<PAGE>   1


                       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, 1999

                                       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: 0-23101

                           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, 2000: 2,133,602 shares

<PAGE>   2


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                                      INDEX


<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>               <C>                                                                          <C>
Part I - Financial Information

Item 1.           Financial Statements (Unaudited)

                  Consolidated Statements of Financial Condition as of                   .....      1
                  December 31, 1999 and June 30, 1999

                  Consolidated Statements of Operations for the Three                    .....      2
                  and Six Months Ended December 31, 1999 and 1998

                  Consolidated Statement of Stockholders' Equity for the                 .....      3
                  Six Months Ended December 31, 1999

                  Consolidated Statements of Cash Flows for the Six                      .....      4
                  Months Ended December 31, 1999 and 1998

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

Item 2.           Management's Discussion and Analysis of Financial                      .....  10-17
                  Condition and Results of Operations

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                     .....     18

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

                  Item 4.  Submission of Matters to a Vote of Security Holders           .....  18-19

                  Item 5.  Other Information                                             .....     19

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


Signatures                                                                               .....     20
</TABLE>

<PAGE>   3


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                 Consolidated Statements of Financial Condition
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                   December 31,           June 30,
                                                                                           1999               1999
-------------------------------------------------------------------------------------------------------------------
                                                                                    (unaudited)
<S>                                                                                 <C>                   <C>
     ASSETS

Cash                                                                                   $  1,796           $    690
Money market investments                                                                     --              3,711
Interest-earning deposits with other institutions                                         5,234              7,710
Investment securities available for sale                                                 37,751             35,549
Investment securities held to maturity  (market value of $18,185 and $12,224)            18,985             12,439
Mortgage-backed securities available for sale                                            11,488             11,868
Mortgage-backed securities held to maturity (market value of $500 and $1,074)               501              1,072
Loans receivable, held for sale                                                           1,304              1,562

Loans receivable, net of unearned discounts of $1 and $2                                155,666            153,256
Allowance for loan losses                                                                (1,856)            (1,866)
-------------------------------------------------------------------------------------------------------------------

     Loans receivable, net                                                              153,810            151,390

Federal Home Loan Bank Stock                                                              1,281              1,277
Real estate owned                                                                           523                377
Accrued interest receivable:
     Loans                                                                                  796                846
     Interest-earning deposits and investments                                              635                492
     Mortgage-backed securities                                                              68                 71

Office properties and equipment, net of accumulated depreciation                          1,437              1,458
Prepaid expenses and sundry assets                                                        1,242                962
-------------------------------------------------------------------------------------------------------------------

               Total Assets                                                            $236,851           $231,474
===================================================================================================================


     LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

     Savings deposits                                                                  $186,829           $182,118
     FHLB Advances                                                                       22,427             20,029
     Advance deposits by borrowers for taxes and insurance                                2,066              3,020
     Accrued interest payable                                                               514                500
     Accrued income taxes                                                                   116                294
     Other accrued expenses and sundry liabilities                                          863                983
-------------------------------------------------------------------------------------------------------------------

               Total Liabilities                                                        212,815            206,944
-------------------------------------------------------------------------------------------------------------------

Stockholders' Equity

     Common stock,  $.01 par value; 5,000,000
        shares authorized;  2,328,822 and 2,324,298 shares
        issued, respectively                                                                 23                 23
     Additional paid-in capital                                                           5,220              5,197
     Treasury stock, at cost (192,720 and 152,120 shares)                                (2,881)            (2,270)
     Retained earnings                                                                   23,001             22,070
     Accumulated other comprehensive loss, net of tax                                      (949)              (190)
     Stock held in deferred compensation trust                                             (378)              (300)
-------------------------------------------------------------------------------------------------------------------

               Total Stockholders' Equity                                                24,036             24,530
-------------------------------------------------------------------------------------------------------------------

               Total Liabilities and Stockholders' Equity                              $236,851           $231,474
===================================================================================================================
</TABLE>

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





                                      -1-


<PAGE>   4


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations
                                   (Unaudited)

         For the Three and Six Months Ended December 31, 1999 and 1998
                     (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                                   Three months ended        Six months ended
                                                                       December 31,            December 31,
                                                                  -------------------       ------------------
                                                                   1999         1998         1999         1998
                                                                  ------       ------       ------       ------
     <S>                                                          <C>          <C>          <C>          <C>
     Interest Income:
         Loans                                                    $2,928       $2,960       $5,836       $5,962
         Mortgage-backed securities                                  206          200          424          410
         Investments                                                 899          613        1,767        1,273
         Interest-earning deposits                                    20          111           45          212
                                                                  ------       ------       ------       ------

              Total interest income                                4,053        3,884        8,072        7,857

     Interest expense:
         Savings deposits                                          1,794        1,784        3,561        3,592
         Borrowings                                                  288          238          560          472
                                                                  ------       ------       ------       ------

              Total interest expense                               2,082        2,022        4,121        4,064
                                                                  ------       ------       ------       ------

     Net interest income before provision
         for loan losses                                           1,971        1,862        3,951        3,793
     Provision for loan losses                                         4            5            9            9
                                                                  ------       ------       ------       ------

     Net interest income after provision
         for loan losses                                           1,967        1,857        3,942        3,784
                                                                  ------       ------       ------       ------

     Other income:
         Service charges                                             137          150          272          303
         Net gain on sale of investments and
              mortgage-backed securities available for sale          159           --          225           --
         Gain on the sale of loans held for sale                       4            6           11           14
         Other operating income                                       60           47          121           99
                                                                  ------       ------       ------       ------

              Total other income                                     201          362          404          641
                                                                  ------       ------       ------       ------

     Operating expenses:
         Compensation, payroll taxes and
              fringe benefits                                        470          433          934          902
         Premises and occupancy costs                                137          111          288          233
         Federal insurance premiums                                   27           26           53           52
         Net loss on real estate owned                                 0           12           40           16
         Data processing expense                                      52           59          104          109
         Professional fees                                            75           49          115          133
         Other operating expenses                                    237          263          464          472
                                                                  ------       ------       ------       ------

              Total operating expenses                               998          953        1,998        1,917
                                                                  ------       ------       ------       ------

     Income before income taxes                                    1,170        1,266        2,348        2,508
                                                                  ------       ------       ------       ------


     Provision for income taxes:
         Federal                                                     309          355          613          707
         State                                                        56           86          115          171
                                                                  ------       ------       ------       ------

              Total income taxes                                     365          441          728          878
                                                                  ------       ------       ------       ------


              Net income                                          $  805       $  825       $1,620       $1,630
                                                                  ======       ======       ======       ======

     Earnings per share
              Basic                                               $ 0.38       $ 0.38       $ 0.75       $ 0.74
                                                                  ======       ======       ======       ======

              Diluted                                             $ 0.36       $ 0.36       $ 0.73       $ 0.71
                                                                  ======       ======       ======       ======

     Dividends per share                                          $ 0.16       $ 0.15       $ 0.32       $ 0.30
                                                                  ======       ======       ======       ======
</TABLE>

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




                                      -2-
<PAGE>   5


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                 Consolidated Statement of Stockholders' Equity
                                   (Unaudited)

                   For the Six Months Ended December 31, 1999
                                 (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, 1999               $23        $5,197      $(2,270)     $22,070          $(190)            $(300)         $24,530

Comprehensive income:
       Net income                     --            --           --        1,620             --                --            1,620
       Other comprehensive loss,
            net of tax $(391)         --            --           --           --           (759)               --             (759)
                                     ---        ------      -------      -------          -----             -----          -------

Total comprehensive income            --            --           --        1,620           (759)               --              861

Stock options exercised
     (4,524 shares)                   --            23           --           --             --                --               23

Dividends on common stock
     at $0.32 per share               --            --           --         (689)            --                --             (689)

Treasury stock purchased              --            --         (611)          --             --                --             (611)

Net purchase of stock in
     deferred compensation trust      --            --           --           --             --               (78)             (78)
                                     ---        ------      -------      -------          -----             -----          -------

Balance, December 31, 1999           $23        $5,220      $(2,881)     $23,001          $(949)            $(378)         $24,036
                                     ===        ======      =======      =======          =====             =====          =======
</TABLE>

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




                                      -3-
<PAGE>   6


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                   (Unaudited)

               For the Six Months Ended December 31, 1999 and 1998
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                             1999              1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                <C>
Net income:                                                                              $  1,620           $ 1,630
      Adjustments to reconcile net income to net
         cash provided by operating activities:
           Depreciation                                                                        97                68
           Provision for loan losses                                                            9                 9
           Net loss on sale of real estate owned                                               29                15
           Net gain on sale of investment securities available for sale                        --              (225)
           Gain on the sale of loans held for sale                                            (11)              (14)
           Amortization of deferred loan fees                                                 (59)              (79)
           Origination of loans held for sale                                                (400)             (550)
           Proceeds from sale of loans held for sale                                          669               693
           (Increase) decrease in accrued interest receivable                                 (90)               46
           Increase in accrued interest payable                                                14               111
           Other - net                                                                       (223)             (255)
--------------------------------------------------------------------------------------------------------------------

                     Net cash provided by operating activities                              1,655             1,449
--------------------------------------------------------------------------------------------------------------------

Investing activities:
      Purchase of investment securities held to maturity                                   (9,537)           (5,451)
      Purchase of investment securities available for sale                                 (3,276)           (8,386)
      Purchase of mortgage-backed securities held to maturity                                  --            (1,011)
      Purchase of mortgage-backed securities available for sale                            (1,000)               --
      Proceeds from maturities of investment securities held to maturity                    3,000             8,000
      Proceeds from maturities of mortgage-backed securities available for sale               159                28
      Proceeds from sale of investment securities available for sale                           --             2,567
      Principal repayments of investment and
         mortgage-backed securities available for sale                                      1,085             1,923
      Principal repayments of investment and
         mortgage-backed securities held to maturity                                          571               183
      Increase in loans                                                                    (2,553)             (975)
      Proceeds from sale of real estate owned                                                  13                85
      Net additions to office properties and equipment                                        (76)              (18)
--------------------------------------------------------------------------------------------------------------------

                     Net cash used by investing activities                                (11,614)           (3,055)
--------------------------------------------------------------------------------------------------------------------

Financing activities:
      Net decrease in demand and club accounts                                                 (2)             (208)
      Net increase in time deposit accounts                                                 4,713             2,232
      Net increase (decrease) in FHLB advances                                              2,398             2,998
      Decrease in advance deposits by borrowers
         for taxes and insurance                                                             (954)             (965)
      Stock options exercised                                                                  23               128
      Acquisition of treasury stock                                                          (611)             (317)
      Dividends paid                                                                         (689)             (659)
--------------------------------------------------------------------------------------------------------------------

                     Net cash provided by financing activities                              4,878             3,209
--------------------------------------------------------------------------------------------------------------------

Net change in cash and cash equivalents                                                    (5,081)            1,603
Cash and cash equivalents at beginning of period                                           12,111            11,377
--------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                               $  7,030           $12,980
====================================================================================================================

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

      Cash paid during the period for:
           Interest on savings deposits                                                  $  3,547           $ 3,481
           Interest on FHLB advances                                                          612               469
           Income taxes                                                                       847               880
      Transfer of loans to real estate owned                                                  183                --

      Cash paid during the period for interest includes interest credited on
      deposits of $3,090 and $3,025 for the six months ended December 31, 1999
      and 1998, respectively
====================================================================================================================
</TABLE>

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





                                      -4-
<PAGE>   7


                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                       DECEMBER 31, 1999 AND JUNE 30, 1999


(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, 1999. The results of operations for the
three and six months ended December 31, 1999 are not necessarily indicative of
the results which may be expected for the entire fiscal year. The 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") 1999 Annual Report to Stockholders for the year ended June 30, 1999.
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,
                                                   1999              1998                 1999                1998
                                                -----------------------------          ------------------------------
<S>                                             <C>                <C>                 <C>                 <C>
Basic earnings per share:
   Net income                                   $      805         $      825          $    1,620          $    1,630
   Weighted average shares outstanding           2,140,190          2,193,210           2,150,518           2,196,410
   Earnings per share                           $     0.38         $     0.38          $     0.75          $     0.74

Diluted earnings per share:
   Net income                                   $      805         $      825          $    1,620          $    1,630
   Weighted average shares outstanding           2,140,190          2,193,210           2,150,518           2,196,410
   Dilutive effect of employee
      stock options                                 76,943            110,787              82,373             114,727
                                                ----------         ----------          ----------          ----------


   Diluted weighted shares outstanding           2,217,133          2,303,997           2,232,891           2,311,137
   Earnings per share                           $     0.36         $     0.36          $     0.73          $     0.71
</TABLE>





                                      -5-
<PAGE>   8


SECURITIES

The Company accounts for investments in debt and equity securities in accordance
with 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

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 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, 1999 and 1998, the Company's total comprehensive
income was $861 and $1,813, respectively. Total comprehensive income is
comprised of net income of $1,620 and $1,630, respectively, and other
comprehensive income (loss) of $(759) and $183, 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
adopted 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, effective July 1, 1995. 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



                                      -6-
<PAGE>   9


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 a number of 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>   10


(3) INVESTMENT AND MORTGAGE-BACKED SECURITIES

         Investment 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, 1999:
           Municipal obligations                                      $21,198       $   120        $ 1,334       $19,984
           FNMA preferred stock                                           250            10             --           260
           FHLMC preferred stock                                          250            --             --           250
           FNMA common stock                                              582            63             21           624
           FHLMC  common stock                                            480            37             46           471
           SLM Student Loan Trust                                         681            16             --           697
           Standard Insurance Company stock                                 4            --             --             4
           Shay Financial Services ARMs Fund                           15,661            --            200        15,461
                                                                    ----------------------------------------------------

                                                                       39,106           246          1,601        37,751

           Mortgage-backed securities available for sale               11,571           103            186        11,488
                                                                    ----------------------------------------------------

                   Total                                              $50,677       $   349        $ 1,787       $49,239
                                                                    ====================================================
</TABLE>

<TABLE>
<CAPTION>
      At December 31, 1999, 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                                                  $   681       $   697
           Due after ten years                                                                      21,198        19,984
                                                                                                 -----------------------

                   Total                                                                           $21,879       $20,681
                                                                                                 =======================
</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, Standard
         Insurance Company stock and the Shay Financial Services ARMs Fund have
         no stated maturity.

         Note:    There were no sales of investment securities available for
                  sale during the six months ended December 31, 1999. Gross
                  realized gains of $225 were recorded during the six months
                  ended December 31, 1998 on the. sale of such securities.
                  Proceeds from the sale of investments available for sale
                  during the six months ended December 31, 1998 were $2,567.



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

<TABLE>
<CAPTION>
                                                                    Amortized           Gross Unrealized            Fair
                                                                         Cost         Gains         Losses         Value
                                                                    ----------------------------------------------------
      <S>                                                           <C>               <C>           <C>          <C>
      AT DECEMBER 31, 1999:
           Corporate notes and commercial paper                       $18,985            $3           $803       $18,185
            Mortgage-backed securities                                    501             3              4           500
                                                                    ----------------------------------------------------

                   Total                                              $19,486            $6           $807       $18,685
                                                                    ====================================================
</TABLE>

<TABLE>
<CAPTION>
      At December 31, 1999, the contractual maturities of the debt securities                    Amortized          Fair
           held to maturity are:                                                                      Cost         Value
                                                                                                 -----------------------
      <S>                                                                                        <C>             <C>
           Due in less than one year                                                               $ 1,045       $ 1,045
           Due after one year through five years                                                     1,499         1,453
           Due after five years through ten years                                                    7,497         7,281
           Due after ten years                                                                       8,944         8,406
                                                                                                 -----------------------

                   Total                                                                           $18,985       $18,185
                                                                                                 =======================
</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>   11





(4) LOANS RECEIVABLE

         Loans receivable are comprised of the following:


<TABLE>
<CAPTION>
                                                       December 31,         June 30,
                                                               1999             1999
           -------------------------------------------------------------------------
           <S>                                         <C>                 <C>
           First mortgage loans:
                 1 to 4 family dwellings                  $ 112,037        $ 112,295
                 Multi-family dwellings                       2,384            1,612
                 Commercial                                   5,258            5,375
                 Guaranteed or insured                           37               39
                 Construction and development loans           2,403            2,268
           -------------------------------------------------------------------------

                                                            122,119          121,589
           Consumer loans:
                 Home improvement loans (net of unearned
                     discounts of $1 and $2)                      9               21
                 Loans secured by savings accounts              225              276
                 Commercial loans                             1,362              941
                 Installment loans                           33,586           31,802
           -------------------------------------------------------------------------

                                                             35,182           33,040
           -------------------------------------------------------------------------

           Loans receivable, net of unearned discounts      157,301          154,629
           Less: Allowance for loan losses                   (1,856)          (1,866)
                     Loans in process                        (1,331)            (987)
                     Deferred loan fees                        (304)            (386)
           -------------------------------------------------------------------------

           Loans receivable, net                          $ 153,810        $ 151,390
           ==========================================================================
</TABLE>


         Changes in the allowance for loan losses for the six months ended
         December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                       Fiscal              Fiscal
                                                         2000                1999
       ---------------------------------------------------------------------------
       <S>                                             <C>                 <C>
       Balance at beginning of the fiscal year         $1,866              $1,852
       Provision for losses                                 9                   9
       Charge-offs                                        (27)                (29)
       Recoveries                                           8                  30
       ---------------------------------------------------------------------------

       Balance at December 31,                         $1,856              $1,862
       ===========================================================================
</TABLE>



         At December 31, 1999, the recorded investment in loans that are
         considered to be impaired under SFAS 114 was $298. Included in this
         amount is $89 of impaired loans for which the related allowance for
         loan losses is $3, and $209 of impaired loans that 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, 1999 was approximately $292. For the six months ended
         December 31, 1999, the Company recognized interest income on those
         impaired loans of $2 which was recognized using the cash basis method
         of income recognition.

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                   1999              1998
                                                                                  ------------------------
       <S>                                                                        <C>               <C>
       Non-accrual loans                                                          $ 536             $ 596
       Non-accrual loans as a percent of total loans                               0.35%             0.39%
</TABLE>

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

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



                                      -9-
<PAGE>   12

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


<TABLE>
<CAPTION>
BALANCE SHEET DATA                                                     At December 31,
                                                                 1999                   1998
                                                                 -----                  ----
                                                           (In thousands except per share data)
                                                           ------------------------------------
                                                                        (Unaudited)

<S>                                                           <C>                   <C>
Total assets                                                  $236,851              $225,917
Money market investments                                            --                 3,626
Interest-earning deposits with other institutions                5,234                 8,313
Investment securities available for sale                        37,751                31,926
Investment securities held to maturity                          18,985                11,478
Mortgage-backed securities available for sale                   11,488                 9,532
Mortgage-backed securities held to maturity                        501                 1,879
Loans receivable held for sale                                   1,304                 1,504
Loans receivable, net                                          153,810               152,169
Savings deposits                                               186,829               177,414
FHLB advances                                                   22,427                20,031
Retained earnings                                               23,001                21,171
Stockholders' equity                                            24,036                24,675
Stockholders' equity per share                                $  11.25              $  11.17
</TABLE>


<TABLE>
<CAPTION>
STATISTICAL PROFILE                                                    Three months ended                     Six months ended
                                                                          December 31,                          December 31,
                                                                    -----------------------               -----------------------

                                                                     1999            1998                   1999            1998
                                                                     -----           -----                  ----            ----

<S>                                                                 <C>             <C>                   <C>             <C>
Average yield earned on all interest-earning assets                   7.12%           7.13%                 7.12%           7.22%
Average rate paid on all interest-bearing liabilities                 4.20            4.34                  4.18            4.36
Average interest rate spread                                          2.92            2.79                  2.94            2.86
Net yield on average interest-earning assets                          3.46            3.42                  3.48            3.49
Average interest-earning assets as a percentage of
      average interest-bearing liabilities                          115.74          117.84                115.96          117.64
Return on average assets (1)                                          1.38            1.48                  1.39            1.47
Return on average equity  (1)                                        13.37           13.55                 13.37           13.52
Average equity to average assets                                     10.29           10.93                 10.40           10.85
</TABLE>

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

(1) Amounts are annualized.



                                      -10-
<PAGE>   13



         COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31,1999 AND 1998


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, 1999
was $805,000 compared to $825,000 for the same period in the prior year. The
decrease of $20,000 or 2.4% was primarily the result of a $159,000 or 100.0%
decrease in net gains on the sale of investments and mortgage-backed securities
available for sale and a $45,000 or 4.7% increase in other operating expenses
partially offset by an $109,000 or 5.9% increase in net interest income and a
$76,000 or 17.2% decrease in income tax 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 increased by $109,000 or 5.9% during the three months ended
December 31, 1999 as compared to the same period of the prior year. The increase
was primarily due to a $15.5 million or 35.4% increase in the average
outstanding balance of investment securities for the quarter ended December 31,
1999 as compared to the quarter ended December 31, 1998. Also contributing to
the increase in net interest income was an increase in the average interest rate
spread from 2.79% for the quarter ended December 31, 1998 to 2.92% for the
quarter ended December 31, 1999. These increases were partially offset by a $2.0
million or 6.2% decrease in the average outstanding balance of net earning
assets for the quarter ended December 31, 1999 compared to the quarter ended
December 31, 1998.

Interest income on loans receivable and loans held for sale decreased by $32,000
or 1.1% during the three months ended December 31, 1999 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 7.74% for the quarter ended December 31,
1998 to 7.59% for the quarter ended December 31, 1999. This decrease was
partially offset by an $1.2 million or .8% increase in the average outstanding
balance of loans receivable for the quarter ended December 31, 1999 as compared
to the same period in the prior year. The increase in the average outstanding
balance of loans receivable was due to a $4.3 million or 13.8% increase in the
average outstanding balance of consumer loans which was partially offset by a
$3.0 million or 2.5% decrease in the average outstanding balance of mortgage
loans. The decrease in the average yield was primarily due to lower market
interest rates preceding the period ended December 31, 1999. The Bank continues
to emphasize the origination of consumer loan products as part of its
Asset/Liability management due to their generally shorter terms.

Interest on mortgage-backed securities held to maturity and mortgage-backed
securities available for sale increased by $6,000 or 3.0% during the quarter
ended December 31, 1999 as compared to the December 31, 1998 quarter. This
increase was primarily due to a $507,000 or 4.3% increase in the average
outstanding balance of mortgage-backed securities during the quarter ended
December 31, 1999 as compared to the December 31, 1998 quarter. This increase
was partially offset by a decrease in the average yield on mortgage-backed
securities from 6.75% for the quarter ended December 31, 1998 to 6.70% for the
quarter ended December 31, 1999. At December 31, 1999, the Bank's portfolio of
mortgage-backed securities available for sale had net unrealized losses of
$83,000. This portfolio consists of fixed and adjustable rate



                                      -11-
<PAGE>   14


securities with an average yield of 6.83% at December 31, 1999. Rising interest
rates would increase the unrealized losses in this portfolio if the fixed rate
securities are not sold. The mortgage-backed securities held to maturity
portfolio consists of two adjustable-rate and one fixed-rate collateralized
mortgage obligations (CMO's) with an average yield of 6.07% at December 31,
1999. At December 31, 1999, the Bank's portfolio of mortgage-backed securities
held to maturity had net unrealized losses of $1,000. In periods of rising
interest rates, unrealized losses could occur due to the timing difference of
when the securities reprice. The Bank uses these securities as part of its
Asset/Liability strategy. See Note 3 of "Notes to Unaudited Consolidated
Financial Statements."

Interest income on investments held to maturity and investments available for
sale increased during the three months ended December 31, 1999 by $286,000 or
46.7% from the comparable period in 1998, primarily due to a $15.5 million or
35.4% increase in the average outstanding balance of such securities for the
quarter ended December 31, 1999 as compared to the quarter ended December 31,
1998. In addition, the average yield on investment securities increased from
5.54% for the quarter ended December 31, 1998 to 6.00% for the quarter ended
December 31, 1999. The increase in the average outstanding balance was primarily
due to the investment of increased savings deposits and funds borrowed from the
Federal Home Loan Bank ("FHLB") of Pittsburgh. At December 31, 1999, the Bank's
portfolio of investment securities available for sale and investment securities
held to maturity had net unrealized losses of $1.4 million and $801,000,
respectively. See Note 3 of "Notes to Unaudited Consolidated Financial
Statements."

Interest income on interest-earning deposits decreased during the three months
ended December 31, 1999 by $91,000 or 82.0% from the comparable period in 1998.
This decrease was primarily due to a decrease of $7.5 million or 82.9% in the
average outstanding balance of interest-earning deposits for the quarter ended
December 31, 1999 as compared to the December 31, 1998 quarter. The average
yield on interest-earning deposits increased from 4.84% for the quarter ended
December 31, 1998 to 5.11% for the quarter ended December 31, 1999.

Interest expense on interest-bearing deposits increased by $10,000 or .6% for
the quarter ended December 31, 1999, compared to the same period in 1998. The
increase was primarily due to a $7.4 million or 4.4% increase in the average
outstanding balance of such deposits during the three months ended December 31,
1999 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 4.22% for the three months ended December 31, 1998 to 4.06% for
the three months ended December 31, 1999.

Interest expense on borrowings increased $50,000 or 21.0% for the quarter ended
December 31, 1999 compared to the quarter ended December 31, 1998 due to a $4.4
million or 25.4% increase in the average outstanding balance of FHLB advances.
The average rate paid on borrowings decreased from 5.54% for the quarter ended
December 31, 1998 to 5.32% for the quarter ended December 31, 1999.

PROVISION FOR LOAN LOSSES. The Bank provided $4,000 and $5,000 to its allowance
for loan losses for the quarters ended December 31, 1999 and 1998, respectively.
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>   15


At both December 31, 1999 and 1998, the Bank's allowance for loan losses
amounted to $1.9 million or 1.2% 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 three months ended December 31,
1999. Thus, the level of the allowance for loan losses is substantially
unchanged from June 30, 1999. 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 $161,000 or 44.5% to $201,000 for
the quarter ended December 31, 1999 as compared to the same period in 1998. This
was primarily due to a $159,000 decrease in net gains on the sale of investments
available for sale and a $13,000 decrease in fees and service charges partially
offset by a $13,000 increase in other operating income. The decrease in net
gains on the sale of investments available for sale was a result of no such
securities being sold during the three months ended December 31, 1999.

OPERATING EXPENSES. Total operating expenses increased by $45,000 or 4.7% during
the quarter ended December 31, 1999 as compared to the comparable quarter in
1998. This increase was primarily due to a $37,000 increase in compensation and
benefits expense, a $26,000 increase in premises and occupancy expense and a
$26,000 increase in professional fees. These increases were partially offset by
a decrease of $26,000 other operating expenses, a $12,000 decrease in net real
estate owned expense and a $7,000 decrease data processing expense. The increase
in professional fees was primarily due to an increase in legal fees incurred in
litigation brought by the Bank against another financial institution.

INCOME TAX EXPENSE. Income tax expense decreased by $76,000 for the quarter
ended December 31, 1999 as compared to the quarter ended December 31, 1998
primarily as a result of a decrease in the effective tax rate from 34.8% for the
1998 quarter to 31.2% for the 1999 quarter. This decrease was primarily due to
increased purchases of non-taxable municipal obligations by the Company during
the past year.






                                      -13-
<PAGE>   16


          COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31,1999 AND 1998


GENERAL. The Company's net income for the six months ended December 31, 1999 was
$1,620,000 compared to $1,630,000 for the same period in the prior year. The
decrease of $10,000 or .6% was primarily the result of a $225,000 or 100.0%
decrease in net gains on the sale of investments and mortgage-backed securities
available for sale and a $81,000 or 4.2% increase in other operating expenses
partially offset by an $158,000 or 4.2% increase in net interest income and a
$150,000 or 17.1% decrease in income tax expense. These and other significant
fluctuations are discussed below.

NET INTEREST INCOME. Net interest income increased by $158,000 or 4.2% during
the six months ended December 31, 1999 as compared to the same period of the
prior year. The increase was primarily due to a $14.6 million or 33.1% increase
in the average outstanding balance of investment securities for the six months
ended December 31, 1999 as compared to the six months ended December 31, 1998.
Also contributing to the increase in net interest income was an increase in the
average interest rate spread from 2.86% for the six months ended December 31,
1998 to 2.94% for the six months ended December 31, 1999. These increases were
partially offset by a $1.4 million or 4.3% decrease in the average outstanding
balance of net earning assets for the six months ended December 31, 1999
compared to the six months ended December 31, 1998.

Interest income on loans receivable and loans held for sale decreased by
$126,000 or 2.1% during the six months ended December 31, 1999 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 7.78% for the six months ended
December 31, 1998 to 7.60% for the six months ended December 31, 1999. This
decrease was partially offset by a $210,000 or .1% increase in the average
outstanding balance of loans receivable for the six months ended December 31,
1999 as compared to the same period in the prior year. The increase in the
average outstanding balance of loans receivable was due to a $4.6 million or
15.3% increase in the average outstanding balance of consumer loans and a $4.4
million or 3.6% decrease in the average outstanding balance of mortgage loans.
The decrease in the average yield was primarily due to lower market interest
rates. The Bank continues to emphasize the origination of consumer loan products
as part of its Asset/Liability management due to their generally shorter terms.

Interest on mortgage-backed securities held to maturity and mortgage-backed
securities available for sale increased by $14,000 or 3.4% during the six months
ended December 31, 1999 as compared to the six months ended December 31, 1998.
This increase was primarily due to an $845,000 or 7.1% increase in the average
outstanding balance of mortgage-backed securities during the six months ended
December 31, 1999 as compared to the six months ended December 31, 1998. The
average yield on mortgage-backed securities decreased from 6.89% for the six
months ended December 31, 1998 to 6.66% for the six months ended December 31,
1999. See "Comparison of the Three Months Ended December 31, 1999 and 1998 - Net
Interest Income."

Interest income on investments held to maturity and investments available for
sale increased during the six months ended December 31, 1999 by $494,000 or
38.8% from the comparable period in 1998, primarily due to a $14.6 million or
33.1% increase in the average outstanding balance of such securities for the six
months ended December 31,1999 as compared to the six months ended December 31,
1998. In addition,



                                      -14-
<PAGE>   17


the average yield on investment securities increased from 5.72% for the six
months ended December 31, 1998 to 5.97% for the six months ended December 31,
1999. The increase in the average outstanding balance was primarily due to the
investment of increased savings deposits and funds borrowed from the FHLB of
Pittsburgh. See "Comparison of the Three Months Ended December 31, 1999 and 1998
- Net Interest Income."

Interest income on interest-earning deposits decreased during the six months
ended December 31,1999 by $167,000 or 78.8% from the comparable period in 1998.
This decrease was primarily due to a decrease of $6.4 million or 78.2% in the
average outstanding balance of interest-earning deposits for the six months
ended December 31, 1999 as compared to the same period in the prior year. The
average yield on interest-earning deposits decreased from 5.12% for the six
months ended December 31, 1998 to 4.98% for the six months ended December 31,
1999.

Interest expense on interest-bearing deposits decreased by $31,000 or .9% for
the six months ended December 31,1999, compared to the same period in 1998. The
decrease was primarily due to a decrease in the average interest rate paid on
savings deposits from 4.24% for the six months ended December 31, 1998 to 4.04%
for the six months ended December 31, 1999. This decrease was partially offset
by a $6.9 million or 4.1% increase in the average outstanding balance of such
deposits during the six months ended December 31, 1999 as compared to the same
period of the prior year.

Interest expense on borrowings increased $88,000 or 18.6% for the six months
ended December 31, 1999 compared to the six months ended December 31, 1998 due
to a $3.7 million or 21.9% increase in the average outstanding balance of FHLB
advances. The average rate paid on borrowings decreased from 5.48% for the six
months ended December 31, 1998 to 5.34% for the six months ended December 31,
1999.

PROVISION FOR LOAN LOSSES. The Bank provided $9,000 to its allowance for loan
losses for both the six months ended December 31, 1999 and 1998. 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, 1999 and 1998 - Provision For Loan Losses."

OTHER INCOME. Total other income decreased by $237,000 or 37.0% to $404,000 for
the six months ended December 31, 1999 as compared to the same period in 1998.
This was primarily due to a $225,000 decrease in net gains on the sale of
investments available for sale and a $31,000 decrease in fees and service
charges partially offset by a $22,000 increase in other operating income. The
decrease in net gains on the sale of investments available for sale was a result
of no such securities being sold during the six months ended December 31, 1999.

OPERATING EXPENSES. Total operating expenses increased by $81,000 or 4.2% during
the six months ended December 31, 1999 as compared to the comparable period in
1998. This increase was primarily due to a $55,000 increase in premises and
occupancy costs, a $32,000 increase in compensation and benefits and a $24,000
increase in net real estate owned expense. These increases were partially offset
by a $18,000 decrease in professional fees, an $8,000 decrease in other
operating expense and a $5,000 decrease in data processing fees. The increase in
premises and occupancy costs was primarily due to an increase in depreciation as
a result of new teller equipment purchased during fiscal 1999.


                                      -15-
<PAGE>   18


INCOME TAX EXPENSE. Income tax expense decreased by $150,000 for the six months
ended December 31, 1999 as compared to the six months ended December 31, 1998
primarily as a result of a decrease in the effective tax rate from 35.0% for the
1998 period to 31.0% for the 1999 period. This decrease was primarily due to
increased purchases of non-taxable municipal obligations by the Company during
the past year.

YEAR 2000

In December 1997, the Company established a management committee to identify all
of its functions potentially affected by the year 2000 date change, help ensure
that re-programming or replacement of all critical systems occurred and to
formulate contingency plans in the event any of those critical systems failed.

The Company experienced no known disruptions as a result of the year 2000 date
change and intends to continue monitoring its critical systems at various other
date changes during the year 2000.

FINANCIAL CONDITION AND CAPITAL RESOURCES

Total assets increased by $5.4 million or 2.3% from June 30, 1999 to December
31, 1999. The largest increases were a $6.5 million increase in investment
securities held to maturity, a $2.4 million increase in loans receivable, net, a
$2.2 million increase in securities available for sale and a $1.1 million
increase in cash. These increases were partially offset by a $3.7 million
decrease in money market investments and a $2.5 million decrease in
interest-earning deposits in other institutions. The largest components of
change in liabilities were a $4.7 million increase in deposits and a $2.4
million increase in FHLB advances and partially offset by a $954,000 decrease in
advance deposits by borrowers for taxes and insurance.

Under regulations adopted by the 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, 1999, the Bank exceeded all of these
requirements, with Tier I and Tier II ratios of 10.03% and 18.99%, respectively.







                                      -16-
<PAGE>   19


The following table sets forth certain information concerning the Bank's
regulatory capital at December 31, 1999.

<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)                        $23,525       $23,525      $23,525
Plus general valuation allowances (2)          --            --        1,660
                                          -------       -------      -------
   Total regulatory capital                23,525        23,525       25,185
Minimum required capital                    9,381         5,312       10,624
                                          -------       -------      -------
   Excess regulatory capital              $14,144       $18,213      $14,561
                                          =======       =======      =======

Minimum required capital to be well
   capitalized under Prompt Corrective
   Action Provisions                      $11,726       $ 7,957      $13,261
                                          =======       =======      =======

Regulatory capital as a percentage (3)      10.03%        17.74%       18.99%
Minimum required capital percentage          4.00          4.00         8.00
                                          -------       -------      -------
   Excess regulatory capital percentage      6.03%        13.74%       10.99%
                                          =======       =======      =======

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 033 for the three months ended
     December 31, 1999.
(2)  Limited to 1.25% of risk adjusted assets.
(3)  Tier I capital is calculated as a percentage of adjusted total assets of
     $234,529. Tier I and Tier II risk-based capital are calculated as a
     percentage of adjusted risk-weighted assets of $132,609.

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.




                                      -17-
<PAGE>   20


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 1999 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, 1999.


                   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

         A. The Annual Meeting of Stockholders was held on November 11, 1999.

         B. The following items were submitted to the stockholders of
            the Company for approval:

             1. To elect three directors for a term of three years or
                until their successors have been elected and qualified

                Nominees for a three-year term:

                Richard S. Hamilton
                For:                   1,937,053
                Withheld:                101,374

                Edwin R. Maus
                For:                   1,937,180
                Withheld:                101,247


                                      -18-
<PAGE>   21


                J. Harold Norris
                For:                   1,934,463
                Withheld:                103,964

             2. To ratify the appointment of KPMG LLP, as the Company's
                independent auditors for the fiscal year ending June 30, 2000.

                For:                   1,986,648
                Against:                  51,616
                Abstain:                     163


Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

         None









                                      -19-
<PAGE>   22


                                   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, 2000











                                      -20-