<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, 2000

                                       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, 2001: 1,955,196 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
            December 31, 2000 and June 30, 2000 .......................................       1

            Consolidated Statements of Operations for the Three
            and Six Months Ended December 31, 2000 and 1999 ...........................       2

            Consolidated Statement of Stockholders' Equity for the
            Six Months Ended December 31, 2000 ........................................       3

            Consolidated Statements of Cash Flows for the Six
            Months Ended December 31, 2000 and 1999 ...................................       4

            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 ................      17

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,
                                                                                             2000                2000
----------------------------------------------------------------------------------------------------------------------
                                                                                       (unaudited)
       ASSETS
<S>                                                                                 <C>                   <C>
Cash                                                                                       $1,065                $822
Interest-earning deposits with other institutions                                           3,546               4,096
Investment securities available for sale                                                   39,360              38,665
Investment securities held to maturity  (market value of $21,946 and $21,144)              21,933              21,931
Mortgage-backed securities available for sale                                              10,812              10,947
Mortgage-backed securities held to maturity (market value of $284 and $396)                   283                 397
Loans receivable, held for sale                                                             1,566               1,514
Loans receivable                                                                          178,239             171,319
Allowance for loan losses                                                                  (1,759)             (1,798)
----------------------------------------------------------------------------------------------------------------------
       Loans receivable, net                                                              176,480             169,521
Federal Home Loan Bank stock                                                                2,146               1,671
Real estate owned                                                                             203                  --
Accrued interest receivable:
       Loans                                                                                  959                 874
       Interest-earning deposits and investments                                              921                 790
       Mortgage-backed securities                                                              66                  67
Office properties and equipment, net of accumulated depreciation                            1,317               1,413
Prepaid expenses and sundry assets                                                            884               1,365
----------------------------------------------------------------------------------------------------------------------
                      Total Assets                                                       $261,541            $254,073
----------------------------------------------------------------------------------------------------------------------
       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
       Savings deposits                                                                  $192,961            $192,663
       FHLB advances                                                                       39,629              33,424
       Advance deposits by borrowers for taxes and insurance                                2,195               3,092
       Accrued interest payable                                                               575                 404
       Accrued income taxes                                                                   274                 239
       Other accrued expenses and sundry liabilities                                        1,016               1,005
----------------------------------------------------------------------------------------------------------------------
                      Total Liabilities                                                   236,650             230,827
----------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
       Common stock,  $.01 par value;  5,000,000
          shares authorized;  2,341,624 and 2,329,272 shares
          issued, respectively                                                                 23                  23
       Additional paid-in capital                                                           5,263               5,224
       Treasury stock, at cost (386,195 and 328,670 shares)                                (5,499)             (4,711)
       Retained earnings                                                                   25,353              24,120
       Accumulated other comprehensive income (loss), net of tax                              160              (1,007)
       Stock held in deferred compensation trust                                             (409)               (403)
----------------------------------------------------------------------------------------------------------------------
                      Total Stockholders' Equity                                           24,891              23,246
----------------------------------------------------------------------------------------------------------------------
                      Total Liabilities and Stockholders' Equity                         $261,541            $254,073
----------------------------------------------------------------------------------------------------------------------
</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, 2000 and 1999
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                       Three months ended               Six months ended
                                                                          December 31,                     December 31,
                                                                     ----------------------          ----------------------
                                                                      2000            1999            2000            1999
                                                                     ------          ------          ------          ------
<S>                                                                 <C>             <C>             <C>             <C>
Interest income:
       Loans                                                         $3,413          $2,928          $6,761          $5,836
       Mortgage-backed securities                                       201             206             405             424
       Investments                                                    1,034             899           2,048           1,767
       Interest-earning deposits                                         26              20              50              45
                                                                     ------          ------          ------          ------
              Total interest income                                   4,674           4,053           9,264           8,072
Interest expense:
       Savings deposits                                               2,032           1,794           4,021           3,561
       Borrowings                                                       647             288           1,211             560
                                                                     ------          ------          ------          ------
              Total interest expense                                  2,679           2,082           5,232           4,121
                                                                     ------          ------          ------          ------
Net interest income before provision
       for loan losses                                                1,995           1,971           4,032           3,951
Provision for loan losses                                                 4               4               9               9
                                                                     ------          ------          ------          ------
Net interest income after provision
       for loan losses                                                1,991           1,967           4,023           3,942
                                                                     ------          ------          ------          ------
Other income:
       Service charges                                                  196             184             376             365
       Net gain on sale of investments and
              mortgage-backed securities available for sale              53              --              58              --
       Gain on the sale of loans held for sale                            3               4               8              11
       Other operating income                                            22              13              38              28
       Other non-operating income                                       325              --             325              --
                                                                     ------          ------          ------          ------
              Total other income                                        599             201             805             404
                                                                     ------          ------          ------          ------
Operating expenses:
       Compensation, payroll taxes and
              fringe benefits                                           512             470           1,012             934
       Premises and occupancy costs                                     134             137             269             288
       Federal insurance premiums                                        10              27              20              53
       Net loss on real estate owned                                     --              --               1              40
       Data processing expense                                           55              52             110             104
       Professional fees                                                 42              75              91             115
       Other operating expenses                                         270             237             543             464
                                                                     ------          ------          ------          ------
              Total operating expenses                                1,023             998           2,046           1,998
                                                                     ------          ------          ------          ------
Income before income taxes                                            1,567           1,170           2,782           2,348
                                                                     ------          ------          ------          ------
Provision for income taxes:
       Federal                                                          425             309             739             613
       State                                                             86              56             144             115
                                                                     ------          ------          ------          ------
              Total income taxes                                        511             365             883             728
                                                                     ------          ------          ------          ------
              Net income                                             $1,056          $  805          $1,899          $1,620
                                                                     ======          ======          ======          ======
Earnings per share
              Basic                                                  $ 0.54          $ 0.38          $ 0.96          $ 0.75
                                                                     ======          ======          ======          ======
              Diluted                                                $ 0.52          $ 0.36          $ 0.93          $ 0.73
                                                                     ======          ======          ======          ======
Dividends per share                                                  $ 0.17          $ 0.16          $ 0.34          $ 0.32
                                                                     ======          ======          ======          ======
</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, 2000
                                 (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, 2000               $     23      $  5,224     ($ 4,711)  $ 24,120      ($ 1,007)       ($   403)      $ 23,246
Comprehensive income:
       Net income                          --            --           --      1,899            --              --          1,899
       Other comprehensive income,
            net of tax $543                --            --           --         --         1,055              --          1,055
       Reclassification adjustment
            net of tax $58                                                                    112
                                     --------      --------     --------   --------      --------        --------       --------
Total comprehensive income                 --            --           --      1,899         1,167              --          3,066
Stock options exercised
     (12,325 shares)                       --            39           --         --            --              --             39
Dividends on common stock
     at $0.17 per share                    --            --           --       (666)           --              --           (666)
Treasury stock purchased                   --            --         (788)        --            --              --           (788)
Net purchase of stock in
     deferred compensation trust           --            --           --         --            --              (6)            (6)
                                     --------      --------     --------   --------      --------        --------       --------
Balance, December 31, 2000           $     23      $  5,263     ($ 5,499)  $ 25,353      $    160        ($   409)      $ 24,891
                                     ========      ========     ========   ========      ========        ========       ========
</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, 2000 and 1999
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                        2000              1999
---------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>
Net income:                                                                           $1,899            $1,620
      Adjustments to reconcile net income to net
         cash provided by operating activities:
                Depreciation                                                              98                97
                Provision for loan losses                                                  9                 9
                Net loss on sale of real estate owned                                     --                29
                Net gain on sale of investment securities available for sale             (58)               --
                Gain on the sale of loans held for sale                                   (8)              (11)
                Amortization of deferred loan fees                                       (54)              (59)
                Origination of loans held for sale                                      (503)             (400)
                Proceeds from sale of loans held for sale                                459               669
                (Increase) in accrued interest receivable                               (215)              (90)
                Increase in accrued interest payable                                     171                14
                Other - net                                                              (66)             (223)
---------------------------------------------------------------------------------------------------------------
                               Net cash provided by operating activities               1,732             1,655
---------------------------------------------------------------------------------------------------------------
Investing activities:
      Purchase of investment securities held to maturity                                  --            (9,537)
      Purchase of investment securities available for sale                              (516)           (3,276)
      Purchase of mortgage-backed securities held to maturity                             --                --
      Purchase of mortgage-backed securities available for sale                           --            (1,000)
      Purchase of FHLB stock                                                            (475)               --
      Proceeds from maturity of investment securities available for sale                 460                --
      Proceeds from maturity of investment securities held to maturity                    --             3,000
      Proceeds from maturity of mortgage-backed securities available for sale             --               159
      Proceeds from sale of investment securities available for sale                     924                --
      Principal repayments of investment and
         mortgage-backed securities available for sale                                   382             1,085
      Principal repayments of investment and
         mortgage-backed securities held to maturity                                     114               571
      Increase in loans                                                               (7,117)           (2,553)
      Proceeds from sale of real estate owned                                             --                13
      Net additions to office properties and equipment                                    (2)              (76)
---------------------------------------------------------------------------------------------------------------
                               Net cash used by investing activities                  (6,230)          (11,614)
---------------------------------------------------------------------------------------------------------------
Financing activities:
      Net decrease in demand and club accounts                                        (2,253)               (2)
      Net increase in time deposit accounts                                            2,551             4,713
      Net increase in FHLB advances                                                    6,205             2,398
      Decrease in advance deposits by borrowers
         for taxes and insurance                                                        (897)             (954)
      Stock options exercised                                                             39                23
      Acquisition of treasury stock                                                     (788)             (611)
      Dividends paid                                                                    (666)             (689)
---------------------------------------------------------------------------------------------------------------
                               Net cash provided by financing activities               4,191             4,878
---------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents                                                 (307)           (5,081)
Cash and cash equivalents at beginning of period                                       4,918            12,111
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                            $4,611            $7,030
---------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
---------------------------------------------------------------------------------------------------------------
      Cash paid during the period for:
                Interest on savings deposits                                          $3,850            $3,547
                Interest on FHLB advances                                              1,124               612
                Income taxes                                                             911               847
      Transfer of loans to real estate owned                                             203               183
      Cash paid during the period for interest includes interest credited on
      deposits of $3,347 and $3,090 for the six months ended December 31, 2000
      and 1999, 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, 2000 AND JUNE 30, 2000


(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, 2000. The results of operations for the
three and six months ended December 31, 2000 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") 2000 Annual Report to Stockholders for the
year ended June 30, 2000. 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,
                                                2000            1999            2000            1999
                                             ----------      ----------      ----------      ----------
<S>                                         <C>             <C>             <C>             <C>
Basic earnings per share:
   Net income                                $    1,056      $      805      $    1,899      $    1,620
   Weighted average shares outstanding        1,958,449       2,140,190       1,969,291       2,150,518
   Earnings per share                             $0.54           $0.38           $0.96           $0.75

Diluted earnings per share:
   Net income                                $    1,056      $      805      $    1,899      $    1,620
   Weighted average shares outstanding        1,958,449       2,140,190       1,969,291       2,150,518
   Dilutive effect of employee
      stock options                              68,880          76,943          68,310          82,373
                                             ----------      ----------      ----------      ----------
   Diluted weighted shares outstanding        2,027,329       2,217,133       2,037,601       2,232,891
   Earnings per share                             $0.52           $0.36           $0.93           $0.73
</TABLE>


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


                                      -5-

<PAGE>   8


For both the three and six months ended December 31, 1999, options to purchase
73,596 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 six
months ended December 31, 2000 and 1999, the Company's total comprehensive
income was $3,066 and $861, respectively. Total comprehensive income is
comprised of net income of $1,899 and $1,620, respectively, and other
comprehensive income (loss) of $1,167 and $(759), net of tax, respectively.
Other comprehensive income consists of unrealized gains and losses on investment
securities and mortgage-backed securities available for sale, net of tax.

LOANS RECEIVABLE

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



                                      -6-

<PAGE>   9

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>   10



(3) INVESTMENT AND MORTGAGE-BACKED SECURITIES

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

<TABLE>
<CAPTION>
                                                          Amortized          Gross Unrealized              Fair
                                                               Cost         Gains         Losses           Value
                                                         --------------------------------------------------------
<S>                                                      <C>              <C>            <C>            <C>
AT DECEMBER 31, 2000:
     Municipal obligations                                  $21,083          $234           $337         $20,980
     FNMA preferred stock                                       250            --              1             249
     FHLMC preferred stock                                      250            --              6             244
     FNMA common stock                                          249           185             --             434
     FHLMC  common stock                                        199           145             --             344
     SLMA Student Loan Trust                                    520            18             --             538
     Standard Insurance Company stock                             4             4             --               8
     Shay Financial Services
         ARMs Fund                                           16,679            --            116          16,563
                                                         --------------------------------------------------------
                                                             39,234           586            460          39,360
     Mortgage-backed securities available for sale           10,696           118              2          10,812
                                                         --------------------------------------------------------
             Total                                          $49,930          $704           $462         $50,172
                                                         --------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
At December 31, 2000, 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                                                 $706            $728
     Due after ten years                                                                  20,897          20,790
                                                                                      ---------------------------
             Total                                                                       $21,603         $21,518
                                                                                      ===========================
</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:     Gross realized gains of $58 were recorded during the six
                  months ended December 31, 2000 on the sale of investment
                  securities available for sale. There were no sales of such
                  securities during the six months ended December 31, 1999.
                  Proceeds from the sale of investments available for sale
                  during the six months ended December 31, 2000 were $866.



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, 2000
             Corporate and Agency bonds                          $21,933           $146       $133         $21,946
              Mortgage-backed securities                             283              2          1             284
                                                              -----------------------------------------------------
                     Total                                       $22,216           $148       $134         $22,230
                                                              -----------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
        At December 31, 2000, 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                                          $3,499          $3,492
             Due after five years through ten years                                          6,498           6,526
             Due after ten years                                                            11,936          11,928
                                                                                        ---------------------------
                     Total                                                                 $21,933         $21,946
                                                                                        ===========================
</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,
                                                                                 2000             2000
-------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                  <C>
     First mortgage loans:
           1 to 4 family dwellings                                           $130,306         $125,242
           Multi-family dwellings                                               2,779            2,476
           Commercial                                                           4,605            5,391
           Guaranteed or insured                                                   32               34
           Construction and development loans                                  11,007           10,167
-------------------------------------------------------------------------------------------------------
                                                                              148,729          143,310

     Commercial loans                                                           1,328              919
     Consumer loans:
           Loans secured by savings accounts                                      235              211
           Installment loans                                                   34,760           34,899
-------------------------------------------------------------------------------------------------------
                                                                               36,323           36,029
-------------------------------------------------------------------------------------------------------
     Loans receivable, net of unearned discounts                              185,052          179,339
     Less: Allowance for loan losses                                           (1,759)          (1,798)
               Loans in process                                                (6,649)          (7,796)
               Deferred loan fees                                                (164)            (224)
-------------------------------------------------------------------------------------------------------
     Loans receivable, net                                                   $176,480         $169,521
-------------------------------------------------------------------------------------------------------
</TABLE>

Changes in the allowance for loan losses for the six months ended
December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                               Fiscal           Fiscal
                                                                                 2001             2000
-------------------------------------------------------------------------------------------------------
<S>                                                                          <C>              <C>
Balance at beginning of the fiscal year                                        $1,798           $1,866
Provision for losses                                                                9                5
Charge-offs                                                                       (54)             (13)
Recoveries                                                                          6                2
-------------------------------------------------------------------------------------------------------

Balance at December 31, 2000 and 1999                                          $1,759           $1,860
-------------------------------------------------------------------------------------------------------
</TABLE>



         At December 31, 2000, the recorded investment in loans that are
         considered to be impaired under SFAS 114 was $324. Included in this
         amount is $49 of impaired loans for which the related allowance for
         loan losses is $12, and $275 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, 2000 was approximately $327. For the six months ended
         December 31, 2000, the Company recognized interest income on those
         impaired loans of $1 which was recognized using the cash basis method
         of income recognition.

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                2000      1999
                                                               ---------------
<S>                                                            <C>       <C>
         Non-accrual loans                                      $658      $536
         Non-accrual loans as a percent of total loans, net     0.37%     0.35%
</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


BALANCE SHEET DATA
<TABLE>
<CAPTION>
                                                                      At December 31,
                                                                 -------------------------
                                                                   2000             1999
                                                                 --------         --------
                                                           (In thousands except per share data)
                                                                       (Unaudited)
<S>                                                            <C>              <C>
Total assets                                                     $261,541         $236,851
Interest-earning deposits with other institutions                   3,546            5,234
Investment securities available for sale                           39,360           37,751
Investment securities held to maturity                             21,933           18,985
Mortgage-backed securities available for sale                      10,812           11,488
Mortgage-backed securities held to maturity                           283              501
Loans receivable held for sale                                      1,566            1,304
Loans receivable, net                                             176,480          153,810
Savings deposits                                                  192,961          186,829
FHLB advances                                                      39,629           22,427
Retained earnings                                                  25,353           23,001
Stockholders' equity                                               24,891           24,036
Stockholders' equity per share                                     $12.73           $11.25
</TABLE>

STATISTICAL PROFILE
<TABLE>
<CAPTION>
                                                                     Three months ended                     Six months ended
                                                                         December 31,                         December 31,
                                                                 --------------------------              ----------------------
                                                                   2000             1999                   2000          1999
                                                                 --------         --------               --------      --------
<S>                                                               <C>              <C>                    <C>           <C>
Average yield earned on all interest-earning assets                  7.42%            7.12%                  7.41%         7.12%
Average rate paid on all interest-bearing liabilities                4.84             4.20                   4.76          4.18
Average interest rate spread                                         2.58             2.92                   2.65          2.94
Net yield on average interest-earning assets                         3.17             3.46                   3.22          3.48
Average interest-earning assets as a percentage of
      average interest-bearing liabilities                         114.64           115.74                 114.68        115.96
Return on average assets (1)                                         1.63             1.38                   1.48          1.39
Return on average equity  (1)                                       17.41            13.37                  15.91         13.37
Average equity to average assets                                     9.37            10.29                   9.29         10.40
</TABLE>
-------------
(1) Amounts are annualized .


                                      -10-

<PAGE>   13



         COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999


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, 2000
was $1,056,000 compared to $805,000 for the same period in the prior year. The
increase of $251,000 or 31.2% was primarily the result of a $398,000 increase in
other income and a $24,000 increase in net interest income partially offset by a
$146,000 or 40.0% increase in income tax expense and a $25,000 or 2.5% increase
in other operating expenses. The increase in other income was primarily the
result of $325,000 of non-recurring income from the settlement of litigation and
an insurance claim and an increase of $53,000 in gains on the sale of investment
securities available for sale recorded during the three months ended December
31, 2000. 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 $24,000 or 1.2% during the three months ended
December 31, 2000 as compared to the same period of the prior year. The increase
was primarily due to a $1.2 million or 4.0% increase in average net earning
assets for the quarter ended December 31, 2000 as compared to the quarter ended
December 31, 1999. This increase was partially offset by a decrease in the
average interest rate spread from 2.92% for the quarter ended December 31, 1999
to 2.58% for the quarter ended December 31, 2000.

Interest income on loans receivable and loans held for sale increased by
$485,000 or 16.6% during the three months ended December 31, 2000 as compared to
the same period in the prior year. This increase was primarily due to a $21.8
million or 14.1% increase in the average outstanding balance of loans receivable
for the quarter ended December 31, 2000 as compared to the same period in the
prior year. In addition, the average yield on loans receivable increased from
7.59% for the quarter ended December 31, 1999 to 7.76% for the quarter ended
December 31, 2000. The increase in the average outstanding balance of loans
receivable was due to a $19.6 million or 16.5% increase in the average
outstanding balance of mortgage loans and a $2.1 million or 6.0% increase in the
average outstanding balance of consumer and other loans. The increase in the
average yield was primarily due to generally higher 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 decreased by $5,000 or 2.4% during the quarter
ended December 31, 2000 as compared to the December 31, 1999 quarter. This
decrease was primarily due to a $1.2 million or 10.0% decrease in the average
outstanding balance of mortgage-backed securities during the quarter ended
December 31, 2000 as compared to the December 31, 1999 quarter. This decrease
was partially offset by an increase in the average yield on mortgage-backed
securities from 6.70% for the quarter ended December 31, 1999 to 7.23% for the
quarter ended December 31, 2000. At December 31, 2000, the Bank's portfolio of
mortgage-backed securities available for sale had net unrealized gains of
$116,000. This portfolio consists of fixed and adjustable rate securities with
an average yield of 7.30% at December 31, 2000. Rising interest rates


                                      -11-


<PAGE>   14

would decrease the unrealized gains in this portfolio if the fixed rate
securities are not sold. The mortgage-backed securities held to maturity
portfolio consists of two adjustable-rate and one fixed-rate collateralized
mortgage obligations (CMO's) with an average yield of 6.61% at December 31,
2000. At December 31, 2000, the Bank's portfolio of mortgage-backed securities
held to maturity had an amortized cost and fair market value of $283,000 and
$284,000, respectively. In periods of rising interest rates, unrealized losses
could occur due to the timing difference of when the securities reprice. 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, 2000 by $135,000 or
15.0% from the comparable period in 1999, primarily due to a $3.8 million or
6.3% increase in the average outstanding balance of such securities for the
quarter ended December 31, 2000 as compared to the quarter ended December 31,
1999. In addition, the average yield on investment securities increased from
6.00% for the quarter ended December 31, 1999 to 6.49% for the quarter ended
December 31, 2000. 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, 2000, the Bank's
portfolio of investment securities available for sale and investment securities
held to maturity had net unrealized gains of $126,000 and $13,000, respectively.
See Note 3 of "Notes to Unaudited Consolidated Financial Statements."

Interest income on interest-earning deposits increased during the three months
ended December 31, 2000 by $6,000 or 30.0% from the comparable period in 1999.
This increase was primarily due to an increase in the average yield on
interest-earning deposits from 5.11% for the quarter ended December 31, 1999 to
6.29% for the quarter ended December 31, 2000. Also contributing to this
increase was an increase of $87,000 or 5.6% in the average outstanding balance
of interest-earning deposits for the quarter ended December 31, 2000 as compared
to the December 31, 1999 quarter.

Interest expense on interest-bearing deposits increased by $238,000 or 13.3% for
the quarter ended December 31, 2000, compared to the same period in 1999. The
increase was primarily due to an increase in the average interest rate paid on
savings deposits from 4.06% for the three months ended December 31, 1999 to
4.49% for the three months ended December 31, 2000. Also contributing to the
increase was a $4.3 million or 2.4% increase in the average outstanding balance
of such deposits during the three months ended December 31, 2000 as compared to
the same period of the prior year.

Interest expense on borrowings increased $359,000 or 124.7% for the quarter
ended December 31, 2000 compared to the quarter ended December 31, 1999 due to a
$18.9 million or 87.8% increase in the average outstanding balance of FHLB
advances. The average rate paid on borrowings increased from 5.32% for the
quarter ended December 31, 1999 to 6.36% for the quarter ended December 31,
2000.

PROVISION FOR LOAN LOSSES. The Bank provided $4,000 to its allowance for loan
losses for both the quarters ended December 31, 2000 and 1999. 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 December 31, 2000 and 1999, the Bank's allowance for loan losses amounted to
$1.8 million and $1.9 million or 1.0% and 1.2%, respectively, of the total loan
portfolio.

A review of the loan portfolio is conducted at least quarterly by management to
determine that the allowance for loan losses is appropriate to absorb estimated
loan 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,
2000. Thus, the level of the allowance for loan losses is substantially
unchanged from June 30, 2000. 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 $398,000 or 198.0% to $599,000 for
the quarter ended December 31, 2000 as compared to the same period in 1999. This
was primarily the result of $325,000 of non-recurring income resulting from the
settlement of litigation and an insurance claim and a $53,000 increase in gains
on the sale of investment securities held for sale recorded during the three
months ended December 31, 2000. There were no such gains recorded during the
quarter ended December 31, 1999.

OPERATING EXPENSES. Total operating expenses increased by $25,000 or 2.5% during
the quarter ended December 31, 2000 as compared to the comparable quarter in
1999. This increase was primarily due to a $42,000 increase in compensation and
benefits expense and a $33,000 increase in other operating expenses. These
increases were partially offset by a decrease of $33,000 in professional fees
and a $17,000 decrease in federal insurance premiums.

INCOME TAX EXPENSE. Income tax expense increased by $146,000 for the quarter
ended December 31, 2000 as compared to the quarter ended December 31, 1999
primarily as a result of higher pre-tax income. The effective tax rate increased
slightly from 31.2% for the 1999 quarter to 32.6% for the 2000 quarter.



                                      -13-
<PAGE>   16


          COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999


GENERAL. The Company's net income for the six months ended December 31, 2000 was
$1,899,000 compared to $1,620,000 for the same period in the prior year. The
increase of $279,000 or 17.2% was primarily the result of a $401,000 or 99.3%
increase in other income and a $81,000 or 2.1% increase in net interest income.
These increases were partially offset by a $155,000 or 21.3% increase in income
tax expense and a $48,000 or 2.4% increase in total operating expenses. These
and other significant fluctuations are discussed below.

NET INTEREST INCOME. Net interest income increased by $81,000 or 2.1% during the
six months ended December 31, 2000 as compared to the same period of the prior
year. The increase was primarily due to a $20.6 million or 13.4% increase in the
average outstanding balance of loans for the six months ended December 31, 2000
as compared to the six months ended December 31, 1999. This increase contributed
to a $790,000 or 2.5% increase in the average outstanding balance of net earning
assets for the six months ended December 31, 2000 as compared to the same period
in the prior period. These increases were partially offset by a decrease in the
average interest rate spread from 2.94% for the six months ended December 31,
1999 to 2.65% for the six months ended December 31, 2000.

Interest income on loans receivable and loans held for sale increased by
$925,000 or 15.9% during the six months ended December 31, 2000 as compared to
the same period in the prior year. This increase was primarily due to a $20.6
million or 13.4% increase in the average outstanding balance of loans receivable
for the six months ended December 31, 2000 as compared to the same period in the
prior year. Also contributing to the increase was an increase in the average
yield on loans receivable from 7.60% for the six months ended December 31, 1999
to 7.76% for the six months ended December 31, 2000. The increase in the average
outstanding balance of loans receivable was due to a $18.2 million or 15.3%
increase in the average outstanding balance of mortgage loans and a $2.4 million
or 7.0% increase in the average outstanding balance of consumer loans. 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 decreased by $19,000 or 4.5% during the six months
ended December 31, 2000 as compared to the six months ended December 31, 1999.
This decrease was primarily due to a $1.5 million or 11.8% decrease in the
average outstanding balance of mortgage-backed securities during the six months
ended December 31, 2000 as compared to the six months ended December 31, 1999.
The average yield on mortgage-backed securities increased from 6.66% for the six
months ended December 31, 1999 to 7.20% for the six months ended December 31,
2000. See "Comparison of the Three Months Ended December 31, 2000 and 1999 - Net
Interest Income."

Interest income on investments held to maturity and investments available for
sale increased during the six months ended December 31, 2000 by $281,000 or
15.9% from the comparable period in 1999, due to a $4.4 million or 7.5% increase
in the average outstanding balance of such securities for the six months ended
December 31, 2000 as compared to the six months ended December 31, 1999. In
addition, the average yield on investment securities increased from 5.97% for
the six months ended December 31, 1999


                                      -14-

<PAGE>   17

to 6.44% for the six months ended December 31, 2000. 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, 2000 and 1999 - Net Interest Income."

Interest income on interest-earning deposits increased during the six months
ended December 31, 2000 by $5,000 or 11.1% from the comparable period in 1999.
This increase was primarily due to an increase in the average yield on
interest-earning deposits from 4.98% for the six months ended December 31, 1999
to 6.35% for the six months ended December 31, 2000. The average outstanding
balance of interest-earning deposits decreased $230,000 or 12.8% for the six
months ended December 31, 2000 as compared to the same period in the prior year.

Interest expense on interest-bearing deposits increased by $460,000 or 12.9% for
the six months ended December 31, 2000 compared to the same period in 1999. The
increase was primarily due to an increase in the average interest rate paid on
savings deposits from 4.04% for the six months ended December 31, 1999 to 4.43%
for the six months ended December 31, 2000. Also contributing to the increase
was a $5.4 million or 3.1% increase in the average outstanding balance of such
deposits during the six months ended December 31, 2000 as compared to the same
period of the prior year.

Interest expense on borrowings increased $651,000 or 116.3% for the six months
ended December 31, 2000 compared to the six months ended December 31, 1999 due
to a $17.1 million or 82.1% increase in the average outstanding balance of FHLB
advances. The average rate paid on borrowings increased from 5.34% for the six
months ended December 31, 1999 to 6.34% for the six months ended December 31,
2000.

PROVISION FOR LOAN LOSSES. The Bank provided $9,000 to its allowance for loan
losses for both the six months ended December 31, 2000 and 1999. 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, 2000 and 1999 - Provision For Loan Losses."

OTHER INCOME. Total other income increased by $401,000 or 99.3% to $805,000 for
the six months ended December 31, 2000 as compared to the same period in 1999.
This was primarily the result of $325,000 of non-recurring income resulting from
the settlement of litigation and an insurance claim and a $58,000 increase in
gains on the sale of investment securities held for sale recorded during the six
months ended December 31, 2000. There were no such gains recorded during the six
months ended December 31, 1999.

OPERATING EXPENSES. Total operating expenses increased by $48,000 or 2.4% during
the six months ended December 31, 2000 as compared to the same period in 1999.
This increase was primarily due to a $79,000 increase in other operating
expenses, a $78,000 increase in compensation and benefits and a $6,000 increase
in data processing fees. These increases were partially offset by a $39,000
decrease in real estate owned expense, a $33,000 decrease in federal insurance
premiums, a $24,000 decrease in professional fees and a $19,000 decrease in
premises and occupancy costs.

INCOME TAX EXPENSE. Income tax expense increased by $155,000 or 21.3% for the
six months ended December 31, 2000 as compared to the six months ended December
31, 1999 primarily as a result of higher pre-tax income. The effective tax rate
increased slightly from 31.0% for the 1999 period to 31.7% for the 2000 period.


                                      -15-

<PAGE>   18

FINANCIAL CONDITION AND CAPITAL RESOURCES

Total assets increased by $7.5 million or 2.9% from June 30, 2000 to December
31, 2000. The largest increases were a $7.0 million increase in loans
receivable, net, a $695,000 increase in investment securities available for sale
and a $475,000 increase in FHLB stock. These increases were partially offset by
a $550,000 decrease in interest-earning deposits in other institutions and a
$481,000 decrease in other assets. The largest components of change in
liabilities were a $6.2 million increase in FHLB advances and a $298,000
increase in savings deposits partially offset by a $897,000 decrease in advance
deposits by borrowers for taxes and insurance.

Under regulations adopted by the Federal Deposit Insurance Corporation ("FDIC"),
the Bank is required to maintain Tier I (Core) capital equal to at least 4% of
the Bank's adjusted total assets, and Tier II (Supplementary) risk-based capital
equal to at least 8% of the risk-weighted assets. At December 31, 2000, the Bank
exceeded all of these requirements, with Tier I and Tier II ratios of 9.34% and
17.74%, respectively.

The following table sets forth certain information concerning the Bank's
regulatory capital at December 31, 2000.

<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)                      $24,179       $24,179      $24,179
Plus general valuation allowances (2)        --            --        1,759
                                        -------       -------       ------
   Total regulatory capital              24,179        24,179       25,938
Minimum required capital                 10,356         5,847       11,694
                                        -------       -------       ------
   Excess regulatory capital            $13,823       $18,332      $14,244
                                        =======       =======      =======
Minimum required capital to be well
   capitalized under Prompt Corrective
   Action Provisions                    $12,945       $ 8,771      $14,618
                                        =======       =======      =======
Regulatory capital as a percentage (3)     9.34%        16.54%       17.74%
Minimum required capital percentage        4.00          4.00         8.00
                                           ----         -----         ----
   Excess regulatory capital percentage    5.34%        12.54%        9.74%
                                           ====         =====        =====
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, 2000.

(2)  Limited to 1.25% of risk adjusted assets.

(3)  Tier I capital is calculated as a percentage of adjusted total assets of
     $258,906. Tier I and Tier II risk-based capital are calculated as a
     percentage of adjusted risk-weighted assets of $146,176.



                                      -16-

<PAGE>   19

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.

ACCOUNTING DEVELOPMENTS

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133," and SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - An Amendment of FASB Statement No. 133," requires that derivative
instruments be carried at fair value on the balance sheet. The statement
continues to allow derivative instruments to be used to hedge various risks and
sets forth specific criteria to be used to determine when hedge accounting can
be used. The statements also provide for offsetting changes in fair value or
cash flows of both the derivative and the hedged asset or liability to be
recognized in earnings in the same period; however, any changes in fair value or
cash flow that represent the ineffective portion of a hedge are required to be
recognized in earnings and cannot be deferred. For derivative instruments not
accounted for as hedges, changes in fair value are required to be recognized in
earnings.

The Company adopted the provisions of this statement as amended as of July 1,
2000. As of December 31, 2000, no such instruments were used by 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 2000 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, 2000.

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




                                      -17-
<PAGE>   20


subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize or should underlying assumptions prove
incorrect, actual results may vary from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.



                    LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY

                                     PART II


Item 1.  Legal Proceedings

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

Item 2.  Changes in Securities and Use of Proceeds

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         A. The Annual Meeting of Stockholders was held on November 9, 2000.

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

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

                Nominees for a three-year term:

                Annette D. Ganassi
                For:                   1,813,150
                Withheld:                117,725

                Harvey J. Haughton
                For:                   1,819,989
                Withheld:                110,886



                                      -18-
<PAGE>   21



             2. To adopt the 2000 Stock Option Plan.

                For:                   1,580,477
                Against:                 336,634
                Abstain:                  13,764


             3. To ratify the appointment of KPMG LLP, as the Company's
                independent auditors for the fiscal year ending June 30, 2001.

                For:                   1,879,532
                Against:                  45,043
                Abstain:                   6,300


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, 2001



                                      -20-