<PAGE>

                                 FORM 10-QSB
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


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

    FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

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

    FOR THE TRANSITION PERIOD FROM      TO     

                      COMMISSION FILE NUMBER:  0-24350

                           TROY HILL BANCORP, INC.
                           -----------------------
       (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


           PENNSYLVANIA                                 25-0844150     
         ---------------                               ------------
  (STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION
   INCORPORATION OR ORGANIZATION)                         NUMBER) 

                            1706 LOWRIE STREET
                       PITTSBURGH, PENNSYLVANIA 15212
                       ------------------------------
         (ADDRESS OF PRICIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                              (412) 231-8238          
                              --------------
                         ISSUER'S TELEPHONE NUMBER,
                            INCLUDING AREA CODE

    CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY 
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PAST 12 
MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE 
SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE 
PAST 90 DAYS.  YES  X    NO     
                   ---      ---

    SHARES OUTSTANDING AS OF NOVEMBER 6, 1996: 1,067,917 SHARES OF COMMON 
STOCK, PAR VALUE $.01 PER SHARE.

    TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES      NO X 
                                                                   ---    ---



<PAGE>


                           TROY HILL BANCORP, INC.

                                    INDEX

PART I.                      FINANCIAL INFORMATION                        PAGE
------------------------------------------------------------------------------

ITEM 1.      FINANCIAL STATEMENTS     

             CONSOLIDATED STATEMENTS OF FINANCIAL                            1
             CONDITION AS OF SEPTEMBER 30, 1996
             (UNAUDITED) AND JUNE 30, 1996

             CONSOLIDATED STATEMENTS OF         
             EARNINGS FOR THE THREE MONTHS
             ENDED SEPTEMBER 30, 1996 AND 1995
             (UNAUDITED)                                                     2

             CONSOLIDATED STATEMENTS OF CASH FLOWS   
             FOR THE THREE MONTHS ENDED SEPTEMBER 30,
             1996 AND 1995 (UNAUDITED)                                       3

             CONSOLIDATED STATEMENT OF          
             STOCKHOLDERS' EQUITY FOR THE
             THREE MONTHS ENDED SEPTEMBER 30,
             1996 (UNAUDITED)                                                5

             NOTES TO UNAUDITED CONSOLIDATED         
             FINANCIAL STATEMENTS                                            6

ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS    
             OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS FOR THE THREE MONTHS
             ENDED SEPTEMBER 30, 1996 AND 1995.                              8


<PAGE>

PART II.     OTHER INFORMATION                                            Page
------------------------------------------------------------------------------

ITEM 1.      LEGAL PROCEEDINGS                                              16
ITEM 2.      CHANGES IN SECURITIES                                          16
ITEM 3.      DEFAULTS UPON SENIOR SECURITIES                                16
ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF           
             SECURITY HOLDERS                                               16
ITEM 5.      OTHER INFORMATION                                              16
ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K                               16
SIGNATURES                                                                  17



<PAGE>

                            TROY HILL BANCORP, INC.
                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>

                                                             September 30,    June 30,
                                                                 1996           1996 
                                                               (Dollars in Thousands)
                                                              (Unaudited)
                                                             ------------    --------- 
<S>                                                          <C>             <C>
ASSETS:                                                                                
Cash and due from banks                                         $ 3,057       $ 2,869 
Investment and mortgage-backed securities-available for sale      9,003        11,731 
Loans receivable                                                 83,882        74,552 
Office properties and equipment - at depreciated                           
       cost                                                         634           653
Federal Home Loan Bank stock - at cost                            1,348           929
Real estate owned                                                   483           462 
Accrued interest receivable                                         623           546 
Deferred income tax benefits                                        366           359 
Other                                                                74            82 
                                                                -------       -------
           Total assets                                         $99,470       $92,183 
                                                                -------       -------
                                                                -------       -------
                                                                           
                                                                           
LIABILITIES                                                                
                                                                           
Deposit accounts                                                $52,655       $53,960 
Advances from Federal Home Loan Bank                             26,950        18,583 
Advances by borrowers for taxes and insurance                       742         1,185 
Accrued expenses and other liabilities                            1,110           415 
                                                                -------       -------
           Total liabilities                                     81,457        74,143 
                                                                -------       -------
                                                                -------       -------
                                                                           
                                                                           
STOCKHOLDERS' EQUITY                                                       
                                                                                                   
Preferred stock, no par value, 5,000,000 shares                            
       authorized and unissued                                       --            --
Common stock, $.01 par value, 10,000,000 shares authorized,                               
        1,124,125 shares issued                                      11            11
Additional paid-in-capital                                       10,624        10,614 
Retained earnings                                                 9,348         9,395 
Treasury stock- at cost, 56,208 shares at June 30, 1996                    
       and September 30, 1996                                      (703)         (703)
Shares acquired by Recognition and Retention Plan                  (463)         (463)
Unearned ESOP shares                                               (732)         (756)
Unrealized loss on investment and mortgage-                                
       backed securities available for sale                         (72)          (58)
                                                                -------       -------
TOTAL STOCKHOLDERS' EQUITY                                       18,013        18,040 
                                                                -------       -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $99,470       $92,183 
                                                                -------       -------
                                                                -------       -------

</TABLE>

                                       1



<PAGE>

                            TROY HILL BANCORP, INC.
                      CONSOLIDATED STATEMENT OF EARNINGS

<TABLE>
<CAPTION>

                                                              Three months ended
                                                                 September 30,
                                                    (In thousands, except for per share data)
                                                                  (Unaudited)
                                                    ----------------------------------------
                                                            1996               1995
                                                         -------             -------
<S>                                                      <C>                 <C>
Interest income:
     Loans                                                $1,700              $1,226 
     Investment securities                                           
          Taxable                                             95                 105 
          Exempt from federal income taxes                    --                  43 
     Mortgage-backed securities                               89                 116 
     Interest-bearing deposits and other                      20                  33 
                                                         -------             -------
          Total interest income                            1,904               1,523 
Interest expense:                                                         
     Interest on deposit accounts                            614                 615 
     Interest on advances and other borrowings               322                 123 
                                                         -------             -------
          Total interest expense                             936                 738 
                                                         -------             -------
Net interest income                                          968                 785 
Provision for loan and lease losses                           30                  30 
                                                         -------             -------
Net interest income after provision for                                   
     loan and lease losses                                   938                 755 
Noninterest income:                                                       
     Loan fees and service charges                            20                  15 
     Gain on sales of  loans                                  18                  32 
     Gain on sales of investments and                                     
     Mortgage-backed securities available for sale             6                  -- 
     Other                                                    15                  10 
                                                         -------             -------
          Total noninterest income                            59                  57 
Noninterest expense:                                                      
     Salaries and employee benefits                          214                 209 
     Net occupancy expense                                    42                  33 
     Federal deposit insurance                                24                  28 
     SAIF assessment                                         326                  --
     Other operating                                         308                 114 
                                                         -------             -------
          Total noninterest expense                          914                 384 
                                                         -------             -------
Earnings before income taxes                                  83                 429 
Income taxes                                                  31                 167 
                                                         -------             -------
                    NET EARNINGS                          $   52              $  262 
                                                         -------             -------
                                                         -------             -------

Earnings and dividends per share:
       Net earnings per share                            $  0.05             $  0.25 
                                                         -------             -------
                                                         -------             -------
       Cash dividends declared per share                 $  0.10             $  0.06 
                                                         -------             -------
                                                         -------             -------

</TABLE>

                                       2

<PAGE>


                              TROY HILL BANCORP, INC. 
                      STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>

                                                            Three months ended
                                                               September 30,
                                                           (Dollars in thousands)
                                                                (Unaudited)
                                                           ----------------------
                                                              1996        1995
                                                             ------      ------

<S>                                                          <C>        <C>

Cash flows from operating activities:
   Net earnings                                              $   52     $   262 
   Adjustments to reconcile net income to                  
      net cash provided by operating activities:           
   Provision for loan and lease losses                           30          30 
   Origination of loans for sale                                 --      (2,719)
   Proceeds from sale of loans                                   --       2,712 
   Depreciation                                                  21          16 
   Amortization of deferred loan origination               
        fees and accretion of discounts                         (25)        (21)
   Deferred income tax benefit                                   (7)          1 
   Increase in accrued interest                            
      receivable                                                (77)        (30)
  Loss (gain) on sale of investment and                    
     mortgage-backed securities available for sale               (6)         --  
  Other                                                           8         283 
   Increase in accrued income taxes and other liabilities       695         114 
                                                             ------      ------
                      Net cash provided by                 
                           operating activities                 691         648 
                                                             ------      ------

Cash flows from investing activities:
   Purchases of investment securities                            --          -- 
   Purchases of mortgage-backed securities                       --          -- 
   Sale of investment and mortgage-backed securities      
        available for sale                                    2,548         749 
   Principal repayments of mortgage-backed securities           179         327 
   Net increase in loans                                     (9,329)     (5,388)
   Purchases of office properties and equipment                  (2)         (1)
   Purchase of Federal Home Loan Bank Stock                    (419)       (331)
                                                             ------      ------
            Net cash provided by                          
                      investing activities                   (7,023)     (4,644)
                                                             ------      ------


                                  (continued)
                                      3


<PAGE>

                              TROY HILL BANCORP, INC. 
                      STATEMENTS OF CONSOLIDATED CASH FLOWS


Cash flows from financing activities:
    Net increase in deposit accounts                         (1,305)      1,136 
    Net increase in advances from Federal Home Loan Bank      8,367       6,583 
    Net decrease in advances by borrowers for taxes and 
       insurance                                               (443)       (396)
    Dividends declared                                          (99)        (57)
                                                             ------      ------
               Net cash provided by
                         financing activities                 6,520       7,266 
                                                             ------      ------

                Net increase in cash                            188       3,270 

Cash and cash equivalents at beginning of period              2,869       1,469 
                                                             ------      ------

Cash and cash equivalents at end of period                  $ 3,057     $ 4,739 
                                                             ------      ------
                                                             ------      ------


Supplemental disclosures of cash flow information:

     Cash paid during the period for:

     Interest on deposits and borrowings                    $   614     $   615 
                                                             ------      ------
                                                             ------      ------

     Income taxes                                           $    35     $    63 
                                                             ------      ------
                                                             ------      ------

     Non-cash investing transactions:

     Transfers from loans to real estate acquired 
          through foreclosure                               $    --     $   335 
                                                             ------      ------
                                                             ------      ------

      Unrealized loss on investment securities                   90          -- 
      Unrealized gain on mortgage-backed securities             (21)       (112)
      Deferred income taxes                                       3          38 
                                                             ------      ------
      Net unrealized (gain) loss on investment and 
            mortgage-backed securities                      $    72     $   (74)
                                                             ------      ------
                                                             ------      ------

</TABLE>

                                      4






<PAGE>

                            TROY HILL BANCORP, INC. 
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY   


<TABLE>
<CAPTION>


                                                                                               
                                                                       Shares acquired         
                                                         Additional      by Employee           
                                   Common    Treasury     Paid In      Stock Ownership     Retained 
(Dollars in thousands)             Stock      Stock       Capital            Plan          Earnings 
----------------------------------------------------------------------------------------------------
<S>                                <C>       <C>         <C>           <C>                 <C>      

Balance at June 30, 1996            $11       (703)        $10,614           ($756)         $9,395  

Purchase of Treasury Stock                      --              --              --              --  

Purchases of stock for  
Recognition and Retention Plan       --                         --              --              -- 

Accrual for Employee Stock   
Ownership Plan (ESOP)                --                         10              24              --

Cash dividends declared on   
Common Stock at $.26 per     
share                                --                         --              --             (99) 

Increase in unrealized gain on    
securities available for sale        --                         --              --              -- 

Net income                           --                         --              --              52 

----------------------------------------------------------------------------------------------------
Balance at September 30, 1996       $11       $(703)       $10,624           $(732)       $  9,348 
                                   -----------------------------------------------------------------
                                   -----------------------------------------------------------------




                                   Unrealized Gain on
                                     Investment and        Shares acquired
                                     Mortgage-backed       by Recognition        Total
                                   securities available     and Retention      Stockholders'
(Dollars in thousands)                   for sale               Plan             Equity
--------------------------------------------------------------------------------------------
<S>                                 <C>                    <C>                  <C>      

Balance at June 30, 1996                   ($58)                ($463)            $18,040 
         
Purchase of Treasury Stock                   --                    --                  -- 
         
Purchases of stock for  
Recognition and Retention Plan               --                    --                  -- 
         
Accrual for Employee Stock   
Ownership Plan (ESOP)                        --                    --                  34 

Cash dividends declared on   
Common Stock at $.26 per     
share                                        --                    --                 (99)

Increase in unrealized gain on    
securities available for sale               (14)                   --                 (14) 

Net income                                   --                    --                  52 
------------------------------------------------------------------------------------------
Balance at September 30, 1996              $(72)                $(463)            $18,013 
                                         -------------------------------------------------
                                         -------------------------------------------------

</TABLE>


                                       5




<PAGE>

TROY HILL BANCORP, INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


BASIS OF PRESENTATION
---------------------

The accompanying unaudited consolidated financial statements have been 
prepared in accordance with the instructions for Form 10-Q and therefore do 
not include information or footnotes necessary for a complete presentation of 
financial condition, results of operations, cash flows and changes in 
stockholders' equity in conformity with generally accepted accounting 
principles. However, all adjustments (consisting only of normal recurring 
adjustments) which, in the opinion of management, are necessary for a fair 
presentation have been included. The results of operations for the three 
months ended September 30, 1996 are not necessarily indicative of the results 
which may be expected for the entire fiscal year or any other interim period.

CORPORATE REORGANIZATION
------------------------

On September 16, 1996, the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") with PennFirst Bancorp, Inc. ("PennFirst"), a
Pennsylvania-chartered thrift holding company which is headquartered in Ellwood
City, Pennsylvania. Pursuant to the Agreement, the Company will merge with and
into PennFirst and the Troy Hill will operate as a separate subsidiary of
PennFirst for a minimum period of one year. Each shareholder of the Company will
be entitled to receive $21.15 in either cash or shares of PennFirst common stock
for each share of Company common stock, subject to an overall requirement that
40% of the outstanding Company common stock be exchanged for cash. The Merger is
subject to, among other things, the receipt of all requisite regulatory
approvals as well as the approval of the respective shareholders of PennFirst
and the Company. In connection therewith, a Special Meeting of Shareholders of
PennFirst and the Company is expected to be called for the purpose of approving
the Merger during the second or third quarter of fiscal 1997.

EARNINGS PER SHARE
------------------

Earnings per share for the three months ended September 30,1996 and September
30, 1995 have been calculated based on the weighted average number of common and
common equivalent shares outstanding (1,005,655 shares and 1,031,528 shares
respectively), during the period.

RECENT ACCOUNTING AND LEGISLATIVE DEVELOPMENTS
----------------------------------------------

In October 1995, the Financial Accounting Standards Board ("FASB") issued 
SFAS No. 123, "Accounting for Stock-Based Compensation," establishing 
financial accounting and 

                                       6

<PAGE>

reporting standards for stock-based employee compensation plans. This 
statement encourages all entities to adopt a new method of accounting to 
measure compensation cost of all employee stock compensation plans based on 
the estimated fair value of the award at the date it is granted. Companies 
are, however, allowed to continue to measure compensation cost for those 
plans using the intrinsic value based method of accounting, which generally 
does not result in compensation expense recognition for most plans. Companies 
that elect to remain with the existing accounting are required to disclose in 
a footnote to the financial statements pro forma net income and, if 
presented, earnings per share, as if this statement had been adopted. The 
accounting requirements of this statement are effective for transactions 
entered into fiscal years that begin after December 15, 1995; however, 
companies are required to disclose information for awards granted in their 
first fiscal year beginning after December 15, 1994. Management of the 
Savings Bank has not completed an analysis of the potential effects of this 
Statement on the Savings Bank's financial condition or results of operations. 

In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." Pursuant to
SFAS No. 125, after a transfer of financial assets, an entity would be required
to recognize all financial assets and servicing it controls and liabilities it
has incurred and, conversely, would not be required to recognize financial
assets when control has been surrendered and liabilities when extinguished. SFAS
No. 125 provides standards for distinguishing transfers of financial assets that
are sales from transfers that are secured borrowings. SFAS No. 125 will be
effective with respect to the transfer and servicing of financial assets and the
extinguishement of liabilities occuring after December 31, 1996, with earlier
application prohibited. The Savings Bank has not completed an analysis of the
potential effects of this Statement on the Savings Bank's financial condition or
results of operations.

On November 14, 1995, the Federal Deposit Insurance Corporation ("FDIC")
approved a final rule regarding deposit insurance premiums. The final rule
reduced deposit insurance premiums for Bank Insurance Fund ("BIF") member
institutions from 23 to 0 basis points (subject to a $2,000 minimum) for
institutions in the lowest risk category, while holding deposit insurance
premiums for Savings Association Insurance Fund ("SAIF") members at their
current levels (23 basis points for institutions in the lowest risk category).
The reduction was effective with respect to the January 1, 1996 premium
assessment. On September 30, 1996, President Clinton signed into law legislation
which will eliminate the premium differential between SAIF-insured institutions
and BIF-insured institutions by recapitalizing the SAIF's reserves to the
required ratio.  The legislation provides that all SAIF member institutions pay
a special one-time assessment to recapitalize the SAIF, which in the aggregate
will be sufficient to bring the reserve ratio in the SAIF to 1.25% of insured
deposits.  It is anticipated that the amount of the special assessment required
to recapitalize the SAIF will be approximately 65.7 basis points of 
SAIF-assessable deposits as of March 31, 1995. It is anticipated that after 
the re-capitalization of the SAIF, premiums paid by SAIF-insured institutions 
will be reduced to approximately $.064 per $100 of deposits for 1997 
through 1999.  The legislation also 

                                       7

<PAGE>


provides for the merger of the BIF and the SAIF, with such merger being 
conditioned upon the prior elimination of the thrift charter.

Pursuant to the legislation, Troy Hill will be required to pay as of November 
27, 1996 the one-time special assessment, which is estimated to amount to 
$326,000 or $214,000, net of related tax benefits, based upon its total SAIF 
deposits as of March 31, 1995. The payment of such special assessment will 
have the effect of immediately reducing Troy Hill's capital by such an 
amount. Nevertheless, management does not believe that this one-time special 
assessment will have a material adverse effect on the Company's consolidated 
financial condition or cause non-compliance with Troy Hill's regulatory 
capital requirements. Based upon the $52.7 million of assessable deposits at 
September 30, 1996, Troy Hill would expect to pay approximately $22,000 less 
in insurance premiums per quarter during 1997.


TROY HILL BANCORP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THREE MONTHS ENDED SEPTEMBER 30, 1996


GENERAL
-------

On June 24, 1994, Troy Hill Federal Savings and Loan Association successfully
completed its conversion from a federally chartered, mutual savings and loan
association to a federally chartered stock savings bank known as Troy Hill
Federal Savings Bank (the "Savings Bank") and the concurrent formation of Troy
Hill Bancorp, Inc. (the "Company" or "Troy Hill"), the parent holding company of
the Savings Bank. The operating results of the Company depend primarily upon its
net interest income, which is determined by the difference between interest and
dividend income on interest-earning assets, principally loans, mortgage-backed
securities and investment securities, and interest expense on interest-bearing
liabilities, which principally consist of deposits and borrowings. The Company's
net income also is affected by its provision for loan and lease losses, as well
as the level of its noninterest income, including loan fees and service charges,
gain on sale of loans, and other income, and its noninterest expenses, such as
salaries and employee benefits, net occupancy expense, federal deposit insurance
and miscellaneous other expenses, and income taxes.

In general, financial institutions are vulnerable to an increase in interest
rates to the extent that interest-bearing liabilities mature or reprice more
rapidly than interest-earning assets.  The lending activities of financial
institutions, including the Savings Bank, have historically emphasized the
origination of long-term, fixed-rate loans secured by single-family residences,
and the primary source of funds of such 


                                       8

<PAGE>

institutions has been deposits, which largely mature or are subject to 
repricing within a short period of time.  This has historically caused the 
income earned by Troy Hill on its loan portfolio to adjust more slowly to 
changes in interest rates than its cost of funds. While having liabilities 
that reprice more frequently than assets is generally beneficial to net 
interest income in times of declining interest rates, such an asset/liability 
mismatch is generally detrimental during periods of rising interest rates.

To reduce the effect of adverse changes in interest rates on its operations, the
Company has implemented the asset and liability management policies described
below.

ASSET AND LIABILITY MANAGEMENT
------------------------------

Troy Hill maintains a program designed to monitor its exposure to material and
prolonged increases in interest rates. The principal determinant of the exposure
of the Company's earnings to interest rate risk is the timing difference between
the repricing or maturity of the Company's interest-earning assets and the
repricing or maturity of its interest-bearing liabilities. The Company's Board
of Directors establishes and monitors the Company's asset and liability
management policies.

The Company has adopted a strategy designed to improve the interest rate
sensitivity of its assets relative to its liabilities. The primary elements of
this strategy include: (i) maintaining a high level of liquid assets that can be
reinvested in higher yielding investments should interest rates rise; (ii)
emphasizing investments in (A) shorter-term (15 years or less), fixed-rate
single-family residential loans and (B) residential construction loans, which
generally have adjustable or floating interest rates and/or shorter maturities
than traditional single-family residential loans; (iii) to the extent market
conditions permit, increasing the origination of adjustable-rate single-family
residential loans ("ARMs"), (iv) maintaining the weighted average maturity of
the Company's investment portfolio at five years or less and (v) selling of
newly originated loans with maturities of greater than fifteen years.

As of September 30, 1996, the implementation of the asset and liability
initiatives resulted in the following: (i) $18.6 million or 22.2% of the
Company's total loan portfolio had adjustable interest rates or maturities of
less than 12 months; (ii) $1.2 million or 48.6% of the Company's
mortgage-backed securities were secured by ARMs; and (iii) $5.1 million or 81.0%
of the Company's investment securities portfolio had scheduled maturities of
five years or less.


                                       9

<PAGE>

RESULTS OF OPERATIONS

GENERAL
-------

The Company reported net earnings of $52,000 and $262,000 during the three 
months ended September 30, 1996 and 1995, respectively.  The $210,000 or 
80.2% decrease in net earnings for the three months ended September 30, 1996, 
as compared to the same period in the prior year, is primarily due to the 
$530,000 increase in noninterest expense which is primarily attributable to 
the $326,000 special one-time SAIF assessment and a $198,000 increase in 
interest expense, which were partially offset by a $381,000 increase in total 
interest income and a $136,000 decrease in income taxes. If not for this 
one-time assessment, net earnings for the three months ended September 30, 
1996 would have been $266,000, or a 1.5% increase over the 1995 quarter.

NET INTEREST INCOME
-------------------

Net interest income is determined by the Company's interest rate spread 
(i.e., the difference between the yields earned on its interest-earning 
assets and the rates paid on its interest-bearing liabilities) and the 
relative amounts of interest-earning assets and interest-bearing liabilities.

The Company's net interest income increased by $183,000 or 23.3% during the 
three months ended September 30, 1996 when compared to the respective period 
in 1995. 

INTEREST INCOME
---------------

Interest on loans increased by $474,000 or 38.7% for the three months ended 
September 30, 1996, when compared with the same period in 1995.  The increase 
in interest on loans was due primarily to an increase in the balance on loans 
receivable for the three months ended September 30, 1996 when compared to the 
same period in 1995. 

Interest and dividends on investment securities and other interest-earning 
assets (consisting primarily of U.S. Government and agency obligations, 
corporate obligations, interest-bearing deposits and FHLB of Pittsburgh 
stock) decreased by $66,000 or 36.5% during the three months ended September 
30, 1996 when compared with the same period in 1995.  The decrease was the 
result of the sale of U.S. Government and agency obligations to fund newly 
originated loans.

Interest on mortgage-backed securities decreased $27,000 or 23.3% during the 
three months ended September 30, 1996 when compared with the same period in 
1995. The decrease was due primarily to a decrease of $2.4 million in the 
average balance of mortgage-backed securities outstanding for the three 
months ended September 30, 1996 when compared to the same period in 1995.


                                       10

<PAGE>

INTEREST EXPENSE
----------------

Interest expense on deposits, the largest component of the Company's 
interest-bearing liabilities, for the three months ended September 30, 1996 
when compared to the same period in 1995 remained constant.

Interest on borrowings (consisting of advances from the FHLB of Pittsburgh) 
increased $199,000 or 161.8% during the three months ended September 30, 
1996, when compared with the same period in 1995.  The increase was due to an 
increase in the average balance of such borrowings of $8.9 million during the 
three months ended September 30, 1996 as compared to the same period in 1995. 
 The Savings Bank reinvested these additional advances from the Federal Home 
Loan Bank of Pittsburgh into permanent and construction loans secured by 
single-family residences.

PROVISION FOR LOAN AND LEASE LOSSES
-----------------------------------

Provisions for loan and lease losses are charged to earnings to bring the 
total allowance to a level considered appropriate by management based on 
historical experience, the volume and type of lending conducted by the 
Savings Bank, the status of past due principal and interest payments, general 
economic conditions, particularly as they relate to the Savings Bank's market 
area, and other factors related to the collectibility of the Savings Bank's 
loan portfolio.

The Savings Bank's provisions for loan and lease losses during the three 
month period ended September 30, 1996 when compared to the same period in 
1995 remained constant. The Company's total allowance for loan and lease 
losses amounted to .82% of the Company's total loan portfolio at September 
30, 1996, as compared with 1.09% at September 30, 1995. As of September 30, 
1996, the Company's total allowance for loan and lease losses amounted to 
76.5% of total nonperforming loans. 

NONINTEREST INCOME
------------------

The Company's noninterest income remained constant during the three months 
ended September 30, 1996 when compared with the same period in 1995.

NONINTEREST EXPENSE
-------------------

Noninterest expense increased by $530,000 or 138.0% during the three months 
ended September 30, 1996 when compared with the same period in 1995. The 
increase is primarily due to the $326,000 one-time SAIF assessment, expenses 
incurred with respect to the merger with PennFirst Bancorp, Inc. and expenses 
incurred for properties held in real estate owned through foreclosure. 
Without the one-time SAIF assessment, noninterest expense would have 
increased by $204,000 or 53.1%.


                                       11

<PAGE>

INCOME TAXES
------------

The Company recognized $31,000 in income tax expense which reflected an 
effective rate of 37.3% for the three months ended September 30, 1996, as 
compared to $167,000 with an effective tax rate of 38.9% for the comparable 
1995 period, due to lower pretax income.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's liquidity, represented by cash and cash equivalents, is a 
product of its operating, investing and financing activities. The Company's 
primary sources of funds are deposits, borrowings, amortization, prepayment 
and maturities of outstanding loans and mortgage-backed securities, sales of 
loans, maturities of investment securities and other short-term investments 
and funds provided from operations. While scheduled loan and mortgage-backed 
securities amortization and maturing investment securities and short-term 
investments are relatively predictable sources of funds, deposit flows and 
loan and mortgage-backed securities prepayments are greatly influenced by 
general interest rates, economic conditions and competition. The Company 
manages the pricing of its deposits to maintain a steady deposit balance. In 
addition, the Company invests excess funds in overnight deposits and other 
short-term interest-earning assets which provides liquidity to meet lending 
requirements. The Company has been able to generate enough cash through the 
retail deposit market, its traditional funding source, to offset the cash 
utilized in investing activities. In addition, the Company may, to the extent 
deemed necessary, utilize borrowings for liquidity (primarily consisting of 
advances from the FHLB of Pittsburgh). At September 30, 1996, the Company had 
$26.9 million of outstanding advances from the FHLB of Pittsburgh. 

Liquidity management is both a daily and long-term function of business 
management.  Excess liquidity is generally invested in short-term investments 
such as overnight deposits. On a longer-term basis, the Company maintains a 
strategy of investing in various lending products. The Company uses its 
sources of funds primarily to meet its ongoing commitments, to pay maturing 
savings certificates and savings withdrawals, fund loan commitments and 
maintain a portfolio of investment and mortgage-backed securities.

At September 30, 1996, the total approved loan commitments outstanding 
amounted to $2.3 million. At the same date, commitments under unused lines of 
credit amounted to $3.0 million and the unadvanced portion of construction 
loans approximated $5.2 million.  Certificates of deposit scheduled to mature 
in one year or less at September 30, 1996 totaled $17.8 million. Management 
believes that a significant portion of maturing deposits will remain with the 
Savings Bank.


                                       12

<PAGE>

The Company's total consolidated assets were $99.5 million at September 30, 
1996, an increase of $7.3 million or 7.9% over total consolidated assets at 
June 30, 1996.

Total consolidated stockholders' equity was $18.0 million at September 30, 
1996, remaining relatively constant compared to the balance at June 30, 1996. 
 

Federally insured savings institutions are required to maintain minimum 
levels of regulatory capital.  Pursuant to the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 ("FIRREA"), the Office of Thrift 
Supervision ("OTS") has established capital standards applicable to all 
savings institutions. These standards generally must be as stringent as the 
comparable capital requirements imposed on national banks. The OTS also is 
authorized to impose capital requirements in excess of these standards on 
individual institutions on a case-by-case basis.

Savings institutions must satisfy three different OTS capital requirements. 
Under these standards, savings institutions must maintain "tangible" capital 
equal to at least 1.5% of adjusted total assets, "core" capital equal to at 
least 3% of adjusted total assets and "total" capital (a combination of core 
and "supplementary"  capital) equal to at least 8% of "risk-weighted" assets. 
 For purposes of the regulation, core capital is defined as common 
stockholders' equity (including retained earnings), noncumulative perpetual 
preferred stock and related surplus, minority interest in the equity accounts 
of fully consolidated subsidiaries, certain nonwithdrawable accounts and 
pledged deposits and qualifying supervisory goodwill. Core capital is 
generally reduced by the amount of savings institutions intangible assets, 
although limited exceptions to the deduction of intangible assets are 
provided for purchased mortgage servicing rights, qualifying supervisory 
goodwill and certain other intangibles, all of which are currently not 
relevant to the calculation of the Savings Bank's regulatory capital.  
Tangible capital is core capital less all intangible assets, with a limited 
exception for purchased mortgage servicing rights. The following table sets 
forth the Savings Bank's compliance with each of the above described 
regulatory capital requirements at September 30, 1996. 




                                       13

<PAGE>

<TABLE>
<CAPTION>

                   Tangible                  Core                Risk-Based
                    Capital                 Capital                Capital 
                   --------                 -------              ----------
                                    (Dollars in Thousands)
<S>                <C>                      <C>                  <C> 

Regulatory
capital            $14,254                  $14,254                $15,022

Minimum
required
regulatory
capital              1,432                    2,865                  4,902
                   -------                  -------                 ------

Excess
regulatory
capital            $12,822                  $11,389                 10,120
                   -------                  -------                 ------
                   -------                  -------                 ------

Regulatory
capital as
a percentage
of assets(1)        14.93%                   14.93%                 24.51%

Minimum capital
required as a
percentage           1.50%                    3.00%                  8.00%
                   -------                  -------                 ------


Excess regulatory
capital as a
percentage in
excess of
requirement         13.43%                   11.93%                 16.51%
                   -------                  -------                 ------
                   -------                  -------                 ------

</TABLE>


(1) Tangible and core capital are computed as a percentage of adjusted
    total assets of $95.5 million.  Risk-based capital is computed as a
    percentage of total risk-weighted assets of $61.3 million.



IMPACT OF INFLATION AND CHANGING PRICES 
---------------------------------------

The financial statements of the Company and related notes presented herein have
been prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of

                                       14

<PAGE>

historical dollars, without considering changes in the relative purchasing 
power of money over time due to inflation.  

Unlike most industrial companies, substantially all of the assets and 
liabilities of a financial institution are monetary in nature.  As a result, 
interest rates have a more significant impact on a financial institution's 
performance than the effects of general levels of inflation. Interest rates 
do not necessarily move in the same direction or in the same magnitude as the 
prices of goods and services, since such prices are affected by inflation to 
a larger extent than interest rates.  In the current interest rate 
environment, liquidity and the maturity structure of the Company's assets and 
liabilities are critical to the maintenance of acceptable performance levels.


                                       15

<PAGE>

PART II-OTHER INFORMATION
-------------------------


ITEM 1.  LEGAL PROCEEDINGS
         ----------------- 

         THE COMPANY IS INVOLVED ONLY IN ROUTINE LEGAL PROCEEDINGS OCCURRING IN
         THE ORDINARY COURSE OF BUSINESS WHICH IN THE AGGREGATE ARE BELIEVED BY
         MANAGEMENT TO BE IMMATERIAL TO THE FINANCIAL CONDITION OF THE COMPANY.

ITEM 2.  CHANGES IN SECURITIES
         --------------------- 
 
         NOT APPLICABLE

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
         -------------------------------

         NOT APPLICABLE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

         NOT APPLICABLE.

ITEM 5.  OTHER INFORMATION
         -----------------

         NOT APPLICABLE.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         -------------------------------- 

         A) EXHIBIT 27:  FINANCIAL DATA SCHEDULE
         
         B) ON SEPTEMBER 25, 1996, THE COMPANY FILED A FORM 8-K TO REPORT THAT
            IT HAD ENTERED INTO AN AGREEMENT AND PLAN OF REORGANIZATION (THE 
            "AGREEMENT") WITH PENNFIRST BANCORP, INC. ("PENNFIRST"), A 
            PENNSYLVANIA-CHARTERED THRIFT HOLDING COMPANY WHICH IS 
            HEADQUARTERED IN ELLWOOD CITY, PENNSYLVANIA. SEE THE NOTE TO THE 
            CONSOLIDATED FINANCIAL STATEMENTS ON THE CORPORATE REORGANIZATION.


                                       16

<PAGE>

                                   SIGNATURES

    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.


                                            TROY HILL BANCORP, INC.  



NOVEMBER 7, 1996                       BY:  /S/ ELLRY N. DAVIS 
----------------                            -----------------------
                                            ELLRY N. DAVIS 
                                            PRESIDENT AND CHIEF EXECUTIVE
                                            OFFICER     



NOVEMBER 7, 1996                       BY:  /S/ LAWRENCE C. KERR  
----------------                            -----------------------
                                            LAWRENCE C. KERR    
                                            TREASURER     



                                       17