           -----------     -----------

            Total interest expense ...................       4,311,261       3,152,052
                                                           -----------     -----------

Net interest income before provision for loan losses .       2,685,332       2,450,813
Provision for loan losses ............................         115,000         115,000
                                                           -----------     -----------

Net interest income after provision for loan losses ..       2,570,332       2,335,813
                                                           -----------     -----------

Other income:
     Service fee income ..............................          34,049          19,091
     Gain (loss) on sale of investment  and
         mortgage-backed securities, net .............           9,391          (1,641)
     Gain on sale of loans ...........................           2,119           1,901
     Other operating income ..........................         172,814         165,070
                                                           -----------     -----------
         Total other income ..........................         218,373         184,421
                                                           -----------     -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        FIDELITY BANCORP, INC. AND SUBSIDIARIES
                            Statements of Income (Unaudited)



                                                                Three Months Ended
                                                                   December 31,
                                                           ---------------------------
                                                               1997            1996
                                                           -----------     -----------
<S>                                                        <C>             <C>                  
Operating expenses:

     Compensation and employee benefits ..............       1,043,570         909,753
     Occupancy and equipment expense .................         138,468         144,930
     Depreciation and amortization ...................         123,084         112,535
     Federal insurance premiums ......................          37,625            --
     Loss on real estate owned, net ..................           8,511           6,660
     Amortization of intangibles .....................            --            44,015
     Other operating expenses ........................         410,526         372,068
                                                           -----------     -----------
         Total operating expenses ....................       1,761,784       1,589,961
                                                           -----------     -----------

Income before income tax provision ...................       1,026,921         930,273

Income tax provision .................................         359,000         307,500
                                                           -----------     -----------

Net income ...........................................     $   667,921     $   622,773
                                                           ===========     -----------

Basic earnings per common share (Notes 3 & 4) ........     $      0.43     $      0.41
Diluted earnings per common share (Notes 3 & 4) ......     $      0.41     $      0.40
Dividends per common share (Note 4) ..................     $      0.09     $     0.073


</TABLE>

See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
                                   FIDELITY BANCORP, INC. AND SUBSIDIARIES
                                     Statements of Cash Flows (Unaudited)
                                                                                        Three Months
                                                                                     Ended December 31,
                                                                              ------------------------------
                                                                                   1997              1996
                                                                              ------------      ------------
<S>                                                                            <C>               <C>
Operating Activities:
     Net income .........................................................      $    667,921      $    622,773
     Adjustments to reconcile net income to net
     cash provided by operating activities:
         Provision for loan losses ......................................           115,000            115,000
         Loss on real estate owned ......................................             8,511              6,660
         Depreciation and amortization ..................................           123,084            112,535
         Deferred loan fee amortization .................................           (31,089)           (57,839)
         Amortization of investment and mortgage-backed securities
          discounts/premiums, net .......................................            95,410             78,689
         Amortization of intangibles ....................................              --               44,015
         Net (gain) loss on sale of investment securities ...............            (3,754)             1,205
         Net (gain) loss on sale of mortgage-backed securities ..........            (5,636)               436
         Net (gain) loss  on sale of loans ..............................            (2,119)            (1,901)
         Origination of loans held-for-sale .............................              --              (66,500)
         Proceeds from sale of loans held-for-sale ......................              --               67,352
         (Increase) decrease in interest receivable .....................          (141,857)           (75,621)
         (Increase) decrease in deferred tax asset ......................          (175,743)           298,508
         Increase (decrease) in accrued income taxes ....................           525,882            286,999
         Increase (decrease) in interest payable ........................          (143,414)          (162,904)
         SAIF assessment ................................................              --           (1,530,357)
         Other changes, net .............................................          (649,793)          (766,144)
                                                                              -------------      -------------

        Net cash provided (used) by operating activities ................           382,403         (1,027,094)
                                                                              -------------      -------------
Investing Activities:
     Proceeds from sales of investment securities available-for-sale ....         2,999,453          6,735,624
     Proceeds from maturities and principal repayments of
        investment securities available-for-sale ........................             4,850          1,000,000
     Proceeds from sales of mortgage-backed securities available-for-sale         9,984,072               --
     Proceeds from maturities and principal repayments of  mortgage-
        backed securities available-for-sale ............................         3,497,372          2,560,620
     Purchases of investment securities available-for-sale ..............        (5,429,743)        (1,522,023)
     Purchases of mortgage-backed securities available-for-sale .........       (11,855,534)        (8,006,214)
     Proceeds from maturities and principal repayments of investment
        securities held-to-maturity .....................................         1,071,633            129,434
     Purchases of mortgage-backed securities held-to-maturity ...........              --           (2,007,500)
     Proceeds from mortgage-backed securities held-to-maturity
       principal repayments .............................................         1,414,968          1,365,216
     Principal repayments on first mortgage loans .......................         4,780,881          5,360,310
     Principal repayments on other loans ................................         7,024,227          4,204,947
     First mortgage loans originated and disbursed ......................       (11,306,500)        (6,141,300)
     Proceeds from sale of other loans ..................................           150,234            136,538
     Other loans originated .............................................       (10,614,088)        (5,884,974)
     Additions to office premises and equipment .........................          (114,288)          (336,412)
  Net purchases of FHLB Stock ...........................................           (27,500)          (226,200)
                                                                              -------------      -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                   FIDELITY BANCORP, INC. AND SUBSIDIARIES
                                     Statements of Cash Flows (Unaudited)
                                                (continued)


                                                                                        Three Months
                                                                                     Ended December 31,
                                                                              ------------------------------
                                                                                   1997              1996
                                                                              ------------      ------------
<S>                                                                            <C>               <C>
  Net cash provided (used) by investing activities ......................        (8,419,963)        (2,631,934)
                                                                              -------------      -------------

Financing Activities:
Net increase (decrease) in savings deposits .............................         8,675,692           (633,881)
Increase (decrease) in reverse repurchase agreements ....................           304,376             11,381
FHLB advance repayments .................................................      (287,830,000)      (461,825,000)
FHLB advances ...........................................................       288,180,000        465,475,000
Cash dividends paid .....................................................          (140,075)          (110,063)
Stock options exercised .................................................            50,252             43,788
Proceeds from sale of stock .............................................            26,758             15,526
                                                                              -------------      -------------

Net cash provided (used) by financing activities ........................         9,267,003          2,976,751
                                                                              -------------      -------------

Increase (decrease) in cash and cash equivalents ........................         1,229,443           (682,277)

Cash and cash equivalents at beginning of period ........................         3,974,705          4,762,098
                                                                              -------------      -------------

Cash and cash equivalents at end of period ..............................     $   5,204,148      $   4,079,821
                                                                              =============      =============

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for:
  Interest on deposits and other borrowings .............................     $   4,149,544      $   3,312,415
  Income taxes ..........................................................     $     214,938      $      20,000

Transfer of loans to real estate owned ..................................     $      20,989      $        --

</TABLE>

See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>

                                               FIDELITY BANCORP, INC. AND SUBSIDIARIES
                                            Statement of Changes in Stockholders' Equity


                                                                   Additional                        Unrealized Gain/
                                                    Common           Paid-in           Retained   (Loss) on Securities
                                                    Stock            Capital           Earnings    Available-for-Sale      Total
                                                 -----------      ------------      ------------     ------------       -----------
<S>                                             <C>               <C>               <C>                <C>              <C>
Balance at September 30, 1996 ..............    $     13,732      $ 10,437,133      $ 12,522,830       $ (1,195,600)    $21,778,095
    Net income .............................                                             622,773                            622,773
    Cash dividends paid at
    $.073 per share (4).....................                                            (110,063)                          (110,063)
Net change in unrealized gain
          (loss) on securities available-
          for-sale, net of taxes ...........                                                                785,056         785,056
     Sale of stock .........................               8            15,518                                               15,526 
     Stock options exercised................              70            43,718                                               43,788
                                                 -----------      ------------      ------------       ------------     -----------
Balance at December 31, 1996 ...............    $     13,810      $ 10,496,369      $ 13,035,540       $   (410,544)    $23,135,175
                                                ============      ============      ============       ============     ===========
         

Balance at September 30, 1997 ..............    $     15,548      $ 13,810,691      $ 11,822,079       $    232,893     $25,881,211
    Net income .............................                                             667,921                            667,921
    Cash dividends paid at
    $.09 per share .........................                                            (140,075)                          (140,075)
Net change in unrealized gain
          (loss) on securities available-
          for-sale, net of taxes ...........                                                                395,061         395,061
     Sale of stock .........................              59            50,193                                               50,252 
     Stock options exercised ...............              10            26,748                                          $    26,758
                                                 -----------      ------------      ------------       ------------     -----------
Balance at December 31, 1997 ...............     $    15,617      $ 13,887,632      $ 12,349,925       $    627,954     $26,881,128
                                                 ===========      ============      ============       ============     ===========


</TABLE>
<PAGE>
                     FIDELITY BANCORP, INC. AND SUBSIDIARIES
                          Notes to Financial Statements
                                   (Unaudited)
                    September 30, 1997 and December 31, 1997


(1) Consolidation
The audited and unaudited consolidated financial statements contained herein for
Fidelity Bancorp, Inc. (the "Company") include the accounts of Fidelity Bancorp,
Inc. and its wholly-owned subsidiaries,  Fidelity Bank, PaSB (the "Bank") and FB
Capital  Trust  (the  "Trust").  All  significant   inter-company  balances  and
transactions have been eliminated.

(2) Basis of Presentation
The accompanying  consolidated  financial statements were prepared in accordance
with instructions to Form 10-QSB, and therefore,  do not include  information or
footnotes necessary for a complete  presentation of financial position,  results
of operations and cash flows in conformity  with generally  accepted  accounting
principles.  However, all normal recurring  adjustments which, in the opinion of
management,  are necessary for a fair presentation of the financial  statements,
have been included.  These  financial  statements  should be read in conjunction
with  the  audited  financial  statements  and the  accompanying  notes  thereto
included in the Company's Annual Report for the period ended September 30, 1997.
The  results  for the  three  month  period  ended  December  31,  1997  are not
necessarily  indicative  of the results that may be expected for the fiscal year
ending September 30, 1998.

(3) Earnings Per Share

In February 1997, the Financial  Accounting  Standards Board ("FASB") issued FAS
No. 128, "Earnings per Share". FAS No. 128 provides revised reporting  standards
for earnings per share ("EPS") and is effective for financial  statement periods
ending after December 15, 1997. FAS No. 128 eliminates primary and fully diluted
EPS  disclosures  and adds new  disclosures  of basic and diluted EPS. Basic EPS
excludes  dilution  and is  computed  by  dividing  income  available  to common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted  EPS  reflects  the  potential  dilution  that  could  occur if
securities or other  contracts to issue common stock were exercised or converted
into common  stock or resulted in the  issuance of common stock that then shared
in the earnings of the Company.

For the basic EPS  computation,  the weighted  average  number of common  shares
outstanding  for the  three  months  ended  December  31,  1996 and  1997,  were
1,514,289 and  1,557,305,  respectively.  For the diluted EPS  computation,  the
effect of outstanding  stock options  calculated under the treasury stock method
was 39,746 and 70,423,  respectively,  for the three months  ended  December 31,
1996 and  1997.  The  average  number  of shares  for the 1996  period  has been
restated to reflect the 10% stock dividend discussed in Note 4.

(4) Per share amounts have been restated to give  retroactive  effect to the 10%
common stock dividend  declared by the Company's  Board of Directors and paid on
May 28, 1997.

(5) Securities
The Company accounts for investments in debt and equity securities in accordance
with FAS No. 115, which requires that  investments be classified as either:  (1)
Securities   Held-to-  Maturity  -  reported  at  amortized  cost,  (2)  Trading
Securities  - reported at fair value,  or (3)  Securities  Available-for-Sale  -
reported at fair value.
<PAGE>
Unrealized  gains and losses for  trading  securities  are  reported in earnings
while unrealized gains and losses for securities available-for-sale are reported
as a separate component of equity.  Unrealized gains of $628,000, net of tax, on
investments   classified  as  available-for-sale  are  recorded  as  a  separate
component of equity at December 31, 1997.

(6) Loans Receivable

Loans receivable are comprised of the following (dollar amounts in thousands):

<TABLE>
<CAPTION>

                                                    December 31,    September 30,
                                                       1997              1997
                                                     ---------        ---------
<S>                                                  <C>              <C> 
First mortgage loans:
         Conventional:
                  1-4 family dwellings .......       $ 101,457        $  97,698
                  Multi-family dwellings .....           4,197            4,165
         Commercial ..........................          21,760           19,976
         Construction ........................           8,568            7,614
                                                     ---------        ---------
                                                       135,982          129,453
Less:
         Loans in process ....................          (5,007)          (3,695)
         Unearned discounts and fees .........            (958)            (912)
                                                     ---------        ---------
                                                       130,017          124,846
Installment loans:
         Home equity .........................          39,201           37,271
         Mobile home loans ...................              56               68
         Consumer loans ......................           2,465            2,579
         Other ...............................           3,728            3,163
                                                     ---------        ---------
                                                        45,450           43,081
                                                     ---------        ---------

Commercial business loans ....................          17,946           16,873
                                                     ---------        ---------

Less: Allowance for possible loan losses .....          (2,020)          (1,931)
                                                     ---------        ---------

         Loans receivable, net ...............       $ 191,393        $ 182,869
                                                     =========        =========
</TABLE>
<PAGE>
(7) Changes in the allowance for loan losses for the three months ended December
31, 1997 and 1996 are as follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
                                                           1977            1996
                                                        -------         --------
<S>                                                     <C>             <C>
Balance at beginning of the fiscal year ........        $ 1,931         $ 1,530
Provision for loan losses ......................            115             115
Charge-offs ....................................            (27)            (22)
Recoveries .....................................              1               9
                                                        -------         -------

Balance at December 31, ........................        $ 2,020         $ 1,632
                                                        =======         =======
</TABLE>
The  provision  for loan  losses  charged to expense is based upon past loan and
loss  experience  and an  evaluation  of  potential  losses in the current  loan
portfolio,  including the  evaluation  of impaired  loans under FAS Nos. 114 and
118. A loan is considered to be impaired  when,  based upon current  information
and events,  it is probable  that the Bank will be unable to collect all amounts
due according to the contractual  terms of the loan. An insignificant  shortfall
in payments does not necessarily  result in a loan being identified as impaired.
For this purpose, delays less than 90 days are considered to be insignificant.

Impairment  losses are included in the provision  for loan losses.  FAS Nos. 114
and 118 do not apply to large groups of smaller balance,  homogeneous loans that
are collectively  evaluated for impairment,  except for those loans restructured
under a troubled debt restructuring. Loans collectively evaluated for impairment
include  consumer loans and residential  real estate loans, and are not included
in the following data.

At December  31,  1997,  there are no loans that are  considered  to be impaired
under FAS No. 114. The average recorded  investment in impaired loans during the
three months  ended  December  31,  1997,  was zero.  For the three months ended
December 31, 1997, the Company  recognized no interest  income on those impaired
loans, using the cash basis of income recognition.

(8) On May 13,  1997,  the Trust,  a  statutory  business  trust  created  under
Delaware law that is a subsidiary of the Company,  issued $10.25 million,  9.75%
Preferred   Securities   ("Preferred   Securities")  with  a  stated  value  and
liquidation  preference  of $10 per share.  The  Trust's  obligations  under the
Preferred  Securities  issued are fully and  unconditionally  guaranteed  by the
Company.  The proceeds  from the sale of the  Preferred  Securities of the Trust
were  utilized  by the  Trust to  invest  in  $10.25  million  of  9.75%  Junior
Subordinated  Debentures (the  "Debentures") of the Company.  The Debentures are
unsecured  and  rank   subordinate  and  junior  in  right  of  payment  to  all
indebtedness,  liabilities  and  obligations  of  the  Company.  The  Debentures
represent the sole asset of the Trust.  Interest on the Preferred  Securities is
cumulative  and  payable  quarterly  in  arrears.  The  Company has the right to
optionally redeem the Debentures prior to the maturity date of July 15, 2027, on
or after July 15, 2002, at 100% of the stated liquidation  amount,  plus accrued
and unpaid  distributions,  if any, to the redemption date. Under the occurrence
of  certain  events,  the  Company  may  redeem in whole,  but not in part,  the
Debentures  prior  to  July  15,  2002.  Proceeds  from  any  redemption  of the
Debentures  would cause a mandatory  redemption of the Preferred  Securities and
the  common  securities  having an  aggregate  liquidation  amount  equal to the
principal amount of the Debentures redeemed.
<PAGE>
                     FIDELITY BANCORP, INC. AND SUBSIDIARIES

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

Comparison of Financial Condition at September 30, 1997 and December 31, 1997

Total assets of the Bank  increased  $12.1 million or 3.2% to $393.1  million at
December 31, 1997 from $381.0 million at September 30, 1997. Significant changes
in individual  categories were increases in loans receivable of $8.5 million and
investment  securities  available-for-sale  of $2.6  million,  and  decreases in
mortgage-backed  securities  held-to-maturity  and  available-for-sale  of  $1.5
million and $1.3 million, respectively.

Total  liabilities  of the Bank  increased  by $11.1  million  or 3.1% to $366.2
million at December  31, 1997 from $355.1  million at September  30,  1997.  The
increase  primarily  reflects a $8.7 million  increase in savings deposits and a
$1.1 million increase in advance payments by borrowers for taxes and insurance.

Stockholders' equity increased $1.0 million or 3.9% to $26.9 million at December
31, 1997,  compared to September 30, 1997. The increase  reflects net income for
the three month  period  ended  December  31, 1997 of  $668,000,  an increase in
unrealized  holding gains on securities  available-for-sale  of $395,000,  stock
options  exercised of $27,000 and stock  issued under the Dividend  Reinvestment
Plan of $50,000.  Partially  offsetting  these  increases were common stock cash
dividends paid of $140,000.

Non-Performing Assets

The following table sets forth information  regarding non-accrual loans and real
estate  owned  by the  Bank at the  dates  indicated.  The Bank did not have any
accruing  loans  which  were 90 days or more  overdue  or any loans  which  were
classified as troubled debt restructurings during the periods presented.
<TABLE>
<CAPTION>

                                                     September 30,   December 31,  
                                                         1997           1997
                                                     ----------      ----------
<S>                                                  <C>             <C>     
Non-accrual residential real
  estate loans (one-to-four-family) ............     $   94,000      $  169,000
Non-accrual construction, multi-family
  residential and commercial real estate loans .        751,000            --
Non-accrual installment and
  commercial business loans ....................        271,000         388,000
                                                     ----------      ----------

Total non-performing loans .....................     $1,116,000      $  557,000
                                                     ==========      ==========
Total non-performing loans as
  a percent of net loans receivable ............            .61%            .29%
                                                     ==========      ==========
Total real estate owned,
  net of related reserves ......................     $     --        $   21,000
                                                     ==========      ==========
Total non-performing loans and real estate
  owned as a percent of total assets ...........            .29%            .15%
                                                     ==========      ==========
</TABLE>
<PAGE>
Included  in  non-performing  loans at  December  31,  1997 are 5  single-family
residential real estate loans totaling  $169,000,  31 installment loans totaling
$115,000,  and three  commercial  business  loans  totaling  $273,000.  Of the 5
non-performing single-family residential real estate loans, the largest amounted
to $77,000.

The 31  installment  loans total  $115,000  and  consist of various  secured and
unsecured consumer loans and credit card loans. The largest loan is for $38,000.

Of the three commercial loans, two of the loans,  totaling  $30,000,  are to one
entity that has recently declared bankruptcy.  The loans are, however, partially
secured.  The  other  commercial  loan is for  $243,000  to a  dental  apparatus
business that is in the process of reorganizing its operations. The loan is both
personally  guaranteed by the borrower and is partially  secured by real estate,
which is currently for sale.

At December 31, 1997, the Bank had an allowance for possible loan losses of $2.0
million or 1.06% of net loans  receivable,  as compared to an  allowance of $1.9
million or 1.06% of net loans  receivable at September  30, 1997.  The allowance
for possible  loan losses  equals 363% of  non-performing  loans at December 31,
1997.

Management has evaluated these  non-performing  loans and the overall  allowance
for possible loan losses and is satisfied that the allowance for possible losses
on loans at December 31, 1997 is adequate.  In that  regard,  consideration  was
given to the increase in the level of the allowance  from  September 30, 1997 to
December 30, 1997, as well as the coverage of non-performing loans the allowance
provides at December 31, 1997.

Real estate owned at December 31, 1997 consists of one single-family residential
property located in Pittsburgh,  Pennsylvania  totaling $21,000. The property is
currently  for sale and  management  believes  that  the  carrying  value of the
property  at December  31, 1997  approximates  the net  realizable  value of the
property.  However, while management uses the best information available to make
such determinations, future adjustments may become necessary.


                       Comparison of Results of Operations
              for the Three Months Ended December 31, 1997 and 1996

Net Income

Net income for the three months ended December 31, 1997 was $668,000 compared to
$623,000  for the same  period in 1996,  an  increase  of $45,000  or 7.2%.  The
increase  reflects an increase in net  interest  income of $235,000 or 9.6%,  an
increase  in other  income of  $34,000  or 18.4% and an  increase  in  operating
expenses  of  $172,000  or 10.8%.  Additionally,  there was an  increase  in the
provision for income taxes of $52,000 or 16.8%.

Interest Rate Spread

The Bank's interest rate spread,  the difference  between yields calculated on a
tax-equivalent basis on interest-earning assets and the cost of funds, decreased
to 2.81% in the three  months  ended  December  31,  1997 from 3.18% in the same
period in 1996.  The  following  table shows the average  tax-equivalent  yields
earned on the Bank's  interest-earning  assets and the average rates paid on its
interest-bearing  liabilities for the periods indicated,  the resulting interest
rate spreads, and the net yields on interest-earning assets.
<PAGE>
<TABLE>
<CAPTION>

                                                      Three Months Ended December 31,
                                                             1997       1996
                                                            -----      -----
<S>                                                         <C>        <C>
Average yield on:
   Mortgage loans ..................................         8.25%      8.06%
   Mortgage-backed securities ......................         6.51       6.31
   Installment loans ...............................         8.41       8.35
   Commercial business loans .......................        10.59      10.11
   Interest-earning deposits with other
     institutions, investment securities,
     and FHLB stock (1) ............................         7.02       7.10
                                                            -----      -----
   Total interest-earning assets ...................         7.59       7.44
                                                            -----      -----

Average rates paid on:
   Savings deposits ................................         4.25       4.01
   Borrowed funds ..................................         5.99       5.22
                                                            -----      -----
   Total interest-bearing liabilities ..............         4.78       4.26
                                                            -----      -----

Average interest rate spread .......................         2.81%      3.18%
                                                            =====      =====

Net yield on interest-earning assets ...............         2.98%      3.34%
                                                            =====      =====
</TABLE>

(1) Interest income on tax free investments has been adjusted for federal income
    tax purposes using a rate of 34%.


Interest Income

Interest  on loans  increased  $815,000  or 25.6% to $4.0  million for the three
months  ended  December  31,  1997,  compared  to the same  period in 1996.  The
increase is  attributable  to an increase in the average loan portfolio  balance
outstanding  during the 1997 period, as well as an increase in the average yield
earned on these  assets in the 1997  period,  as  compared to the same period in
1996.  The  increase  in the  average  balance  of the loan  portfolio  reflects
management's continued strategy of emphasizing and increasing loan originations.

Interest  on  mortgage-backed  securities  increased  $514,000  or 33.1% to $2.1
million for the three  months ended  December 31, 1997,  as compared to the same
period in 1996.  The  increase  is  attributable  to an  increase in the average
portfolio balance  outstanding during the 1997 period, as well as an increase in
the average yield earned on these assets in the 1997 period,  as compared to the
same period in 1996.

Interest on investment  securities increased $63,000 or 7.4% to $923,000 for the
three  months ended  December 31, 1997,  as compared to the same period in 1996.
The  increase  is  attributable  to  an  increase  in  the  average  balance  of
investments  securities  held  during the 1997  period,  as compared to the same
period in 1996, partially offset by a decrease in yield.
<PAGE>
Interest Expense

Interest on savings deposits increased $308,000 or 13.0% to $2.7 million for the
three month  period ended  December 31, 1997,  as compared to the same period in
1996. The increase  reflects both an increase in the average  balance of savings
deposits  for the 1997 period  compared  to 1996,  as well as an increase in the
average cost of deposits.

Interest on borrowed funds  increased  $595,000 or 75.4% to $1.4 million for the
three month  period ended  December 31, 1997,  as compared to the same period in
1996. The increase reflects  primarily an increase in the Federal Home Loan Bank
("FHLB") advances  outstanding during the 1997 period, as well as an increase in
the average cost of borrowing  during the 1997 period,  as compared to 1996. The
Bank continued to rely more on these  wholesale  funding sources in 1997 to fund
growth.

Interest on guaranteed  preferred  beneficial  interest in subordinated debt was
$256,000 for the three month period ended  December 31, 1997. As discussed  more
fully in Note 8, the Preferred Securities were issued in May 1997.

Net Interest Income Before Provision for Loan Losses

The Bank's net  interest  income  before  provision  for loan  losses  increased
$235,000 or 9.6% to $2.7 million for the three  months ended  December 31, 1997,
as compared  to the same period in 1996.  This  increase is  attributable  to an
increase in net interest  earning assets,  partially offset by a decrease in the
interest rate spread,  from 3.18% for the three month period ended  December 31,
1996, to 2.81% for the same period in 1997.

Provision for Loan Losses

The provision for loan losses  remained  constant at $115,000 for both the three
month periods ended  December 31, 1997 and 1996.  The provision for both periods
reflects  management's  evaluation  of  economic  conditions  and other  factors
described  below. The allowance for possible loan losses has increased from $1.6
million at December 31, 1996 to $2.0 million at December 31, 1997.

A monthly  review is conducted by management to determine that the allowance for
possible loan losses is adequate to absorb estimated loan losses. In determining
the level of  allowances  for possible  loan losses,  consideration  is given to
general economic conditions, the size of the loan portfolio, the diversification
of the loan portfolio,  historical loss experience,  identified credit problems,
delinquency levels and the adequacy of collateral.  Although management believes
that the current allowance for loan losses is adequate,  future additions to the
reserve may be  necessary  due to changes in economic  conditions.  In addition,
various regulatory agencies review the adequacy of the allowance for loan losses
as part of their examination  process and may require additions to the allowance
based on their judgment.

Other Income

Total  non-interest or other income  increased  $34,000 or 18.4% to $218,000 for
the three  months ended  December  31,  1997,  as compared to the same period in
1996.
<PAGE>
Service  fee income,  which  includes  late  charges on loans and fees for loans
serviced for others,  increased $15,000 or 78.4% to $34,000 for the period ended
December 31, 1997, as compared to the same period in 1996. The results primarily
reflect an increase in late charges on loans and the collection of a fee related
to a program  whereby  customers  could skip their regular loan payment over the
Christmas holidays.

Gain on the sale of investment and mortgage-backed securities was $9,000 for the
period ended  December  31,  1997,  as compared to a loss of $2,000 for the same
period in 1996.  Sales in both  periods  were  made from the  available-for-sale
category and  represented a partial  repositioning  of the portfolio  based upon
current market conditions.

Gain on sale of loans was $2,000 for both the three month periods ended December
31, 1997 and 1996. The Bank sells  education loans to the Student Loan Marketing
Association  ("SLMA").  Such sales  generally  result in some gain or loss being
realized and are being done to reduce the Bank's position in these loans,  which
are  generally  lower  yielding and subject to extensive  and costly  government
regulation.  The Bank does not  intend  to  originate  additional  loans for its
portfolio,  except those that will be serviced by SLMA.  Sales to SLMA increased
slightly in the period ended December 31, 1997, as compared to 1996, however the
net gains recorded in 1997 and 1996 reflect the timing of the sales.

Other operating  income includes  miscellaneous  sources of income which consist
primarily of various fees  related to checking  accounts,  fees from the sale of
cashiers  checks and money  orders,  and safe deposit box rental  income.  Other
operating income increased $8,000 or 4.5% to $173,000 for the three month period
ended  December 31, 1997,  as compared to the same period in 1996.  The increase
primarily reflects fees earned on a debit card product introduced by the Bank in
1996 and  increased  non-sufficient  funds  fees  charged  to  checking  account
customers,  partially  offset  by  decreased  fees  earned  on  credit  and life
insurance sales on loans.

Other Expenses

Total  operating  expenses  increased  $172,000 or 10.8% to $1.8 million for the
three months ended December 31, 1997, compared to the same period in 1996.

Compensation,  payroll  taxes and fringe  benefits,  the  largest  component  of
operating  expenses,  increased  $134,000 or 14.7% to $1.0 million for the three
month  period  ended  December  31,  1997,  compared to the same period in 1996.
Factors  contributing  to the  increase  were normal  salary  increases,  higher
bonuses  awarded in the 1997  period,  an increase in the number of employees on
the payroll,  particularly  professionals  employed in the lending area,  and an
increase in retirement expenses.

Office occupancy and equipment  expense decreased $6,000 or 4.5% to $138,000 for
the three months ended  December 31, 1997,  compared to the same period in 1996.
The decrease primarily reflects decreased equipment maintenance expenditures.

Depreciation and amortization increased $11,000 or 9.4% to $123,000 for the 1997
period as compared to 1996. The increase  primarily reflects the purchase of new
computer  equipment,  as well as an automatic  teller machine for the Washington
Road branch.

Federal  insurance  premiums  were  $38,000 for the 1997 period and zero for the
1996  period.  As a result of the  Deposit  Insurance  Funds Act of 1996 and the
resulting  payment  of a  one-time  special  assessment  in  1996,  the  Savings
<PAGE>
Association  Insurance Fund was fully  capitalized to the level required by law.
The FDIC then  determined  that,  for the quarter  ended  December 31, 1996,  no
deposit insurance  premiums would be due from many  institutions,  including the
Bank.  Thus there was no deposit  insurance  expense for the three  months ended
December 31, 1996. For subsequent periods, the amount of the premium is based on
the average  amount of deposits  outstanding.  The premium for the quarter ended
December 31,1997 is 6.32 basis points.
 
Net loss on real estate  owned was $8,000 in the 1997  period,  as compared to a
net loss of $7,000 for the three months ended  December 31, 1996.  There were no
individually significant transactions included in the results.

Amortization  of  intangibles  was  $44,000  for the three  month  period  ended
December  31,  1996,  compared to zero for the  comparable  period in 1997.  The
intangibles generated by the three branch acquisitions that occurred in November
1991 were  being  amortized  on a  straight-line  basis over five  years.  These
intangibles were fully amortized in November 1996.

Other operating expenses,  which consists of check processing costs,  consulting
fees, legal and audit fees,  advertising,  bank charges and other administrative
expenses,  amounted to $411,000 and $372,000 for the three month  periods  ended
December  31,  1997 and 1996,  respectively,  an  increase  of $38,000 or 10.3%.
Significant   variations  between  periods  include  increases  in  advertising,
stationary and supplies, and telephone expenses,  partially offset by reductions
in legal expenses and consulting fees.

Income Taxes

Income taxes  increased  $52,000 or 16.8% to $359,000 for the three month period
ended  December 31, 1997,  compared to the same period in 1996.  The increase in
taxes results from an increase in taxable income,  as well as an increase in the
effective tax rate to approximately  35.0% in 1997 from  approximately  33.0% in
the same period in 1996.

Capital Requirements

The Federal Reserve Board measures capital  adequacy for bank holding  companies
on the  basis of a  risk-based  capital  framework  and a  leverage  ratio.  The
guidelines  include  the  concept of Tier 1 capital  and total  capital.  Tier 1
capital is essentially  common equity,  excluding net unrealized  gain (loss) on
securities  available-for-sale  and  goodwill,  plus certain  types of preferred
stock,  including  the  Preferred  Securities  issued by the Trust in 1997.  The
Preferred  Securities  may comprise up to 25% of the  Company's  Tier 1 capital.
Total  capital  includes  Tier 1 capital and other forms of capital  such as the
allowance for loan losses,  subject to limitations,  and subordinated  debt. The
guidelines  establish a minimum standard risk-based target ratio of 8%, of which
at least 4% must be in the form of Tier 1 capital.  At December  31,  1997,  the
Company had Tier 1 capital as a percentage of risk-weighted  assets of 17.2% and
total risk-based capital as a percentage of risk-weighted assets of 19.0%.

In addition,  the Federal Reserve Board has established  minimum  leverage ratio
guidelines for bank holding companies.  These guidelines currently provide for a
minimum  ratio of Tier 1 capital as a percentage  of total  average  assets (the
"Leverage  Ratio") of 3% for bank holding  companies that meet certain criteria,
including  that they  maintain  the highest  regulatory  rating.  All other bank
holding  companies are required to maintain a Leverage  Ratio of at least 100 to
200 basis  points above the  minimum.  At December  31, 1997,  the Company had a
Leverage Ratio of 9.1%.
<PAGE>
The FDIC has issued regulations that require insured  institutions,  such as the
Bank, to maintain  minimum levels of capital.  In general,  current  regulations
require a leverage  ratio of Tier 1 capital to average  total assets of not less
than 3% for the most highly rated  institutions  and an  additional 1% to 2% for
all other institutions. At December 31, 1997, the Bank complied with the minimum
leverage  ratio  having  Tier 1 capital  of 8.6% of  average  total  assets,  as
defined.

The Bank is also  required to maintain a ratio of  qualifying  total  capital to
risk-weighted assets and off-balance sheet items of a minimum of 8%. At December
31, 1997,  the Bank's total  capital to  risk-weighted  assets ratio  calculated
under the FDIC capital requirement was 17.5%.

A reconciliation of Stockholders'  Equity for the Bank to Regulatory  Capital is
as follows:
<TABLE>
<CAPTION>
<S>                                                                  <C>
Stockholder's equity at December 31, 1997 (1)                        $33,575,352
Less: Unrealized securities gains                                        588,994
                                                                     ----------- 
Tier 1 Capital at December 31, 1997                                   32,986,358
Plus: Qualifying loan loss allowance                                   2,019,638
                                                                     ----------- 
Total capital at December 31, 1997                                   $35,005,996
                                                                     ===========
</TABLE>

(1) Represents  equity  capital  of the  Bank as  reported  to the  FDIC and the
    Pennsylvania Department of Banking on Form 032.

Liquidity

The Bank's  primary  sources of funds have  historically  consisted of deposits,
amortization and prepayments of outstanding  loans,  borrowings from the FHLB of
Pittsburgh and other sources,  including  sales of securities  and, to a limited
extent,  loans.  At December 31, 1997,  the total of approved  loan  commitments
amounted to $4.3 million. In addition,  the Bank had $5.0 million of undisbursed
loan funds at that date. The amount of savings  certificates which mature during
the next twelve months totals approximately $80.6 million, a substantial portion
of which management believes,  on the basis of prior experience,  will remain in
the Bank.
<PAGE>


Part II - Other Information

Item. 1  Legal Proceedings

            The Bank is not involved in any pending legal proceedings other than
            non-material legal proceedings  undertaken in the ordinary course of
            business.

Item 2.  Changes in Securities
           None

Item 3.  Defaults Upon Senior Securities
           Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders
           None

Item 5.  Other Information
           None

Item 6.  Exhibits and Reports on Form 8-K
           None

<PAGE>




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.


                                   SIGNATURES



                                          FIDELITY BANK



Date:  February 9, 1998               By: /s/ William L. Windisch
                                          -----------------------
                                          William L. Windisch
                                          President and Chief Executive Officer


Date:  February 9, 1998               By: /s/ Richard G. Spencer
                                          ---------------------
                                          Richard G. Spencer
                                          Vice President and Chief Financial
                                          Officer