<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:  March 31, 2002

                                       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 May 1, 2002: 1,926,681 shares







<PAGE>
                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                                      INDEX


                                                                          PAGE
                                                                          ----


Part I - Financial Information
------------------------------

Item 1.  Financial Statements (Unaudited)

         Consolidated Statements of Financial Condition as of
         March 31, 2002 and June 30, 2001.................................1

         Consolidated Statements of Operations for the Three
         and Nine months ended March 31, 2002 and 2001....................2

         Consolidated Statement of Stockholders' Equity for the
         nine months ended March 31, 2002.................................3

         Consolidated Statements of Cash Flows for the nine
         months Ended March 31, 2002 and 2001.............................4

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

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations..........................10-18

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

Part II - Other Information
---------------------------

         Item 1.  Legal Proceedings......................................18

         Item 2.  Changes in Securities and Use of Proceeds..............19

         Item 3.  Defaults Upon Senior Securities........................19

         Item 4.  Submission of Matters to a Vote of
                  Security Holders.......................................19

         Item 5.  Other Information......................................19

         Item 6.  Exhibits and Reports on Form 8-K.......................19


Signatures...............................................................20

<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                 Consolidated Statements of Financial Condition
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                     March 31,         June 30,
                                                                                       2002              2001
----------------------------------------------------------------------------------------------------------------
                                                                                    (unaudited)
<S>                                                                                <C>               <C>
       ASSETS

Cash                                                                               $     1,037       $     1,045
Interest-earning deposits with other institutions                                       16,110             8,669
Investment securities available for sale                                                39,000            39,762
Investment securities held to maturity  (market value of $12,617 and $14,129)           12,488            13,937
Mortgage-backed securities available for sale                                            7,895             9,998
Mortgage-backed securities held to maturity (market value of $46 and $152)                  45               150
Loans receivable, held for sale                                                          1,486             1,701

Loans receivable                                                                       178,728           178,667
Allowance for loan losses                                                               (1,789)           (1,759)
----------------------------------------------------------------------------------------------------------------

       Loans receivable, net                                                           176,939           176,908

Federal Home Loan Bank stock                                                             1,706             1,706
Real estate owned                                                                          185               290
Accrued interest receivable:
       Loans                                                                               919               960
       Interest-earning deposits and investments                                           359               687
       Mortgage-backed securities                                                           39                56

Office properties and equipment, net of accumulated depreciation                         1,207             1,271
Prepaid expenses and sundry assets                                                       1,153               872
----------------------------------------------------------------------------------------------------------------

                      Total Assets                                                 $   260,568       $   258,012
================================================================================================================

       LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

       Savings deposits                                                            $   206,922       $   205,636
       Federal Home Loan Bank advances                                                  21,622            21,626
       Advance deposits by borrowers for taxes and insurance                             2,591             2,850
       Accrued interest payable                                                          1,489               563
       Accrued income taxes                                                                236               130
       Other accrued expenses and sundry liabilities                                     1,108             1,069
----------------------------------------------------------------------------------------------------------------

                      Total Liabilities                                                233,968           231,874
----------------------------------------------------------------------------------------------------------------

Stockholders' Equity

       Common stock, $.01 par value; 5,000,000
          shares authorized; 2,353,429 and 2,348,863 shares
          issued, respectively                                                              24                23
       Additional paid-in capital                                                        5,365             5,322
       Treasury stock, at cost (427,295 and 389,895 shares)                             (6,239)           (5,553)
       Retained earnings                                                                27,688            26,427
       Accumulated other comprehensive income, net of tax                                  200               331
       Stock held in deferred compensation trust                                          (438)             (412)
----------------------------------------------------------------------------------------------------------------

                      Total Stockholders' Equity                                        26,600            26,138
----------------------------------------------------------------------------------------------------------------

                      Total Liabilities and Stockholders' Equity                   $   260,568       $   258,012
================================================================================================================
</TABLE>

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS








                                      -1-
<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations
                                   (Unaudited)

          For the Three and Nine Months Ended March 31, 2002 and 2001
                     (In thousands, except per share data)



<TABLE>
<CAPTION>
                                                               Three months ended        Nine months ended
                                                                    March 31,                March 31,
                                                              --------------------      --------------------
                                                                2002         2001         2002         2001
                                                              -------      -------      -------      -------
<S>                                                           <C>          <C>          <C>          <C>
Interest income:
       Loans                                                  $ 3,217      $ 3,460      $ 9,842      $10,221
       Mortgage-backed securities                                 121          191          402          596
       Investments                                                599          934        1,975        2,982
       Interest-earning deposits                                   51           27          224           77
                                                              -------      -------      -------      -------

              Total interest income                             3,988        4,612       12,443       13,876

Interest expense:
       Savings deposits                                         1,735        2,104        5,792        6,125
       Borrowings                                                 314          445          957        1,656
                                                              -------      -------      -------      -------

              Total interest expense                            2,049        2,549        6,749        7,781
                                                              -------      -------      -------      -------

Net interest income before provision
       for loan losses                                          1,939        2,063        5,694        6,095
Provision for loan losses                                           5            4           14           13
                                                              -------      -------      -------      -------

Net interest income after provision
       for loan losses                                          1,934        2,059        5,680        6,082
                                                              -------      -------      -------      -------

Other income:
       Service charges                                            190          179          624          555
       Net gain on sale of securities available for sale            -            -           55           58
       Gain on the sale of loans held for sale                      4            2           18           10
       Other operating income                                      18           14           53           52
       Other non-operating income                                   -            -            -          325
                                                              -------      -------      -------      -------

              Total other income                                  212          195          750        1,000
                                                              -------      -------      -------      -------

Operating expenses:
       Compensation, payroll taxes and
              fringe benefits                                     521          543        1,532        1,555
       Premises and occupancy costs                               136          150          417          419
       Federal insurance premiums                                   9            9           28           29
       Net loss on real estate owned                               20            -           29            1
       Data processing expense                                     61           54          178          164
       Professional fees                                           35           30          103          121
       Other operating expenses                                   263          235          760          778
                                                              -------      -------      -------      -------

              Total operating expenses                          1,045        1,021        3,047        3,067
                                                              -------      -------      -------      -------

Income before income taxes                                      1,101        1,233        3,383        4,015
                                                              -------      -------      -------      -------


Provision for income taxes:
       Federal                                                    287          313          875        1,052
       State                                                       64           61          195          205
                                                              -------      -------      -------      -------

              Total income taxes                                  351          374        1,070        1,257
                                                              -------      -------      -------      -------


              Net income                                      $   750      $   859      $ 2,313      $ 2,758
                                                              =======      =======      =======      =======

Earnings per share
              Basic                                           $  0.39      $  0.44      $  1.19      $  1.40
                                                              =======      =======      =======      =======

              Diluted                                         $  0.37      $  0.42      $  1.13      $  1.35
                                                              =======      =======      =======      =======

Dividends per share                                           $  0.18      $  0.17      $  0.54      $  0.51
                                                              =======      =======      =======      =======
</TABLE>




      SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                        2
<PAGE>

                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                 Consolidated Statement of Stockholders' Equity
                                   (Unaudited)

                    For the Nine Months Ended March 31, 2002
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                                                Other Stock Held in
                                                  Additional                            Comprehensive      Deferred         Total
                                         Common      Paid-in     Treasury      Retained       Income,  Compensation Stockholders'
                                          Stock      Capital        Stock      Earnings    Net of Tax         Trust        Equity
                                       --------   ----------     --------      -------- ------------- ------------- -------------

<S>                                    <C>          <C>          <C>           <C>           <C>           <C>           <C>
Balance, June 30, 2001                 $     23     $  5,322     ($ 5,553)     $ 26,427      $    331      ($   412)     $ 26,138

Comprehensive income:
       Net income                             -            -            -         2,313             -             -         2,313
       Other comprehensive income,
            net of tax $68                    -            -            -             -          (131)            -          (131)
                                       --------     --------     --------      --------      --------      --------      --------

Total comprehensive income                    -            -            -         2,313          (131)            -         2,182

Stock options exercised
     (4,566 shares)                           1           43            -             -             -             -            44

Dividends on common stock
     at $0.18 per share                       -            -            -        (1,052)            -             -        (1,052)

Treasury stock purchased                      -            -         (686)            -             -             -          (686)

Net purchase of stock in
     deferred compensation trust              -            -            -             -             -           (26)          (26)
                                       --------     --------     --------      --------      --------      --------      --------

Balance, March 31, 2002                $     24     $  5,365     ($ 6,239)     $ 27,688      $    200      ($   438)     $ 26,600
                                       ========     ========     ========      ========      ========      ========      ========
</TABLE>

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



                                       3
<PAGE>



                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                   (Unaudited)

                For the Nine Months Ended March 31, 2002 and 2001
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                     2002        2001
-------------------------------------------------------------------------------------------------------

<S>                                                                                <C>         <C>
Net income:                                                                        $  2,313    $  2,758
      Adjustments to reconcile net income to net
         cash provided by operating activities:
                Depreciation                                                            143         146
                Provision for loan losses                                                14          13
                Net loss on sale of real estate owned                                    20           1
                Net gain on sale of investment securities available for sale            (55)        (58)
                Gain on the sale of loans held for sale                                 (18)        (10)
                Amortization of deferred loan fees                                        -         (84)
                Origination of loans held for sale                                     (721)       (806)
                Proceeds from sale of loans held for sale                               953         536
                Decrease in accrued interest receivable                                 386         268
                Increase in accrued interest payable                                    926       1,264
                Other - net                                                            (128)       (207)
-------------------------------------------------------------------------------------------------------

                              Net cash provided by operating activities               3,833       3,821
-------------------------------------------------------------------------------------------------------

Investing activities:
      Purchase of investment securities held to maturity                             (8,010)          -
      Purchase of investment securities available for sale                           (1,772)       (953)
      Purchase of mortgage-backed securities available for sale                      (1,027)          -
      Purchase of FHLB stock                                                              -        (475)
      Proceeds from sale of investment securities available for sale                    358         924
      Principal repayments and maturities of securities available for sale            5,229         985
      Principal repayments and maturities of securities held to maturity              9,550       7,664
      Increase in loans receivable                                                     (255)     (4,386)
      Proceeds from sale of real estate owned                                           278         218
      Net additions to office properties and equipment                                  (79)        (50)
-------------------------------------------------------------------------------------------------------

                              Net cash provided by investing activities               4,272       3,927
-------------------------------------------------------------------------------------------------------

Financing activities:
      Net increase (decrease) in demand and club accounts                             4,959      (1,240)
      Net (decrease) increase in time deposit accounts                               (3,673)      8,147
      Net decrease in FHLB advances                                                      (4)    (10,797)
      Decrease in advance deposits by borrowers for taxes and insurance                (259)       (725)
      Stock options exercised                                                            43          76
      Acquisition of treasury stock                                                    (686)       (842)
      Dividends paid                                                                 (1,052)       (999)
-------------------------------------------------------------------------------------------------------

                              Net cash used by financing activities                    (672)     (6,380)
-------------------------------------------------------------------------------------------------------

Net change in cash and cash equivalents                                               7,433       1,368
Cash and cash equivalents at beginning of period                                      9,714       4,918
-------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                         $ 17,147    $  6,286
=======================================================================================================

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

      Cash paid during the period for:
                Interest on savings deposits                                       $  4,886    $  4,861
                Interest on FHLB advances                                               954       1,583
                Income taxes                                                          1,132       1,491
      Transfer of loans to real estate owned                                            210         203

      Cash paid during the period for interest includes interest credited on
      deposits of $4,092 and $4,109 for the nine months ended March 31, 2002 and
      2001, respectively
=======================================================================================================
</TABLE>


SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





                                       4
<PAGE>


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                        MARCH 31, 2002 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 nine months ended March 31, 2002 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        Nine months ended
                                                March 31,                 March 31,
                                            2002         2001         2002         2001
                                         ----------   ----------   ----------   ----------
<S>                                      <C>          <C>          <C>          <C>
Basic earnings per share:
   Net income                            $      750   $      859   $    2,313   $    2,758
   Weighted average shares outstanding    1,934,369    1,955,568    1,945,130    1,965,188
   Earnings per share                    $     0.39   $     0.44   $     1.19   $     1.40

Diluted earnings per share:
   Net income                            $      750   $      859   $    2,313   $    2,758
   Weighted average shares outstanding    1,934,369    1,955,568    1,945,130    1,965,188
   Dilutive effect of employee
      stock options                         106,423       76,946       95,105       71,296
                                         ----------   ----------   ----------   ----------

   Diluted weighted shares outstanding    2,040,792    2,032,514    2,040,235    2,036,484
   Earnings per share                    $     0.37   $     0.42   $     1.13   $     1.35
</TABLE>

Options to purchase 8,430 shares of common stock at $18.00 and 16,860 shares of
common stock at prices ranging from $18.00 to $19.50 were outstanding during the



                                       5
<PAGE>

three and nine months ended March 31, 2002, respectively, 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 nine months ended March 31, 2001, options to purchase 68,360
and 72,596 shares of common stock at prices ranging from $14.69 to $19.50 per
share were 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 nine
months ended March 31, 2002 and 2001, the Company's total comprehensive income
was $2,182 and $4,190, respectively. Total comprehensive income is comprised of
net income of $2,313 and $2,758, respectively, and other comprehensive
(loss)income of ($131) and $1,432, 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


                                       6
<PAGE>

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 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.


                                       7
<PAGE>

(3) INVESTMENT AND MORTGAGE-BACKED SECURITIES

        Investment 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 MARCH 31, 2002:
               Municipal obligations                                              $18,712         $213         $320         18,605
               FNMA preferred stock                                                   250            2            -            252
               FHLMC preferred stock                                                  750           15            -            765
               FNMA common stock                                                      631          168            -            799
               FHLMC  common stock                                                    514          120            -            634
               SLMA Student Loan Trust                                                274           14            -            288
               Shay Financial Services ARM Fund                                    17,707            -           50         17,657
                                                                              -----------------------------------------------------

                                                                                   38,838          532          370         39,000

               Mortgage-backed securities available for sale                        7,754          144            3          7,895
                                                                              -----------------------------------------------------

                            Total                                                 $46,592         $676         $370        $46,895
                                                                              =====================================================
</TABLE>

<TABLE>
<CAPTION>

        At March 31, 2002, 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                                                          $460           $479
               Due after ten years                                                                           18,526         18,414
                                                                                                       ----------------------------

                            Total                                                                           $18,986        $18,893
                                                                                                       ============================
</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 nine months
               ended March 31, 2002 and 2001, respectively. Proceeds from the
               sale of investments available for sale during the nine months
               ended March 31, 2002 and 2001 were $358 and $924, respectively.


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

<TABLE>
<CAPTION>
                                                                                Amortized  Gross Unrealized                   Fair
                                                                                     Cost        Gains       Losses          Value
                                                                              -----------------------------------------------------

<S>                                                                               <C>             <C>           <C>        <C>
        AT MARCH 31, 2002
               Corporate and Agency bonds                                         $12,488         $140          $11        $12,617
               Mortgage-backed securities                                              45            1            -             46
                                                                              -----------------------------------------------------

                            Total                                                 $12,533         $141          $11        $12,663
                                                                              =====================================================
</TABLE>


<TABLE>
<CAPTION>
        At March 31, 2002, 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                                                         $6,491         $6,487
               Due after five years through ten years                                                         3,000          3,076
               Due after ten years                                                                            2,997          3,054
                                                                                                       ----------------------------

                            Total                                                                           $12,488        $12,617
                                                                                                       ============================
</TABLE>

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


                                       8
<PAGE>




(4)      LOANS RECEIVABLE

              Loans receivable are comprised of the following:

<TABLE>
<CAPTION>
                                                                                              March 31,                 June 30,
                                                                                                   2002                     2001
         ------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>                      <C>
              First mortgage loans:
                    1 to 4 family dwellings                                                    $129,977                 $130,010
                    Multi-family dwellings                                                        3,059                    2,892
                    Commercial                                                                    4,661                    5,051
                    Guaranteed or insured                                                            23                       29
                    Construction and development loans                                           12,869                   10,763
         ------------------------------------------------------------------------------------------------------------------------

                                                                                                150,589                  148,745

              Commercial loans                                                                    1,662                    1,707
              Consumer loans:
                    Loans secured by savings accounts                                               195                      251
                    Installment loans                                                            32,574                   34,190
         ------------------------------------------------------------------------------------------------------------------------

                                                                                                 34,431                   36,148
         ------------------------------------------------------------------------------------------------------------------------

              Loans receivable, net of unearned discounts                                       185,020                  184,893
              Less: Allowance for loan losses                                                    (1,789)                  (1,759)
                        Loans in process                                                         (6,336)                  (6,160)
                        Net deferred loan origination costs (fees collected)                         44                      (66)
         ------------------------------------------------------------------------------------------------------------------------

              Loans receivable, net                                                            $176,939                 $176,908
         ========================================================================================================================


         Changes in the allowance for loan losses for the nine months ended
         March 31, 2002 and 2001 are as follows:

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

         Balance at beginning of the fiscal year                                                 $1,759                   $1,798
         Provision for losses                                                                        14                        9
         Charge-offs                                                                                (20)                     (54)
         Recoveries                                                                                  36                        6
         ------------------------------------------------------------------------------------------------------------------------

         Balance at March 31, 2002 and 2001                                                      $1,789                   $1,759
         ========================================================================================================================
</TABLE>



         At March 31, 2002, the recorded investment in loans that are considered
         to be impaired under SFAS 114 was $168. At March 31, 2002, the $168 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 nine months ended March 31, 2002 was approximately $190. For
         the nine months ended March 31, 2002, the Company recognized interest
         income on those impaired loans of $1 which was recognized using the
         cash basis method of income recognition.

<TABLE>
<CAPTION>
                                                                                                     March 31,
                                                                                           2002                   2001
                                                                                       ----------------------------------

<S>                                                                                       <C>                      <C>
         Non-accrual loans                                                               $ 193                    $ 674
         Non-accrual loans as a percent of total loans, net                               0.11%                    0.39%
</TABLE>



         --------------------------------------------

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





                                       9
<PAGE>

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

<TABLE>
<CAPTION>
BALANCE SHEET DATA                                                        At March 31, 2002
                                                                      2002                  2001
                                                                      ----                  ----
                                                           (In thousands except per share data)
                                                           ------------------------------------
                                                                          (Unaudited)


<S>                                                               <C>                   <C>
Total assets                                                      $260,568              $253,032
Interest-earning deposits with other institutions                   16,110                 5,484
Investment securities available for sale                            39,000                40,063
Investment securities held to maturity                              12,488                14,435
Mortgage-backed securities available for sale                        7,895                10,760
Mortgage-backed securities held to maturity                             45                   233
Loans receivable held for sale                                       1,486                 1,794
Loans receivable, net                                              176,939               173,759
Savings deposits                                                   206,922               199,570
FHLB advances                                                       21,622                22,627
Retained earnings                                                   27,688                25,879
Stockholders' equity                                                26,600                25,665
Stockholders' equity per share                                      $13.81                $13.12
</TABLE>


<TABLE>
<CAPTION>
STATISTICAL PROFILE                                                       Three months ended                Nine months ended
                                                                               March 31,                        March 31,
                                                          ----------------------------------------   ------------------------------

                                                                      2002                  2001          2002              2001
                                                                      ----                  ----          ----              ----


<S>                                                                 <C>                   <C>           <C>               <C>
Average yield earned on all interest-earning assets                   6.39%                 7.42%         6.62%             7.42%
Average rate paid on all interest-bearing liabilities                 3.84                  4.77          4.18              4.76
Average interest rate spread                                          2.55                  2.65          2.44              2.66
Net yield on average interest-earning assets                          3.09                  3.30          3.03              3.25
Average interest-earning assets as a percentage of
      average interest-bearing liabilities                          116.20                115.39        116.44            114.91
Return on average assets (1)                                          1.16                  1.34          1.20              1.43
Return on average equity  (1)                                        11.20                 13.59         11.56             15.11
Average equity to average assets                                     10.37                  9.85         10.34              9.49
</TABLE>


-------------------------------

(1) Amounts are annualized






                                       10
<PAGE>



          COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001


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 March 31, 2002 was
$750,000 compared to $859,000 for the same period in the prior year. The
decrease of $109,000 or 12.69% was primarily the result of a $124,000 decrease
in net interest income and a $24,000 increase in total operating expense
partially offset by a $23,000 decrease in income taxes and a $17,000 increase in
total operating income. 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 $124,000 or 6.01% during the three months ended
March 31, 2002 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 quarter ended March 31, 2001 to 2.55% for the quarter ended March 31,
2002. This decrease was partially offset by an increase in the average balance
of net earning assets of $1.3 million or 0.51%.

Interest income on loans receivable and loans held for sale decreased by
$243,000 or 7.02% during the three months ended March 31, 2002 as compared to
the same period in the prior year. This decrease was primarily due to a decrease
in the average yield on loans receivable from 7.79% to 7.29% for the three
months ended March 31, 2001 and 2002, respectively. Additionally, the average
outstanding balance of loans receivable decreased $1.2 million or 0.68% compared
to the same period in the prior year. The decrease in the average outstanding
balance of loans receivable was due to a $1.5 million or 4.11% decrease in the
average outstanding balance of consumer and other loans which was partially
offset by a $304,000 or 0.22% increase in the average outstanding balance
mortgage 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 36.65% during the quarter
ended March 31, 2002 as compared to the March 31, 2001 quarter. This decrease
was primarily due to a $2.6 million or 23.62% decrease in the average
outstanding balance of mortgage-backed securities during the quarter ended March
31, 2002 as compared to the March 31, 2001 quarter. In addition, the average
yield on mortgage-backed securities decreased from 7.01% for the quarter ended
March 31, 2001 to 5.81% for the quarter ended March 31, 2002. This decrease was
primarily due to a decline in market interest rates which resulted in increased
repayments and downward re-pricing of adjustable rate securities. At March 31,
2002, the Bank's portfolio of mortgage-backed securities available for sale had
net unrealized gains of $141,000. This portfolio consists of fixed and
adjustable rate securities with an average yield of 6.06% at March 31, 2002.
Rising interest rates would decrease the unrealized gains in this portfolio if
the fixed rate securities are not sold. The mortgage-backed


                                       11
<PAGE>

securities held to maturity portfolio consists of one adjustable-rate
collateralized mortgage obligation (CMO) with a yield of 2.67% at March 31,
2002. At March 31, 2002, the Bank's portfolio of mortgage-backed securities held
to maturity had an amortized cost and fair market value of $45,000 and $46,000,
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 March 31, 2002 by $335,000 or
35.87% from the comparable period in 2001, primarily due to a decrease in the
average yield on investment securities from 6.38% for the quarter ended March
31, 2001 to 4.57% for the quarter ended March 31, 2002. In addition, the average
outstanding balance decreased $6.3 million or 10.59% for the quarter ended March
31, 2002 as compared to the same period in the prior fiscal year. The decrease
in the average outstanding balance was primarily due to increased repayments of
investments held to maturity due to declining interest rates. At March 31, 2002,
the Bank's portfolio of investment securities available for sale and investment
securities held to maturity had net unrealized gains of $162,000 and $129,000,
respectively. See Note 3 of "Notes to Unaudited Consolidated Financial
Statements."

Interest income on interest-earning deposits increased during the three months
ended March 31, 2002 by $24,000 or 88.89% from the comparable period in 2001.
This increase was primarily due to an increase of $11.3 million or 568.15% in
the average outstanding balance of interest-earning deposits for the quarter
ended March 31, 2002 as compared to the March 31, 2001 quarter. This increase
was, to a large extent, offset by a decrease in the average yield on
interest-earning deposits from 5.48% for the quarter ended March 31, 2001 to
1.55% for the quarter ended March 31, 2002. The increase in the average balance
was primarily due to increases in deposit balances and the investment of excess
funds resulting from repayments of loans and investment and mortgage-backed
securities.

Interest expense on interest-bearing deposits decreased by $369,000 or 17.54%
for the quarter ended March 31, 2002, compared to the same period in 2001. The
decrease was primarily due to a decrease in the average interest rate paid on
savings deposits from 4.58% for the three months ended March 31, 2001 to 3.62%
for the three months ended March 31, 2002. This decrease was partially offset by
a $8.2 million or 4.40% increase in the average outstanding balance of such
deposits during the three months ended March 31, 2002 as compared to the same
period of the prior year.

Interest expense on borrowings decreased $131,000 or 29.44% for the quarter
ended March 31, 2002 compared to the quarter ended March 31, 2001 due to a $8.6
million or 28.52% 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 5.97% for the quarter ended March 31, 2001 to
5.89% for the quarter ended March 31, 2002.

PROVISION FOR LOAN LOSSES. The Bank provided $5,000 to its allowance for loan
losses for the quarter ended March 31, 2002 and $4,000 to its allowance for loan
losses for the quarter ended March 31, 2001. 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.


                                       12
<PAGE>

At both March 31, 2002 and 2001, the Bank's allowance for loan losses amounted
to $1.8 million or 1.00% 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 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 nine months ended March 31,
2002. 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 increased by $17,000 or 8.72% to $212,000 for
the quarter ended March 31, 2002 as compared to the same period in 2001. This
was the result of an increase in service charge income of $11,000, as well as a
$4,000 increase in other operating income and a $2,000 increase in the gain on
the sale of loans held for sale.

OPERATING EXPENSES. Total operating expenses increased by $24,000 or 2.35%
during the quarter ended March 31, 2002 as compared to the same quarter in 2001.
This increase was primarily due to a $28,000 increase in other operating
expenses and a $20,000 increase in net loss on real estate owned. Additionally,
data processing expense increased $7,000 and professional fees increased $5,000.
These increases were partially offset by a $22,000 decrease in compensation and
benefits expense and a $14,000 decrease in premises and occupancy expense.

INCOME TAX EXPENSE. Income tax expense decreased by $23,000 for the quarter
ended March 31, 2002 as compared to the quarter ended March 31, 2001 primarily
as a result of lower pre-tax income. Additionally, the effective tax rate
decreased slightly from 31.88% for the 2001 quarter to 30.33% for the 2002
quarter.



                                       13
<PAGE>

           COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2002 AND 2001


GENERAL. The Company's net income for the nine months ended March 31, 2002 was
$2.3 million compared to $2.8 million for the same period in the prior year. The
decrease of $445,000 or 16.13% was primarily the result of a $401,000 decrease
in net interest income and a $250,000 decrease in other income partially offset
by a $187,000 decrease in income taxes and a $20,000 decrease in total operating
expense. These and other significant fluctuations are discussed below.

NET INTEREST INCOME. Net interest income decreased by $401,000 or 6.58% during
the nine months ended March 31, 2002 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 2.66% for the nine months ended March 31, 2001 to 2.44% for the nine
months ended March 31, 2002. This decrease was partially offset by an increase
in the average balance of net earning assets of $702,000 or 0.28%.

Interest income on loans receivable and loans held for sale decreased by
$379,000 or 3.71% during the nine months ended March 31, 2002 as compared to the
same period in the prior year. This decrease was primarily due to a decrease in
the average yield on loans receivable from 7.77% for the nine months ended March
31, 2001 to 7.45% for the nine months ended March 31, 2002. This decrease was
partially offset by a $790,000 or 0.45% 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 $1.8 million or 1.30% increase in the average outstanding balance of
mortgage loans which was partially offset by a $1.0 million or 2.73% decrease in
the average outstanding balance of consumer 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 $194,000 or 32.55% during the nine
months ended March 31, 2002 as compared to the same period in the prior year.
This decrease was primarily due to a $2.2 million or 19.81% decrease in the
average outstanding balance of mortgage-backed securities during the nine months
ended March 31, 2002 as compared to the nine months ended March 31, 2001. In
addition, the average yield on mortgage-backed securities decreased from 7.14%
for the nine months ended March 31, 2001 to 6.01% for the nine months ended
March 31, 2002. See "Comparison of the Three Months Ended March 31, 2002 and
2001 - Net Interest Income."

Interest income on investments held to maturity and investments available for
sale decreased during the nine months ended March 31, 2002 by $1.0 million or
33.77% from the comparable period in 2001. This decrease was primarily due to a
decrease in the average yield on investment securities from 6.42% for the nine
months ended March 31, 2001 to 5.05% for the nine months ended March 31, 2002.
Additionally, the average outstanding balance of such securities decreased $9.8
million or 15.81% for the nine months ended March 31, 2002 as compared to the
same period in the prior year. 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 March 31,
2002 and 2001 - Net Interest Income."


                                       14
<PAGE>

Interest income on interest-earning deposits increased during the nine months
ended March 31, 2002 by $147,000 or 190.91% from the comparable period in 2001.
This increase was primarily due to an increase of $11.9 million or 697.71% in
the average outstanding balance of interest-earning deposits for the nine months
ended March 31, 2002 as compared to the same period in the prior year. This
increase was, to a large extent, offset by a decrease in the average yield on
interest-earning deposits from 6.01% for the nine months ended March 31, 2001 to
2.19% for the nine months ended March 31, 2002. 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 $333,000 or 5.44% for
the nine months ended March 31, 2002 compared to the same period in 2001. The
decrease was primarily due to a decrease in the average interest rate paid on
savings deposits from 4.48% for the nine months ended March 31, 2001 to 3.98%
for the nine months ended March 31, 2002. This decrease was partially offset by
an increase of $11.5 million or 6.30% in the average outstanding balance of
savings deposits during the nine months ended March 31, 2002 as compared to the
same period of the prior year.

Interest expense on borrowings decreased $699,000 or 42.21% for the nine months
ended March 31, 2002 compared to the nine months ended March 31, 2001 due to a
$13.7 million or 38.84% 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 6.24% for the nine months ended
March 31, 2001 to 5.90% for the nine months ended March 31, 2002.

PROVISION FOR LOAN LOSSES. The Bank provided $14,000 to its allowance for loan
losses for the nine months ended March 31, 2002 and $13,000 for the nine months
ended March 31, 2001. 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 March 31, 2002 and 2001 -
Provision For Loan Losses."

OTHER INCOME. Total other income decreased by $250,000 or 25.00% to $750,000 for
the nine months ended March 31, 2002 as compared to the same period in 2001.
This was primarily the result of a decrease in other non-operating income of
$325,000 related to the settlement of litigation and an insurance claim in the
prior period. This decrease was partially offset by an increase in service
charge income of $69,000.

OPERATING EXPENSES. Total operating expenses decreased by $20,000 or 0.65%
during the nine months ended March 31, 2002 as compared to the same period in
2001. This decrease was primarily due to a $23,000 decrease in compensation and
benefits expense, an $18,000 decrease in other operating expenses and a $18,000
decrease in professional fees. These decreases were partially offset by a
$28,000 increase in net loss on real estate owned and a $14,000 increase in data
processing expense.

INCOME TAX EXPENSE. Income tax expense decreased by $187,000 or 14.88% for the
nine months ended March 31, 2002 as compared to the nine months ended March 31,
2001 primarily as a result of lower pre-tax income. Additionally, the effective
tax rate decreased slightly from 31.63% for the nine months ended March 31, 2001
to 31.31% for the same period in 2002.


                                       15
<PAGE>

FINANCIAL CONDITION AND CAPITAL RESOURCES


Total assets increased by $2.6 million or 0.99% from June 30, 2001 to March 31,
2002. The largest increase was a $7.4 million increase in interest earning
deposits with other institutions. Additionally, there was a $281,000 increase in
prepaid expenses and sundry assets and a $31,000 increase in loans receivable,
net. These increases were partially offset by a $2.1 million decrease in
mortgage-backed securities available for sale and a $1.5 million decrease in
investment securities held to maturity. The largest components of change in
liabilities were a $1.3 million increase in savings deposits and a $926,000
increase in accrued interest payable on savings deposits.

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 March 31, 2002, the Bank
exceeded all of these requirements, with Tier I and Tier II ratios of 10.01% and
19.28%, respectively.

The following table sets forth certain information concerning the Bank's
regulatory capital at March 31, 2002.


<TABLE>
<CAPTION>
                                              Tier I        Tier I        Tier II
                                                Core    Risk-Based     Risk-Based
                                             Capital       Capital        Capital
                                             -------       -------        ------
                                                (Dollar amounts in thousands)

<S>                                          <C>           <C>           <C>
Equity capital(1)                            $25,871       $25,871       $25,871
Plus general valuation allowances(2)               -             -         1,789
Plus allowable unrealized gains                    -             -           114
                                             -------       -------        ------
   Total regulatory capital                   25,871        25,871        27,774
Minimum required capital                      10,334         5,763        11,526
                                             -------       -------        ------
   Excess regulatory capital                 $15,537       $20,108       $16,248
                                             =======       =======       =======

Minimum required capital to be well
   capitalized under Prompt Corrective
   Action Provisions                         $12,917       $ 8,645       $14,408
                                             =======       =======       =======

Regulatory capital as a percentage(3)          10.01%        17.96%        19.28%
Minimum required capital percentage             4.00          4.00          8.00
                                                ----         -----          ----
   Excess regulatory capital percentage         6.01%        13.96%        11.28%
                                                ====         =====         =====

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


---------------------------------------
(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 March 31, 2002.
(2)      Limited to 1.25% of risk adjusted assets.
(3)      Tier I capital is calculated as a percentage of adjusted total assets
         of $258,344. Tier I and Tier II risk-based capital are calculated as
         percentage of adjusted risk-weighted assets of $144,077.



                                       16
<PAGE>

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.

CRITICAL ACCOUNTING POLICIES

Certain critical accounting policies affect the more significant judgments and
estimates used in the preparation of the consolidated financial statements. The
Company's single most critical accounting policy relates to the Company's
allowance for loan loss, which reflects the estimated losses resulting from the
inability of the Company's borrowers to make required loan payments. If the
financial condition of the Company's borrowers were to deteriorate, resulting in
an impairment of their ability to make payments, the Company's estimates would
be updated, and additional provisions for loan losses may be required. Further
discussion of the estimates used in determining the allowance for loan loss is
contained in the discussion on "Provision for Loan Losses" on pages 12 and 15
herein.

ACCOUNTING DEVELOPMENTS

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


                                       17
<PAGE>

SFAS No. 144 is not expected to have a material effect on the financial
position, results of operations or liquidity of the Company.

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. Factors that could have a material
adverse effect on our operations and future prospects include, but are not
limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Board of Governors
of the Federal Reserve System, the quality or composition of the loan or
investment portfolios, demand for loan products, deposit flows, competition,
demand for financial services in our market area and accounting principles,
policies and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements contained herein, and you should not place
undue reliance on such statements, which reflect our position as of the date of
this report.



                    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.


                                       18
<PAGE>


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

         On May 8, 2002 the Board of Directors of Laurel Capital Group, Inc.
         passed a resolution to change the date of the annual stockholders
         meeting. Beginning in 2002, the annual stockholders meeting will be
         held on the 4th Thursday of October.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

              (a)  Exhibits

                   Exhibit 3.2 - Bylaws

              (b)  Reports on Form 8-K

                   None










                                       19
<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

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: May 14, 2002









                                       20