<PAGE>

                       Securities and Exchange Commission
                             WASHINGTON, D. C. 20549



                                    FORM 10-Q



[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the Quarterly Period Ended:  December 31, 2001

                                       or

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the Transition period from                  to
                               ----------------    ---------------

Commission File Number: 0-23010

                           LAUREL CAPITAL GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        PENNSYLVANIA                                           25-1717451
-------------------------------                           --------------------
(State or other jurisdiction of                              (IRS Employer
incorporation or organization)                             Identification No.)

     2724 HARTS RUN ROAD
 ALLISON PARK, PENNSYLVANIA                                        15101
-------------------------------                                ------------
(Address of principal executive office)                         (Zip Code)

Registrant's telephone number including area code:  (412) 487-7404


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES X NO

The number of shares outstanding for each of the issuer's classes of common
stock, as of the latest practicable date is:

                Class: Common stock, par value $.01 per share
                Outstanding at February 1, 2002: 1,939,334 shares
<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                                      INDEX


<TABLE>
<CAPTION>

                                                                                       PAGE
                                                                                       ----
<S>                                                                                    <C>
PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)

          Consolidated Statements of Financial Condition as of                  .....      1
          December 31, 2001 and June 30, 2001

          Consolidated Statements of Operations for the Three                   .....      2
          And Six Months Ended December 31, 2001 and 2000

          Consolidated Statement of Stockholders' Equity for the                .....      3
          Six Months Ended December 31, 2001

          Consolidated Statements of Cash Flows for the Six                     .....      4
          Months Ended December 31, 2001 and 2000

          Notes to Unaudited Consolidated Financial Statements                  .....    5-9

Item 2.   Management's Discussion and Analysis of Financial                     .....  10-16
          Condition and Results of Operations

Item 3.   Quantitative and Qualitative Disclosures about Market Risk            .....  17-18

PART II - OTHER INFORMATION

          Item 1. Legal Proceedings                                             .....     18

          Item 2. Changes in Securities and Use of Proceeds                     .....     18

          Item 3. Defaults Upon Senior Securities                               .....     18

          Item 4. Submission of Matters to a Vote of Security Holders           .....     18

          Item 5. Other Information                                             .....     18

          Item 6. Exhibits and Reports on Form 8-K                              .....     18


Signatures                                                                      .....     19
</TABLE>

<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                 Consolidated Statements of Financial Condition
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                December 31,      June 30,
                                                                                    2001            2001
-----------------------------------------------------------------------------------------------------------
                                                                                (unaudited)
<S>                                                                            <C>            <C>
       ASSETS
Cash                                                                           $     1,111    $     1,045
Interest-earning deposits with other institutions                                   17,875          8,669
Investment securities available for sale                                            39,517         39,762
Investment securities held to maturity  (market value of $9,805 and $14,129)         9,511         13,937
Mortgage-backed securities available for sale                                        8,350          9,998
Mortgage-backed securities held to maturity (market value of $51 and $152)              49            150
Loans receivable, held for sale                                                      1,472          1,701

Loans receivable                                                                   173,580        178,667
Allowance for loan losses                                                           (1,776)        (1,759)
----------------------------------------------------------------------------------------------------------

       Loans receivable, net                                                       171,804        176,908

Federal Home Loan Bank stock                                                         1,706          1,706
Real estate owned                                                                      298            290
Accrued interest receivable:
       Loans                                                                           866            960
       Interest-earning deposits and investments                                       542            687
       Mortgage-backed securities                                                       41             56

Office properties and equipment, net of accumulated depreciation                     1,191          1,271
Prepaid expenses and sundry assets                                                     937            872
----------------------------------------------------------------------------------------------------------

                      Total Assets                                             $   255,270    $   258,012
----------------------------------------------------------------------------------------------------------


       LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

       Savings deposits                                                        $   203,453    $   205,636
       Federal Home Loan Bank advances                                              21,623         21,626
       Advance deposits by borrowers for taxes and insurance                         1,837          2,850
       Accrued interest payable                                                        621            563
       Accrued income taxes                                                             40            130
       Other accrued expenses and sundry liabilities                                 1,019          1,069
----------------------------------------------------------------------------------------------------------

                      Total Liabilities                                            228,593        231,874
----------------------------------------------------------------------------------------------------------

Stockholders' Equity

       Common stock,  $.01 par value; 5,000,000
          shares authorized;  2,351,167 and 2,348,863 shares
          issued, respectively                                                          24             23
       Additional paid-in capital                                                    5,347          5,322
       Treasury stock, at cost (410,495 and 389,895 shares)                         (5,913)        (5,553)
       Retained earnings                                                            27,287         26,427
       Accumulated other comprehensive income, net of tax                              351            331
       Stock held in deferred compensation trust                                      (419)          (412)
----------------------------------------------------------------------------------------------------------

                      Total Stockholders' Equity                                    26,677         26,138
----------------------------------------------------------------------------------------------------------

                      Total Liabilities and Stockholders' Equity               $   255,270    $   258,012
----------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements
</TABLE>
<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations
                                   (Unaudited)

             For the Three Months Ended December 31, 2001 and 2000
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                             Three months ended        Six months ended
                                                                December 31,              December 31,
                                                           ---------------------       ----------------
                                                              2001      2000             2001     2000
                                                           ---------   ---------       -------   ------
<S>                                                           <C>      <C>              <C>      <C>
Interest income:
       Loans                                                  $3,235   $3,413           $6,625   $6,761
       Mortgage-backed securities                                131      201              281      405
       Investments                                               650    1,034            1,376    2,048
       Interest-earning deposits                                  80       26              173       50
                                                              ------   ------           ------   ------

              Total interest income                            4,096    4,674            8,455    9,264

Interest expense:
       Savings deposits                                        1,949    2,032            4,057    4,021
       Borrowings                                                322      647              643    1,211
                                                              ------   ------           ------   ------

              Total interest expense                           2,271    2,679            4,700    5,232
                                                              ------   ------           ------   ------

Net interest income before provision
       for loan losses                                         1,825    1,995            3,755    4,032
Provision for loan losses                                          4        4                9        9
                                                              ------   ------           ------   ------

Net interest income after provision
       for loan losses                                         1,821    1,991            3,746    4,023
                                                              ------   ------           ------   ------

Other income:
       Service charges                                           223      196              434      376
       Net gain on sale of investments and
              mortgage-backed securities available for sale       55       53               55       58
       Gain on the sale of loans held for sale                     3        3               14        8
       Other operating income                                     17       22               35       38
       Other non-operating income                                 --      325               --      325
                                                              ------   ------           ------   ------

              Total other income                                 298      599              538      805
                                                              ------   ------           ------   ------

Operating expenses:
       Compensation, payroll taxes and
              fringe benefits                                    500      512            1,011    1,012
       Premises and occupancy costs                              150      134              281      269
       Federal insurance premiums                                 10       10               19       20
       Net loss on real estate owned                               2       --                9        1
       Data processing expense                                    58       55              117      110
       Professional fees                                          44       42               68       91
       Other operating expenses                                  246      270              497      543
                                                              ------   ------           ------   ------

              Total operating expenses                         1,010    1,023            2,002    2,046
                                                              ------   ------           ------   ------

Income before income taxes                                     1,109    1,567            2,282    2,782
                                                              ------   ------           ------   ------


Provision for income taxes:
       Federal                                                   284      425              588      739
       State                                                      66       86              131      144
                                                              ------   ------           ------   ------

              Total income taxes                                 350      511              719      883
                                                              ------   ------           ------   ------


              Net income                                      $  759   $1,056           $1,563   $1,899
                                                              ======   ======           ======   ======

Earnings per share
              Basic                                           $ 0.39   $ 0.54           $ 0.80   $ 0.96
                                                              ======   ======           ======   ======

              Diluted                                         $ 0.37   $ 0.52           $ 0.77   $ 0.93
                                                              ======   ======           ======   ======

Dividends per share                                           $ 0.18   $ 0.17           $ 0.36   $ 0.34
                                                              ======   ======           ======   ======

See accompanying notes to unaudited consolidated financial statements
</TABLE>
<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                 Consolidated Statement of Stockholders' Equity
                                   (Unaudited)

                   For the Six Months Ended December 31, 2001
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                                     Accumulated
                                                                                                                           Other
                                                         Additional                                                Comprehensive
                                          Common            Paid-in           Treasury           Retained                Income,
                                           Stock            Capital              Stock           Earnings             Net of Tax
                                         -------       ------------    ---------------      -------------       ----------------
<S>                                      <C>           <C>               <C>                    <C>               <C>
Balance, June 30, 2001                   $     23      $  5,322          ($ 5,553)              $ 26,427          $    331

Comprehensive income:
       Net income                              --            --                --                  1,563                --
       Other comprehensive income,
            net of tax $10                     --            --                --                     --                20
                                         --------      --------          --------               --------          --------

Total comprehensive income                     --            --                --                  1,563                20

Stock options exercised
     (2,304 shares)                             1            25                --                     --                --

Dividends on common stock
     at $0.18 per share                        --            --                --                   (703)               --

Treasury stock purchased                       --            --              (360)                    --                --

Net purchase of stock in
     deferred compensation trust               --            --                --                     --                --
                                         --------      --------          --------               --------          --------

Balance, December 31, 2001               $     24      $  5,347          ($ 5,913)              $ 27,287          $    351
                                         ========      ========          ========               ========          ========
</TABLE>


<TABLE>
<CAPTION>

                                              Stock Held in
                                                   Deferred                 Total
                                               Compensation         Stockholders'
                                                      Trust                Equity
                                         ------------------      ----------------
<S>                                        <C>                    <C>
Balance, June 30, 2001                     ($   412)              $ 26,138

Comprehensive income:
       Net income                                --                  1,563
       Other comprehensive income,
            net of tax $10                       --                     20
                                           --------               --------

Total comprehensive income                       --                  1,583

Stock options exercised
     (2,304 shares)                              --                     26

Dividends on common stock
     at $0.18 per share                          --                   (703)

Treasury stock purchased                         --                   (360)

Net purchase of stock in
     deferred compensation trust                 (7)                    (7)
                                           --------               --------

Balance, December 31, 2001                 ($   419)              $ 26,677
                                           ========               ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements

<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                   (Unaudited)

               For the Six Months Ended December 31, 2001 and 2000
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                2001        2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>         <C>
Net income:                                                                                  $  1,563    $  1,899
      Adjustments to reconcile net income to net
         cash provided by operating activities:
                Depreciation                                                                       95          98
                Provision for loan losses                                                           9           9
                Net gain on sale of investment securities available for sale                      (55)        (58)
                Gain on the sale of loans held for sale                                           (14)         (8)
                Amortization of deferred loan fees                                                 (2)        (54)
                Origination of loans held for sale                                               (478)       (503)
                Proceeds from sale of loans held for sale                                         721         459
                Decrease (increase) in accrued interest receivable                                254        (215)
                Increase in accrued interest payable                                               58         171
                Other - net                                                                      (157)        (66)
----------------------------------------------------------------------------------------------------------------------

                              Net cash provided by operating activities                         1,994       1,732
----------------------------------------------------------------------------------------------------------------------

Investing activities:
      Purchase of investment securities held to maturity                                       (2,032)         --
      Purchase of investment securities available for sale                                     (1,629)       (516)
      Purchase of FHLB stock                                                                       --        (475)
      Proceeds from sale of investment securities available for sale                              358         924
      Principal repayments and maturities of investment securities available for sale           1,500         460
      Principal repayments and maturities of investment securities held to maturity             6,445          --
      Principal repayments and maturities of mortgage-backed securities
         available for sale                                                                     1,689         382
      Principal repayments and maturities of mortgage-backed securities
         held to maturity                                                                         101         114
      Decrease (increase) in loans                                                              5,097      (7,117)
      Net additions to office properties and equipment                                            (15)         (2)
----------------------------------------------------------------------------------------------------------------------

                              Net cash provided (used) by investing activities                 11,514      (6,230)
----------------------------------------------------------------------------------------------------------------------

Financing activities:
      Net decrease in demand and club accounts                                                    (44)     (2,253)
      Net (decrease) increase in time deposit accounts                                         (2,139)      2,551
      Net (decrease) increase in FHLB advances                                                     (3)      6,205
      Decrease in advance deposits by borrowers
         for taxes and insurance                                                               (1,013)       (897)
      Stock options exercised                                                                      26          39
      Acquisition of treasury stock                                                              (360)       (788)
      Dividends paid                                                                             (703)       (666)
----------------------------------------------------------------------------------------------------------------------

                              Net cash (used) provided by financing activities                 (4,236)      4,191
----------------------------------------------------------------------------------------------------------------------

Net change in cash and cash equivalents                                                         9,272        (307)
Cash and cash equivalents at beginning of period                                                9,714       4,918
----------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                                   $ 18,986    $  4,611
----------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
----------------------------------------------------------------------------------------------------------------------

      Cash paid during the period for:
                Interest on savings deposits                                                 $  3,999    $  3,850
                Interest on FHLB advances                                                         639       1,124
                Income taxes                                                                      959         911
      Transfer of loans to real estate owned                                                       --         203

      Cash paid during the period for interest includes interest credited on
      deposits of $3,441 and $3,347 for the six months ended December 31, 2001
      and 2000, respectively
----------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to unaudited consolidated financial statements

<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                       DECEMBER 31, 2001 AND JUNE 30, 2001


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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
all the information or footnotes necessary for a complete presentation of
financial condition, results of operation and cash flows 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. Significant accounting
policies have not changed since June 30, 2001. The results of operations for the
three and six months ended December 31, 2001 are not necessarily indicative of
the results which may be expected for the entire fiscal year. The unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and the notes thereto included in Laurel
Capital Group, Inc.'s (the "Company") 2001 Annual Report to Stockholders for the
year ended June 30, 2001. All amounts presented in the Notes to Unaudited
Consolidated Financial Statements are presented in thousands except share and
per share data.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>

                                                  Three Months Ended            Six Months Ended
                                                     December 31,                  December 31,
                                                   2001         2000              2001          2000
                                                -----------------------      ------------------------
<S>                                             <C>          <C>             <C>          <C>
Basic earnings per share:
   Net income                                   $      759   $    1,056      $    1,563   $    1,899
   Weighted average shares outstanding           1,943,997    1,958,449       1,950,643    1,969,291
   Earnings per share                           $     0.39   $     0.54      $     0.80   $     0.96

Diluted earnings per share:
   Net income                                   $      759   $    1,056      $    1,563   $    1,899
   Weighted average shares outstanding           1,943,997    1,958,449       1,950,643    1,969,291
   Dilutive effect of employee
      stock options                                 92,934       68,880          90,596       68,310
                                                ----------   ----------      ----------   ----------

   Diluted weighted shares outstanding           2,036,931    2,027,329       2,041,239    2,037,601
   Earnings per share                           $     0.37   $     0.52      $     0.77   $     0.93
</TABLE>

Options to purchase 8,430 shares of common stock at $18.00 and 8,430 shares of
common stock at $19.50 per share were outstanding during the three and six
months ended December 31, 2001, but were not included in the computation of
diluted earnings per share because the option exercise price was greater than
the average market price of the common shares, and therefore, the effect would
be antidilutive.

For the three and six months ended December 31, 2000, options to purchase 72,596
and 93,314 shares of common stock at prices ranging from $14.00 to $19.50 per
share were

<PAGE>


not included in the computation of diluted earnings per share due to their
antidilutive effect.

SECURITIES

The Company accounts for investments in debt and equity securities in accordance
with the Financial Accounting Standards Board's ("FASB") Statement No. 115
("SFAS 115"). SFAS 115 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. Unrealized gains and losses for trading securities are reported in
earnings while unrealized gains and losses for securities available for sale are
reported as other comprehensive income in stockholders' equity.

COMPREHENSIVE INCOME

The Company reports Comprehensive Income in accordance with SFAS No. 130 which
establishes standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains, and losses) in a full set of general
purpose financial statements. SFAS No. 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS No. 130 requires that an
enterprise (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. For the six
months ended December 31, 2001 and 2000, the Company's total comprehensive
income was $1,583 and $3,066, respectively. Total comprehensive income is
comprised of net income of $1,563 and $1,899, respectively, and other
comprehensive income of $20 and $1,167, net of tax, respectively. Other
comprehensive income consists of unrealized gains and losses on investment
securities and mortgage-backed securities available for sale, net of tax.

LOANS RECEIVABLE

Loans receivable are stated at unpaid principal balances net of the allowance
for possible loan losses, net deferred loan fees and discounts. The Company
accounts for impaired loans in accordance with SFAS 114, "Accounting by
Creditors for Impairment of a Loan" and SFAS 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures", an amendment of SFAS
114. These statements address the accounting by creditors for impairment of
certain loans. They apply to all creditors and to all loans, uncollateralized as
well as collateralized, except for large groups of smaller-balance homogeneous
loans that are collectively evaluated for impairment. The Bank considers all
one-to-four family residential mortgage loans and all consumer loans (as
presented in Note 4) to be smaller-balance homogeneous loans. Loans within the
scope of these statements are considered impaired when, based on current
information and events, it is probable that all principal and interest will not
be collected in accordance with the contractual terms of the loans. Management
determines the impairment of loans based on knowledge of the borrower's ability
to repay the loan according to the contractual agreement, the borrower's
repayment history and the fair value of collateral for certain collateral
dependent loans. Pursuant to SFAS 114 paragraph 8, management does not consider
an insignificant delay or insignificant shortfall to impair a loan. Management
has determined that a delay less than 90 days will be considered an
insignificant delay and that an amount less

<PAGE>


than $5,000 will be considered an insignificant shortfall. The Bank does not
apply SFAS 114 using major risk characteristics for groups of loans, but on a
loan by loan basis. All loans are charged off when management determines that
principal and interest are not collectible.

The accrual of interest on all loans is discontinued when, in management's
opinion, the borrower may be unable to meet payments as they become due or when
the loan becomes 90 days past due, whichever occurs first. When interest accrual
is discontinued, all unpaid accrued interest is reserved. Such interest
ultimately collected is credited to income in the period of recovery or applied
to reduce principal if there is sufficient doubt about the collectability of
principal. Consumer loans more than 120 days or 180 days delinquent (depending
on the nature of the loan) are generally required to be written off.

Any excess of the Bank's recorded investment in the loans over the measured
value of the loans in accordance with FAS 114 is provided for in the allowance
for loan losses. The Bank reviews its loans for impairment on a quarterly basis.

Loans receivable classified as held for sale are recorded in the financial
statements in the aggregate at the lower of cost or market.


(2) CONTINGENT LIABILITIES

The Company is subject to asserted and unasserted potential claims encountered
in the normal course of business. In the opinion of management and legal
counsel, the resolution of these claims is not expected to have a material
adverse effect on the Company's financial position, liquidity or results of
operations.

<PAGE>

(3)  INVESTMENT AND MORTGAGE-BACKED SECURITIES
     -----------------------------------------

     Investment securities and mortgage-backed securities available for sale are
     comprised of the following:

<TABLE>
<CAPTION>

                                                  Amortized     Gross Unrealized   Fair
                                                       Cost     Gains    Losses    Value
                                                 ---------------------------------------
<S>                                                <C>       <C>       <C>        <C>
AT DECEMBER 31, 2001:
   Municipal obligations                           $19,123   $   282   $   289    19,116
   FNMA preferred stock                                250         3       -         253
   FHLMC preferred stock                               750        39       -         789
   FNMA common stock                                   631       164       -         795
   FHLMC  common stock                                 514       140       -         654
   SLMA Student Loan Trust                             346        15       -         361
   Shay Financial Services ARM Fund                 17,563       -          14    17,549
                                                 ---------------------------------------

                                                    39,177       643       303    39,517

   Mortgage-backed securities available for sale     8,159       191       -       8,350
                                                 ---------------------------------------

             Total                                 $47,336   $   834   $   303   $47,867
                                                 =======================================
</TABLE>


<TABLE>
<CAPTION>

At December 31, 2001, the contractual maturities of the debt securities                   Amortized                 Fair
available for sale are:                                                                        Cost                 Value
                                                                                          -------------------------------
<S>                                                                                         <C>                  <C>
               Due after five years through ten years                                       $   761              $   783
               Due after ten years                                                           26,867               27,044
                                                                                          -------------------------------

                            Total                                                           $27,628              $27,827
                                                                                          ===============================
</TABLE>



Mortgage-backed securities have various contractual maturity dates. Actual
repayments may be different due to prepayments on the loans underlying the
securities. The FNMA stock, FHLMC stock and the Shay Financial Services ARM Fund
have no stated maturity.

Note: Gross realized gains of $55 and $58 were recorded on the sale of
      investment securities available for sale during the six months ended
      December 31, 2001 and 2000, respectively. Proceeds from the sale of
      investments available for sale during the six months ended December 31,
      2001 were $358.


Investment and mortgage-backed securities held to maturity are comprised of the
following:

                                    Amortized     Gross Unrealized      Fair
                                         Cost     Gains     Losses      Value
                                     ----------------------------------------

At December 31, 2001
  Corporate and Agency bonds          $9,511     $  296     $    2     $9,805
  Mortgage-backed securities              49          2         --         51
                                     ----------------------------------------

             Total                    $9,560     $  298     $    2     $9,856
                                     ========================================

<TABLE>
<CAPTION>

At December 31, 2001, the contractual maturities of the debt securities              Amortized                Fair
held to maturity are:                                                                     Cost                Value
                                                                                   -----------------------------------
<S>                                                                                     <C>                  <C>
               Due after one year through five years                                    $2,516               $2,523
               Due after five years through ten years                                    4,000                4,077
               Due after ten years                                                       3,044                3,256
                                                                                   -----------------------------------

                            Total                                                       $9,560               $9,856
                                                                                   ===================================
</TABLE>


Mortgage-backed securities have various contractual maturity dates. Actual
repayments may be different due to prepayments on the loans underlying the
securities.
<PAGE>

(4)  LOANS RECEIVABLE
     ----------------

     Loans receivable are comprised of the following:

<TABLE>
<CAPTION>

                                                                                     December 31,        June 30,
                                                                                             2001            2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                <C>
     First mortgage loans:
           1 to 4 family dwellings                                                   $ 124,160          $ 130,010
           Multi-family dwellings                                                        2,737              2,892
           Commercial                                                                    4,872              5,051
           Guaranteed or insured                                                            26                 29
           Construction and development loans                                           13,808             10,763
--------------------------------------------------------------------------------------------------------------------

                                                                                       145,603            148,745

     Commercial loans                                                                    1,411              1,707
     Consumer loans:
           Loans secured by savings accounts                                               268                251
           Installment loans                                                            33,110             34,190
--------------------------------------------------------------------------------------------------------------------

                                                                                        34,789             36,148
--------------------------------------------------------------------------------------------------------------------

     Loans receivable, net of unearned discounts                                       180,392            184,893
     Less: Allowance for loan losses                                                    (1,776)            (1,759)
               Loans in process                                                         (6,853)            (6,160)
               Net deferred loan origination costs (fees collected)                         41                (66)
--------------------------------------------------------------------------------------------------------------------

     Loans receivable, net                                                           $ 171,804          $ 176,908
====================================================================================================================


Changes in the allowance for loan losses for the
six months ended December 31, 2001 and 2000 are as follows:

                                                                                        Fiscal             Fiscal
                                                                                          2002               2001
--------------------------------------------------------------------------------------------------------------------

Balance at beginning of the fiscal year                                              $   1,759          $   1,798
Provision for losses                                                                         9                  9
Charge-offs                                                                                (16)               (54)
Recoveries                                                                                  24                  6
--------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2001 and 2000                                                $   1,776          $   1,759
====================================================================================================================
</TABLE>

At December 31, 2001, the recorded investment in loans that are considered to be
impaired under SFAS 114 was $165. At December 31, 2001, the $165 of impaired
loans, as a result of write-downs, do not have an allowance for loan losses. The
average recorded investment in impaired loans during the six months ended
December 31, 2001 was approximately $197. For the six months ended December 31,
2001, the Company recognized interest income on those impaired loans of $1 which
was recognized using the cash basis method of income recognition.

<TABLE>
<CAPTION>

                                                                    December 31,
                                                                   2001      2000
                                                                 ------------------
<S>                                                                <C>       <C>
         Non-accrual loans                                         $ 312     $ 658
         Non-accrual loans as a percent of total loans, net         0.18%     0.37%
</TABLE>

-----------------
All loans 90 days or more past due are reported as non-accrual.

<PAGE>

         COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000


GENERAL. Laurel Capital Group, Inc.'s (the "Company") only significant asset is
the stock it owns of its wholly-owned subsidiary, Laurel Savings Bank (the
"Bank"). The Company's net income for the three months ended December 31, 2001
was $759,000 compared to $1.1 million for the same period in the prior year. The
decrease of $297,000 or 28.13% was primarily the result of a $301,000 decrease
in other income and a $170,000 decrease in net interest income partially offset
by a $161,000 decrease in income taxes and a $13,000 decrease in total operating
expense. These and other significant fluctuations are discussed below.

NET INTEREST INCOME. The Company's operating results depend substantially on the
Bank's net interest income, which is determined by the average interest rate
spread between the Bank's interest-earning assets and interest-bearing
liabilities and the relative amounts of such assets and liabilities. Net
interest income decreased by $170,000 or 8.54% during the three months ended
December 31, 2001 as compared to the same period of the prior year. The decrease
was primarily due to a decrease in the average interest rate spread from 2.58%
for the quarter ended December 31, 2000 to 2.36% for the quarter ended December
31, 2001. This decrease was partially offset by an increase in the average
balance of net earning assets of $3.2 million or 9.97%.

Interest income on loans receivable and loans held for sale decreased by
$178,000 or 5.22% during the three months ended December 31, 2001 as compared to
the same period in the prior year. This decrease was primarily due to a $1.6
million or .90% decrease in the average outstanding balance of loans receivable
compared to the same period in the prior year, as well as a decrease in the
average yield on loans receivable from 7.76% for the quarter ended December 31,
2000 to 7.42% for the quarter ended December 31, 2001. The decrease in the
average outstanding balance of loans receivable was due to a $359,000 or 0.26%
decrease in the average outstanding balance of mortgage loans and a $1.2 million
or 3.20% decrease in the average outstanding balance of consumer and other
loans. The decrease in the average outstanding balance of loans receivable was
primarily the result of loan repayments in excess of loan originations. The
decrease in the average yield was primarily due to generally lower market
interest rates.

Interest on mortgage-backed securities held to maturity and mortgage-backed
securities available for sale decreased by $70,000 or 34.83% during the quarter
ended December 31, 2001 as compared to the December 31, 2000 quarter. This
decrease was primarily due to a $2.3 million or 20.47% decrease in the average
outstanding balance of mortgage-backed securities during the quarter ended
December 31, 2001 as compared to the December 31, 2000 quarter. In addition, the
average yield on mortgage-backed securities decreased from 7.23% for the quarter
ended December 31, 2000 to 5.93% for the quarter ended December 31, 2001
primarily due to a decline in market interest rates. At December 31, 2001, the
Bank's portfolio of mortgage-backed securities available for sale had net
unrealized gains of $191,000. This portfolio consists of fixed and adjustable
rate securities with an average yield of 6.04% at December 31, 2001. Rising
interest rates would decrease the unrealized gains in this portfolio if the
fixed rate securities are not sold. The mortgage-backed securities held to
maturity portfolio consists of one adjustable-rate collateralized mortgage
obligation (CMO) with an average yield of 3.15% at December 31, 2001. At
December 31, 2001, the Bank's portfolio of mortgage-backed securities held to
maturity had an

<PAGE>


amortized cost and fair market value of $49,000 and $51,000, respectively. In
periods of rising interest rates, unrealized losses could occur due to the
timing difference of when the securities re-price. See Note 3 of "Notes to
Unaudited Consolidated Financial Statements."

Interest income on investments held to maturity and investments available for
sale decreased during the three months ended December 31, 2001 by $384,000 or
37.14% from the comparable period in 2000, primarily due to a $12.6 million or
19.99% decrease in the average outstanding balance of such securities for the
quarter ended December 31, 2001 as compared to the quarter ended December 31,
2000. In addition, the average yield on investment securities decreased from
6.49% for the quarter ended December 31, 2000 to 5.10% for the quarter ended
December 31, 2001. The decrease in the average outstanding balance was primarily
due to increased repayments of investments held to maturity due to declining
interest rates. At December 31, 2001, the Bank's portfolio of investment
securities available for sale and investment securities held to maturity had net
unrealized gains of $340,000 and $296,000, respectively. See Note 3 of "Notes to
Unaudited Consolidated Financial Statements."

Interest income on interest-earning deposits increased during the three months
ended December 31, 2001 by $54,000 or 207.69% from the comparable period in
2000. This increase was primarily due to an increase of $14.8 million or 899.94%
in the average outstanding balance of interest-earning deposits for the quarter
ended December 31, 2001 as compared to the December 31, 2000 quarter. This
increase was partially offset by a decrease in the average yield on
interest-earning deposits from 6.29% for the quarter ended December 31, 2000 to
1.94% for the quarter ended December 31, 2001. The increase in the average
balance was primarily due to increases in deposit balances and repayments of
investment and mortgage-backed securities which exceeded the demand for loans.

Interest expense on interest-bearing deposits decreased by $83,000 or 4.08% for
the quarter ended December 31, 2001, compared to the same period in 2000. The
decrease was primarily due to a decrease in the average interest rate paid on
savings deposits from 4.49% for the three months ended December 31, 2000 to
4.00% for the three months ended December 31, 2001. This decrease was partially
offset by a $13.8 million or 7.70% increase in the average outstanding balance
of such deposits during the three months ended December 31, 2001 as compared to
the same period of the prior year.

Interest expense on borrowings decreased $325,000 or 50.23% for the quarter
ended December 31, 2001 compared to the quarter ended December 31, 2000 due to a
$18.7 million or 46.41% decrease in the average outstanding balance of FHLB
advances. The Company was able to reduce total borrowings from the FHLB as a
result of increased savings deposits and repayments of loans receivable. The
average rate paid on borrowings decreased from 6.36% for the quarter ended
December 31, 2000 to 5.89% for the quarter ended December 31, 2001.

PROVISION FOR LOAN LOSSES. The Bank provided $4,000 to its allowance for loan
losses for both the quarters ended December 31, 2001 and 2000. Such provisions
were the result of an analysis of the allowance for loan losses in connection
with a review of the Bank's loan portfolio.

At both December 31, 2001 and 2000, the Bank's allowance for loan losses
amounted to $1.8 million or 1.0% and .99%, respectively, of the total loan
portfolio.

A review of the loan portfolio is conducted at least quarterly by management to
determine that the allowance for loan losses is appropriate to absorb estimated
loan

<PAGE>


losses. In determining the appropriate level of the allowance for loan losses,
consideration is given to general economic conditions, diversification of loan
portfolios, historic loss experience, identified credit problems, delinquency
levels and adequacy of collateral. In consideration of the above, management has
assessed the risks in the loan portfolio and has determined that no significant
changes have occurred during the three months ended December 31, 2001. Thus, the
level of the allowance for loan losses is substantially unchanged from June 30,
2001. Although management believes that the current allowance for loan losses is
appropriate, future additions to the reserve may be necessary due to changes in
economic conditions and other factors. In addition, as an integral part of their
periodic examination, certain regulatory agencies review the adequacy of the
Bank's allowance for loan losses and may direct the Bank to make additions to
the allowance based on their judgement. No such additions were required to be
made during the Company's most recent examination.

OTHER INCOME. Total other income decreased by $301,000 or 50.25% to $298,000 for
the quarter ended December 31, 2001 as compared to the same period in 2000. This
was primarily the result of a decrease in other non-operating income of
$325,000. This decrease was partially offset by an increase in service charge
income of $27,000.

OPERATING EXPENSES. Total operating expenses decreased by $13,000 or 1.27%
during the quarter ended December 31, 2001 as compared to the same quarter in
2000. This decrease was primarily due to a $24,000 decrease in other operating
expenses and a $12,000 decrease in compensation and benefits expense. These
decreases were partially offset by a $16,000 increase in premises and occupancy
expense, a $3,000 increase in data processing expense, a $2,000 increase in
professional fees and a $2,000 increase in real estate owned expense.

INCOME TAX EXPENSE. Income tax expense decreased by $161,000 for the quarter
ended December 31, 2001 as compared to the quarter ended December 31, 2000
primarily as a result of lower pre-tax income. Additionally, the effective tax
rate decreased slightly from 32.61% for the 2000 quarter to 31.56% for the 2001
quarter.


          COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 2001 AND 2000


GENERAL. The Company's net income for the six months ended December 31, 2001 was
$1.6 million compared to $1.9 million for the same period in the prior year. The
decrease of $336,000 or 17.69% was primarily the result of a $277,000 decrease
in net interest income and a $267,000 decrease in other income partially offset
by a $164,000 decrease in income taxes and a $44,000 decrease in total operating
expense. These and other significant fluctuations are discussed below.

NET INTEREST INCOME. Net interest income decreased by $277,000 or 6.89% during
the six months ended December 31, 2001 as compared to the same period of the
prior year. The decrease was primarily due to a decrease in the average interest
rate spread from 2.65% for the six months ended December 31, 2000 to 2.41% for
the six months ended December 31, 2001. This decrease was partially offset by an
increase in the average balance of net earning assets of $3.6 million or 11.21%.

Interest income on loans receivable and loans held for sale decreased by
$136,000 or 2.01% during the six months ended December 31, 2001 as compared to
the same period in

<PAGE>


the prior year. This decrease was primarily due to a decrease in the average
yield on loans receivable from 7.76% for the six months ended December 31, 2000
to 7.53% for the six months ended December 31, 2001. This decrease was partially
offset by a $1.8 million or 1.03% increase in the average outstanding balance of
loans receivable compared to the same period in the prior year. The increase in
the average outstanding balance of loans receivable was primarily due to a $2.5
million or 1.86% increase in the average outstanding balance of mortgage loans.
The decrease in the average yield was primarily due to lower market interest
rates.

Interest on mortgage-backed securities held to maturity and mortgage-backed
securities available for sale decreased by $124,000 or 30.62% during the six
months ended December 31, 2001 as compared to the same period in the prior year.
This decrease was primarily due to a $2.0 million or 17.97% decrease in the
average outstanding balance of mortgage-backed securities during the six months
ended December 31, 2001 as compared to the six months ended December 31, 2000.
In addition, the average yield on mortgage-backed securities decreased from
7.20% for the six months ended December 31, 2000 to 6.09% for the six months
ended December 31, 2001. See "Comparison of the Three Months Ended December 31,
2001 and 2000 - Net Interest Income."

Interest income on investments held to maturity and investments available for
sale decreased during the six months ended December 31, 2001 by $672,000 or
32.81% from the comparable period in 2000, primarily due to an $11.6 million or
18.31% decrease in the average outstanding balance of such securities for the
six months ended December 31, 2001 as compared to the six months ended December
31, 2000. In addition, the average yield on investment securities decreased from
6.44% for the six months ended December 31, 2000 to 5.29% for the six months
ended December 31, 2001. The decrease in the average outstanding balance was
primarily due to increased repayments of investments held to maturity due to
declining interest rates. See "Comparison of the Three Months Ended December 31,
2001 and 2000 - Net Interest Income."

Interest income on interest-earning deposits increased during the six months
ended December 31, 2001 by $123,000 or 246.00% from the comparable period in
2000. This increase was primarily due to an increase of $12.2 million or 781.13%
in the average outstanding balance of interest-earning deposits for the six
months ended December 31, 2001 as compared to the same period in the prior year.
This increase was partially offset by a decrease in the average yield on
interest-earning deposits from 6.35% for the six months ended December 31, 2000
to 2.49% for the six months ended December 31, 2001. The increase in the average
balance was primarily due to increases in deposit balances and repayments of
investment and mortgage-backed securities which exceeded the demand for loans.

Interest expense on interest-bearing deposits increased by $36,000 or 0.90% for
the six months ended December 31, 2001 compared to the same period in 2000. The
increase was primarily due to an increase of $13.1 million or 7.28% in the
average outstanding balance of savings deposits during the six months ended
December 31, 2001 as compared to the same period of the prior year. This
increase was partially offset by a decrease in the average interest rate paid on
savings deposits from 4.43% for the six months ended December 31, 2000 to 4.16%
for the six months ended December 31, 2001.

Interest expense on borrowings decreased $568,000 or 46.90% for the six months
ended December 31, 2001 compared to the six months ended December 31, 2000 due
to a $16.2 million or 42.96% decrease in the average outstanding balance of FHLB
advances. The Company was able to reduce total borrowings from the FHLB as a
result of increased

<PAGE>


savings deposits and repayments of loans receivable. The average rate paid on
borrowings decreased from 6.34% for the six months ended December 31, 2000 to
5.90% for the six months ended December 31, 2001.

PROVISION FOR LOAN LOSSES. The Bank provided $9,000 to its allowance for loan
losses for both the six months ended December 31, 2001 and 2000. Such provisions
were the result of an analysis of the allowance for loan losses in connection
with a review of the Bank's loan portfolio. See "Comparison of the Three Months
Ended December 31, 2001 and 2000 - Provision For Loan Losses."

OTHER INCOME. Total other income decreased by $267,000 or 33.17% to $538,000 for
the six months ended December 31, 2001 as compared to the same period in 2000.
This was primarily the result of a decrease in other non-operating income of
$325,000. This decrease was partially offset by an increase in service charge
income of $58,000.

OPERATING EXPENSES. Total operating expenses decreased by $44,000 or 2.15%
during the six months ended December 31, 2001 as compared to the same period in
2000. This decrease was primarily due to a $46,000 decrease in other operating
expenses and a $23,000 decrease in professional fees. These decreases were
partially offset by a $12,000 increase in premises and occupancy expense, a
$7,000 increase in data processing expense and a $8,000 increase in real estate
owned expense.

INCOME TAX EXPENSE. Income tax expense decreased by $164,000 or 18.57% for the
six months ended December 31, 2001 as compared to the six months ended December
31, 2000 primarily as a result of lower pre-tax income. Additionally, the
effective tax rate decreased slightly from 31.74% for the six months ended
December 31, 2000 to 31.51% for the same period in 2001.


FINANCIAL CONDITION AND CAPITAL RESOURCES


Total assets decreased by $2.7 million or 1.06% from June 30, 2001 to December
31, 2001. The largest decrease was a $5.1 million decrease in loans receivable,
net. Additionally, there was a $4.7 million decrease in investment securities
and a $1.7 million decrease in mortgage-backed securities. These decreases were
partially offset by a $9.2 million increase in interest-earning deposits with
other institutions. The largest components of change in liabilities were a $2.2
million decrease in savings deposits and a $1.0 million decrease in advance
deposits by borrowers for taxes and insurance.

Under regulations adopted by the Federal Deposit Insurance Corporation ("FDIC"),
the Bank is required to maintain Tier I (Core) capital equal to at least 4% of
the Bank's adjusted total assets, and Tier II (Supplementary) risk-based capital
equal to at least 8% of the risk-weighted assets. At December 31, 2001, the Bank
exceeded all of these requirements, with Tier I and Tier II ratios of 9.91% and
19.66%, respectively.

<PAGE>

The following table sets forth certain information concerning the Bank's
regulatory capital at December 31, 2001.

                                         Tier I        Tier I       Tier II
                                           Core    Risk-Based    Risk-Based
                                        Capital       Capital       Capital
                                        -------    ----------    ----------
                                           (Dollar amounts in thousands)

Equity capital (1)                      $25,507       $25,507      $25,507
Plus general valuation allowances (2)         -             -        1,743
Plus allowable unrealized gains               -             -          149
                                        -------       -------       ------
   Total regulatory capital              25,507        25,507       27,399
Minimum required capital                 10,292         5,576       11,151
                                        -------       -------       ------
   Excess regulatory capital            $15,215       $19,931      $16,248
                                        =======       =======      =======

Minimum required capital to be well
   capitalized under Prompt Corrective
   Action Provisions                    $12,865       $ 8,361      $13,936
                                        =======       =======      =======

Regulatory capital as a percentage (3)     9.91%        18.30%       19.66%
Minimum required capital percentage        4.00          4.00         8.00
                                           ----         -----         ----
   Excess regulatory capital percentage    5.91%        14.30%       11.66%
                                           ====         =====        =====

Minimum required capital percentage
   to be well capitalized under Prompt
   Corrective Action Provisions            5.00%         6.00%       10.00%
                                           ====         =====        =====

--------------------------------
(1)  Represents equity capital of the Bank as reported to the FDIC and the
     Pennsylvania Department of Banking on Form 041 for the three months ended
     December 31, 2001.
(2)  Limited to 1.25% of risk adjusted assets.
(3)  Tier I capital is calculated as a percentage of adjusted total assets of
     $257,295. Tier I and Tier II risk-based capital are calculated as
     percentage of adjusted risk-weighted assets of $138,398.

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements and related data 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 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 as measured by the consumer price
index.

<PAGE>


ACCOUNTING DEVELOPMENTS

On July 6, 2001, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 102, Selected Loan Loss Allowance Methodology and
Documentation Issues. The guidance contained in the SAB is effective
immediately. This SAB expresses the views of the SEC staff regarding a
registrant's development, documentation, and application of a systematic
methodology for determining the allowance for loan and lease losses, as required
by SEC Financial Reporting Release (FRR) No. 28. The guidance in the SAB focuses
on the documentation the SEC staff normally expects registrants to prepare and
maintain in support of the allowance for loans and lease losses.

Concurrent with the SEC's issuance of SAB No. 102, the federal banking agencies
(the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the
Federal Reserve System (FRB), the Office of the Comptroller of the Currency
(OCC), and the Office of Thrift Supervision (OTS) represented by the Federal
Financial Institutions Examination Council issued an interagency policy
statement entitled Allowance for Loan and Lease Losses Methodologies and
Documentation for Banks and Savings Institutions (Policy Statement). The SAB and
Policy Statement were the result of an agreement between the SEC and the federal
banking agencies in March 1999 to provide guidance on allowance for loan and
lease methodologies and supporting documentation.

The guidance contained in the SAB does not prescribe specific allowance
estimation methodologies registrants should employ in estimating their allowance
for loan and lease losses, but rather emphasizes the need for a systematic
methodology that is properly designed and implemented by registrants.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. SFAS No. 144
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of; however, it retains many of the
fundamental provisions of that statement.

SFAS No. 144 also supersedes the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
However, it retains the requirement in APB No. 30 to report separately
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. By broadening the presentation of
discontinued operations to include more disposal transactions, the FASB has
enhanced management's ability to provide information that helps financial
statement users to assess the effects of a disposal transaction on the ongoing
operations of an entity.

SFAS No. 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years. Early application is encouraged. The
provisions of SFAS No. 144 generally are to be applied prospectively. The
adoption of SFAS No. 144 is not expected to have a material effect on the
financial position, results of operations or liquidity of the Company.

<PAGE>

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


<TABLE>
<CAPTION>

BALANCE SHEET DATA                                            At December 31,
                                                             2001         2000
                                                             ----         ----
                                                     (In thousands except per share data)
                                                     ------------------------------------
                                                                 (Unaudited)

<S>                                                        <C>          <C>
Total assets                                               $255,270     $261,541
Interest-earning deposits with other institutions            17,875        3,546
Investment securities available for sale                     39,517       39,360
Investment securities held to maturity                        9,511       21,933
Mortgage-backed securities available for sale                 8,350       10,812
Mortgage-backed securities held to maturity                      49          283
Loans receivable held for sale                                1,472        1,566
Loans receivable, net                                       171,804      176,480
Savings deposits                                            203,453      192,961
FHLB advances                                                21,623       39,629
Retained earnings                                            27,287       25,353
Stockholders' equity                                         26,677       24,891
Stockholders' equity per share                             $  13.75     $  12.73
</TABLE>


<TABLE>
<CAPTION>

STATISTICAL PROFILE                                        Three months ended             Six months ended
                                                               December 31,                   December 31,
                                                         ----------------------         ---------------------

                                                            2001         2000              2001        2000
                                                            ----         ----              ----        ----
<S>                                                          <C>        <C>               <C>           <C>
Average yield earned on all interest-earning assets          6.55 %     7.42 %            6.75 %        7.41
Average rate paid on all interest-bearing liabilities        4.19       4.84              4.34          4.76
Average interest rate spread                                 2.36       2.58              2.41          2.65
Net yield on average interest-earning assets                 2.92       3.17              3.00          3.22
Average interest-earning assets as a percentage of
      average interest-bearing liabilities                 116.47     114.64            116.56        114.68
Return on average assets (1)                                 1.18       1.63              1.21          1.48
Return on average equity (1)                                11.35      17.41             11.74         15.91
Average equity to average assets                            10.40       9.37             10.34          9.29
</TABLE>


----------------
(1)  Amounts are annualized .

<PAGE>


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company's asset and liability management policies as
well as the potential impact of interest rate changes upon the market value of
the Bank's portfolio equity, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the 2001 Annual Report to
Stockholders. There has been no material change in the Company's asset and
liability position or market value of portfolio equity since June 30, 2001.

FORWARD LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. In
addition, in those and other portions of this document, the words "anticipate,"
"believe," "estimate," "except," "intend," "should" and similar expressions, or
the negative thereof, as they relate to the Company or the Company's management,
are intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future looking events and are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize or should underlying assumptions prove
incorrect, actual results may vary from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.



                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                                     PART II

Item 1. LEGAL PROCEEDINGS

     The Company is not engaged in any legal proceedings at the present time
     other than those generally associated with the normal course of business.
     In the opinion of management and legal counsel, the resolution of these
     claims are not expected to have a material adverse effect on the Company's
     financial position, liquidity or results of operations.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

          None

Item 3. DEFAULTS UPON SENIOR SECURITIES

          None

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None

Item 5. OTHER INFORMATION

          None
<PAGE>


Item 6. EXHIBITS AND REPORTS ON FORM 8-K

          None




                                   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

LAUREL CAPITAL GROUP, INC.



/s/ Edwin R. Maus
-----------------------------------------
Edwin R. Maus
President and Chief Executive Officer



/s/ John A. Howard, Jr.
-----------------------------------------
John A. Howard, Jr.
Senior Vice President and
Chief Financial Officer


Date: February 14, 2002