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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
20549

FORM 10-Q

|x                                                                  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------
|                                                                   |  |                                                                                        
|For the quarterly period ended March 31, 2003                     
|                                                                  
|OR                                                                
|                                                                   |  |                                                                                        
|o                                                                  |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     
|                                                                   |  |                                                                                        
|For the transition period from __________ to __________           
|                                                                  
|Commission file Number 0-21720                                    
|                                                                  
|Slippery Rock Financial Corporation                               
|(Exact Name of registrant as specified in its charter)            
|                                                                  
|Pennsylvania                                                       |  | 25-1674381                                                                             
|(State or other jurisdiction of incorporation or organization)     |  | (I.R.S. Employer Identification Number)                                                
|                                                                   |  |                                                                                        
|100 South Main Street Slippery Rock, Pennsylvania                  |  | 16057                                                                                  
|(Address of principal executive offices)                           |  | (Zip Code)                                                                             
|                                                                   |  |                                                                                        
|Registrants telephone number, including area code: (724) 794-2210
|                                                                   |  |                                                                                        

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 requirement for the past 90 days.

|Yes x | No o
|----- | ----

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

|Yes o | No x
|----- | ----

As of May 13, 2003, there were 2,728,323 shares
outstanding of the issuers class of common stock.

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Slippery Rock Financial Corporation INDEX TO QUARTERLY REPORT ON FORM 10-Q

|        |                       |                                                                                              | Page 
|------- | --------------------- | -------------------------------------------------------------------------------------------- | -----
|        |                       |                                                                                              |      
|Part I  | Financial Information |                                                                                             
|        |                       |                                                                                              |      
|        | Item 1.               | Consolidated Financial Statements (unaudited)                                                |      
|        |                       |                                                                                              |      
|        |                       | Consolidated Balance Sheet, March 31, 2003 and December 31, 2002                             | 3    
|        |                       |                                                                                              |      
|        |                       | Consolidated Statement of Income, Three months ended March 31, 2003 and 2002                 | 4    
|        |                       |                                                                                              |      
|        |                       | Consolidated Statement of Comprehensive Income, Three months ended March 31, 2003 and 2002   | 5    
|        |                       |                                                                                              |      
|        |                       | Consolidated Statement of Changes in Stockholders Equity, Three months ended March 31, 2003 | 6    
|        |                       |                                                                                              |      
|        |                       | Consolidated Statement of Cash Flows, Three months ended March 31, 2003 and 2002             | 7    
|        |                       |                                                                                              |      
|        |                       | Notes to Consolidated Financial Statements                                                   | 8-10 
|        |                       |                                                                                              |      
|        | Item 2.               | Managements Discussion and Analysis of Financial Condition and Results of Operations        | 11-17
|        |                       |                                                                                              |      
|        | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                   | 17-18
|        |                       |                                                                                              |      
|        | Item 4.               | Controls and Procedures                                                                      | 18   
|        |                       |                                                                                              |      
|Part II | Other Information     |                                                                                             
|        |                       |                                                                                              |      
|        | Item 1.               | Legal Proceedings                                                                            | 19   
|        |                       |                                                                                              |      
|        | Item 2.               | Changes in Securities and Use of Proceeds                                                    | 19   
|        |                       |                                                                                              |      
|        | Item 3.               | Defaults upon Senior Securities                                                              | 19   
|        |                       |                                                                                              |      
|        | Item 4.               | Submission of Matters to a Vote of Security Holders                                          | 19   
|        |                       |                                                                                              |      
|        | Item 5.               | Other Information                                                                            | 20   
|        |                       |                                                                                              |      
|        | Item 6.               | Exhibits and Reports of Form 8-K                                                             | 20   
|        |                       |                                                                                              |      
|        | Signatures            |                                                                                              | 21   
|        |                       |                                                                                              |      
|        | Certifications        | 22-23                                                                                       

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Slippery Rock Financial CorporationCONSOLIDATED BALANCE SHEET (Unaudited - $ in 000)

|                                                                                                                    |  | March 31, 2003 |         | December 31, 2002 |  
|------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ----------------- | -
|                                                                                                                    |  |                |         |                   |  
|ASSETS                                                                                                              |  |                |         |                   |  
|Cash and due from banks                                                                                             |  | $              | 21,617  |                   | $
|Interest-bearing deposits in other banks                                                                            |  |                | 140     |                   |  
|Federal funds sold                                                                                                  |  |                | 9,500   |                   |  
|Mortgage loans held for sale                                                                                        |  |                | 1,861   |                   |  
|Investment securities:                                                                                              |  |                |         |                   |  
|Available for sale                                                                                                  |  |                | 67,286  |                   |  
|Held to maturity (market value $2,554 and $2,661)                                                                   |  |                | 2,545   |                   |  
|Loans                                                                                                               |  |                | 221,344 |                   |  
|Less allowance for loan losses                                                                                      |  |                | 2,916   |                   |  
|                                                                                                                    |  |                |         |                   |  
|Net loans                                                                                                           |  |                | 218,428 |                   |  
|Premises and equipment                                                                                              |  |                | 7,841   |                   |  
|Core deposit intangible                                                                                             |  |                | 68      |                   |  
|Goodwill                                                                                                            |  |                | 1,013   |                   |  
|Accrued interest and other assets                                                                                   |  |                | 7,516   |                   |  
|                                                                                                                    |  |                |         |                   |  
|Total assets                                                                                                        |  | $              | 337,815 |                   | $
|                                                                                                                    |  |                |         |                   |  
|LIABILITIES                                                                                                         |  |                |         |                   |  
|Deposits:                                                                                                           |  |                |         |                   |  
|Noninterest-bearing demand                                                                                          |  | $              | 48,182  |                   | $
|Interest-bearing demand                                                                                             |  |                | 31,793  |                   |  
|Savings                                                                                                             |  |                | 59,062  |                   |  
|Money market                                                                                                        |  |                | 23,025  |                   |  
|Time                                                                                                                |  |                | 106,272 |                   |  
|                                                                                                                    |  |                |         |                   |  
|Total deposits                                                                                                      |  |                | 268,334 |                   |  
|Short-term borrowings                                                                                               |  |                | 5,654   |                   |  
|Other borrowings                                                                                                    |  |                | 30,164  |                   |  
|Accrued interest and other liabilities                                                                              |  |                | 1,517   |                   |  
|                                                                                                                    |  |                |         |                   |  
|Total liabilities                                                                                                   |  |                | 305,669 |                   |  
|                                                                                                                    |  |                |         |                   |  
|STOCKHOLDERS EQUITY                                                                                                |  |                |         |                   |  
|Common stock (par value $0.25; 12,000,000 shares authorized; 2,751,859 and 2,776,504 shares issued and outstanding) |  |                | 694     |                   |  
|Capital surplus                                                                                                     |  |                | 10,661  |                   |  
|Retained earnings                                                                                                   |  |                | 20,442  |                   |  
|Accumulated other comprehensive income                                                                              |  |                | 732     |                   |  
|Treasury Stock (25,000 shares at cost)                                                                              |  |                | (383    | )                 |  
|                                                                                                                    |  |                |         |                   |  
|Total stockholders equity                                                                                          |  |                | 32,146  |                   |  
|                                                                                                                    |  |                |         |                   |  
|Total liabilities and stockholders equity                                                                          |  | $              | 337,815 |                   | $
|                                                                                                                    |  |                |         |                   |  

See accompanying notes to the unaudited consolidated financial statements

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Slippery Rock Financial CorporationCONSOLIDATED STATEMENT OF INCOME (Unaudited - $ in 000 except per share amounts)

|                                                    |  | Three Months Ended March 31, |          
|--------------------------------------------------- |  | ---------------------------- | ---------
|                                                    |  | 2003                         |          
|                                                    |  |                              |          
|INTEREST AND DIVIDEND INCOME                        |  |                              |          
|Interest and fees on loans                          |  | $                            | 3,868    
|Federal funds sold                                  |  |                              | 14       
|Interest and dividends on investment securities:    |  |                              |          
|Taxable interest                                    |  |                              | 599      
|Tax-exempt interest                                 |  |                              | 147      
|Dividends                                           |  |                              | 22       
|                                                    |  |                              |          
|Total interest and dividend income                  |  |                              | 4,650    
|                                                    |  |                              |          
|INTEREST EXPENSE                                    |  |                              |          
|Deposits                                            |  |                              | 1,322    
|Short-term borrowings                               |  |                              | 11       
|Other borrowings                                    |  |                              | 388      
|                                                    |  |                              |          
|Total interest expense                              |  |                              | 1,721    
|                                                    |  |                              |          
|NET INTEREST INCOME                                 |  |                              | 2,929    
|Provision for loan losses                           |  |                              | 150      
|                                                    |  |                              |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                              | 2,779    
|                                                    |  |                              |          
|OTHER INCOME                                        |  |                              |          
|Service charges on deposit accounts                 |  |                              | 352      
|Trust department income                             |  |                              | 37       
|Net investment securities gains (losses)            |  |                              | 48       
|Net gains on loan sales                             |  |                              | 632      
|Interchange fee income                              |  |                              | 66       
|Other income                                        |  |                              | 71       
|                                                    |  |                              |          
|Total other income                                  |  |                              | 1,206    
|                                                    |  |                              |          
|OTHER EXPENSE                                       |  |                              |          
|Salaries and employee benefits                      |  |                              | 1,371    
|Occupancy expense                                   |  |                              | 186      
|Equipment expense                                   |  |                              | 255      
|Data processing expense                             |  |                              | 80       
|Pennsylvania shares tax                             |  |                              | 73       
|Professional fees                                   |  |                              | 109      
|Other expense                                       |  |                              | 658      
|                                                    |  |                              |          
|Total other expense                                 |  |                              | 2,732    
|                                                    |  |                              |          
|Income before income taxes                          |  |                              | 1,253    
|Income tax expense                                  |  |                              | 377      
|                                                    |  |                              |          
|NET INCOME                                          |  | $                            | 876      
|                                                    |  |                              |          
|PER SHARE DATA                                      |  |                              |          
|Average shares for the period, Basic                |  |                              | 2,774,838
|Average shares for the period, Diluted              |  |                              | 2,776,652
|Earnings per share, Basic                           |  | $                            | 0.32     
|Earnings per share, Diluted                         |  | $                            | 0.32     
|Dividends paid                                      |  | $                            | 0.15     

See accompanying notes to the unaudited consolidated financial statements

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Slippery Rock Financial CorporationCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited - $ in 000)

|                                                                      |  | Three Months Ended March 31, |    
|--------------------------------------------------------------------- |  | ---------------------------- | ---
|                                                                      |  | 2003                         |    
|                                                                      |  |                              |    
|Net income                                                            |  | $                            | 876
|Other comprehensive income:                                           |  |                              |    
|Unrealized gains on available for sale securities                     |  |                              | 205
|Reclassification adjustment for (gains) losses included in net income |  |                              | (48
|                                                                      |  |                              |    
|Other comprehensive income before tax                                 |  |                              | 157
|Income tax expense related to other comprehensive income              |  |                              | 53 
|                                                                      |  |                              |    
|Other comprehensive income, net of tax                                |  |                              | 104
|                                                                      |  |                              |    
|Comprehensive income                                                  |  | $                            | 980
|                                                                      |  |                              |    

See accompanying notes to the unaudited consolidated financial statements

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Slippery Rock Financial CorporationCONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited - $ in 000 except per share amounts)

|                                                     |  | Common Stock |     | Capital Surplus |   | Retained Earnings |  | Accumulated Other Comprehensive Income |        | Treasury Stock |   | Total | 
|---------------------------------------------------- |  | ------------ | --- | --------------- | - | ----------------- |  | -------------------------------------- | ------ | -------------- | - | ----- | 
|                                                     |  |              |     |                 |   |                   |  |                                        |        |                |   |       | 
|Balance, December 31, 2002                           |  | $            | 694 |                 | $ | 10,656            |  | $                                      | 19,982 |                | $ | 628   | 
|Net Income                                           |  |              |     |                 |   |                   |  |                                        | 876    |                |   |       | 
|Net unrealized gain on available for sale securities |  |              |     |                 |   |                   |  |                                        |        |                |   | 104   | 
|Stock options exercised                              |  |              |     |                 |   | 5                 |  |                                        |        |                |   |       | 
|Treasury stock purchased                             |  |              |     |                 |   |                   |  |                                        |        |                |   |       | 
|Cash dividends ($0.15 per share)                     |  |              |     |                 |   |                   |  |                                        | (416   | )              |   |       | 
|                                                     |  |              |     |                 |   |                   |  |                                        |        |                |   |       | 
|Balance, March 31, 2003                              |  | $            | 694 |                 | $ | 10,661            |  | $                                      | 20,442 |                | $ | 732   | 
|                                                     |  |              |     |                 |   |                   |  |                                        |        |                |   |       | 

See accompanying notes to the unaudited consolidated financial statements

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Slippery Rock Financial CorporationCONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited - $ in 000)

|                                                                                  |  | Three Months Ended March 31, |        
|--------------------------------------------------------------------------------- |  | ---------------------------- | -------
|                                                                                  |  | 2003                         |        
|                                                                                  |  |                              |        
|OPERATING ACTIVITIES                                                              |  |                              |        
|Net income                                                                        |  | $                            | 876    
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |        
|Provision for loan losses                                                         |  |                              | 150    
|Depreciation, amortization and accretion of investment securities                 |  |                              | 271    
|Originations of mortgage loans held for sale                                      |  |                              | (16,175
|Proceeds from sales of mortgage loans                                             |  |                              | 16,107 
|Net gains on loan sales                                                           |  |                              | (632   
|Net investment security (gains) losses                                            |  |                              | (48    
|Decrease in accrued interest receivable                                           |  |                              | 234    
|Decrease in accrued interest payable                                              |  |                              | (97    
|Other, net                                                                        |  |                              | (628   
|                                                                                  |  |                              |        
|Net cash provided by operating activities                                         |  |                              | 58     
|                                                                                  |  |                              |        
|INVESTING ACTIVITIES                                                              |  |                              |        
|Investment securities available for sale:                                         |  |                              |        
|Proceeds from sales                                                               |  |                              | 5,151  
|Proceeds from maturities and repayments                                           |  |                              | 3,605  
|Purchases                                                                         |  |                              |       
|Investment securities held to maturity:                                           |  |                              |        
|Proceeds from maturities and repayments                                           |  |                              | 101    
|Decrease (Increase) in loans, net                                                 |  |                              | 3,648  
|Purchases of premises and equipment                                               |  |                              | (646   
|Proceeds from loan sales                                                          |  |                              | 6,720  
|Proceeds from the sale of other real estate owned                                 |  |                              | 81     
|                                                                                  |  |                              |        
|Net cash provided by (used for) investing activities                              |  |                              | 18,660 
|                                                                                  |  |                              |        
|FINANCING ACTIVITIES                                                              |  |                              |        
|Increase (decrease) in deposits, net                                              |  |                              | (2,968 
|Increase in short term borrowings                                                 |  |                              | 2,829  
|Payments on other borrowings                                                      |  |                              | (12    
|Proceeds from stock options exercised                                             |  |                              | 5      
|Purchase of treasury stock                                                        |  |                              | (383   
|Cash dividends paid                                                               |  |                              | (416   
|                                                                                  |  |                              |        
|Net cash provided by (used for) financing activities                              |  |                              | (945   
|                                                                                  |  |                              |        
|Increase in cash and cash equivalents                                             |  |                              | 17,773 
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  |  |                              | 13,484 
|                                                                                  |  |                              |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        |  | $                            | 31,257 
|                                                                                  |  |                              |        
|Cash payments for interest                                                        |  | $                            | 1,818  
|Cash payments for income taxes                                                    |  | $                            | 250    

See accompanying notes to the unaudited consolidated financial statements

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Slippery Rock Financial CorporationNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1  BASIS OF PRESENTATIONThe accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information, which would be included in audited financial statements.  The information furnished reflects all normal recurring
adjustments, which are, in the opinion of management, necessary for fair statement of the results of the period.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full
year.

NOTE 2  EARNINGS PER SHAREThere were no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as
presented on the Consolidated Statement of Income will be used as the numerator.  The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share
computation.

|                                                                                                         |  | Three Months Ended March 31, 2003 |           | Three Months Ended March 31, 2002 | 
|-------------------------------------------------------------------------------------------------------- |  | --------------------------------- | --------- | --------------------------------- | 
|                                                                                                         |  |                                   |           |                                   | 
|Weightedaverage common shares outstanding used to calculate basic earnings per share                    |  |                                   | 2,774,838 |                                   | 
|Additional common stock equivalents (stock options) used to calculate diluted earnings per share         |  |                                   | 1,814     |                                   | 
|                                                                                                         |  |                                   |           |                                   | 
|Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share |  |                                   | 2,776,652 |                                   | 
|                                                                                                         |  |                                   |           |                                   | 

Options to purchase 112,316 and 39,050 shares of common stock at prices from $15.23 to $19.30
were outstanding for the periods ended March 31, 2003 and 2002, respectively, but were not included in the computation of diluted EPS because to do so would have been anti-dilutive.

NOTE 3
 RECLASSIFICATION OF COMPARATIVE AMOUNTSCertain comparative amounts for the prior periods have been reclassified to conform to current period presentations.  Such reclassifications had no effect on net income or
stockholders equity.

NOTE 4  RECENT ACCOUNTING PRONOUNCEMENTSIn August 2001, the Financial Accounting Standards Board (FASB) issued FAS No. 143, Accounting for
Asset Retirement Obligations, which requires that the fair value of a liability be recognized when incurred for the retirement of a long-lived asset and the value of the asset be increased by that amount.  The statement also requires that the
liability be maintained at its present value in subsequent periods and outlines certain disclosures for such obligations.  The adoption of this statement, which was effective January 1, 2003, did not have a material effect on the Companys
financial position or results of operations.

In April 2002, the FASB issued FAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.  FAS No. 145 rescinds FAS No. 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect.  As a result, the
criteria in APB Opinion No. 30 will now be used to classify those gains and losses. This statement also amends FAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for
in the same manner as sale-leaseback transactions. This statement also makes technical corrections to existing pronouncements, which are not substantive but in some cases may change accounting practice.  The provisions of this statement related
to the rescission of FAS No. 4 shall be applied in fiscal years beginning after May 15, 2002.  Any gain or loss on extinguishments of debt that was classified as an extraordinary item in prior periods

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presented that does not meet the criteria in APB Opinion No. 30 for classification as an extraordinary item shall be reclassified.  Early adoption of the provisions of
this statement related to FAS No. 13 shall be effective for transactions occurring after May 15, 2002.  All other provisions of this statement shall be effective for financial statements issued on or after May 15, 2002.   The adoption
of this statement did not have a material effect on the Companys financial position or results of operations.

In July 2002, the FASB issued FAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  This statement replaces EITF Issue
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).  The new statement is effective for exit or disposal activities initiated after
December 31, 2002.  The adoption of this statement did not have a material effect on the Companys financial position or results of operations.

On December 31, 2002, the FASB issued FAS
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure, which amends FAS No. 123, Accounting for Stock-Based Compensation.  FAS No. 148 amends the disclosure requirements of FAS No. 123 to require more prominent and
more frequent disclosures in financial statements about the effects of stock-based compensation.  Under the provisions of FAS No. 123, companies that adopted the preferable, fair value based method were required to apply that method
prospectively for new stock option awards.  This contributed to a ramp-up effect on stock-based compensation expense in the first few years following adoption, which caused concern for companies and investors because of the lack of
consistency in reported results.  To address that concern, FAS No. 148 provides two additional methods of transition that reflect an entitys full complement of stock-based compensation expense immediately upon adoption, thereby
eliminating the ramp-up effect.  FAS No. 148 also improves the clarity and prominence of disclosures about the pro forma effects of using the fair value based method of accounting for stock-based compensation for all companiesregardless
of the accounting method usedby requiring that the data be presented more prominently and in a more user-friendly format in the footnotes to the financial statements.  In addition, the statement improves the timeliness of those
disclosures by requiring that this information be included in interim as well as annual financial statements. The transition guidance and annual disclosure provisions of FAS No. 148 are effective for fiscal years ending after December 15, 2002, with
earlier application permitted in certain circumstances.  The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002.

The following table represents the effect on net income and earnings per share had the stock-based employee compensation expense been recognized:

|                                               |  | Three Months Ended March 31, |     
|---------------------------------------------- |  | ---------------------------- | ----
|                                               |  | 2003                         |     
|                                               |  |                              |     
|Net income, as reported:                       |  | $                            | 876 
|Less proforma expense related to stock options |  |                              | 21  
|                                               |  |                              |     
|Proforma net income                            |  | $                            | 855 
|                                               |  |                              |     
|Basic net income per common share:             |  |                              |     
|As reported                                    |  | $                            | 0.32
|Pro forma                                      |  |                              | 0.32
|Diluted net income per common share:           |  |                              |     
|As reported                                    |  | $                            | 0.32
|Pro forma                                      |  |                              | 0.32

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In April, 2003, the FASB issued FAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.  This statement amends and clarifies accounting
for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under FAS No. 133.  The amendments set forth in FAS No. 149 improve financial reporting by requiring that contracts
with comparable characteristics be accounted for similarly. In particular, this statement clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in FAS No. 133. In addition,
it clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. FAS No. 149 amends certain other existing pronouncements. Those changes will result in more consistent reporting of
contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting.   This statement is effective for contracts entered into or modified after June 30, 2003, except as stated below and
for hedging relationships designated after June 30, 2003. The guidance should be applied prospectively.  The provisions of this statement that relate to FAS No. 133 Implementation Issues that have been effective for fiscal quarters that began
prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, certain provisions relating to forward purchases or sales of when-issued securities or other securities that do not yet exist,
should be applied to existing contracts as well as new contracts entered into after June 30, 2003.

In November, 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and
Disclosure requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.  This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued.  This interpretation clarifies that a guarantor is required to disclose (a) the nature of the guarantee, including the approximate term of the guarantee, how the guarantee arose, and the events or
circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments under the guarantee; (c) the carrying amount of the liability, if any, for the guarantors obligations under the
guarantee; and (d) the nature and extent of any recourse provisions or available collateral that would enable the guarantor to recover the amounts paid under the guarantee.  This interpretation also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the obligations it has undertaken in issuing the guarantee, including its ongoing obligation to stand ready to perform over the term of the guarantee in the event that the specified
triggering events or conditions occur.  The objective of the initial measurement of that liability is the fair value of the guarantee at its inception.  The initial recognition and initial measurement provisions of this interpretation are
applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantors fiscal year-end. The disclosure requirements in this interpretation are effective for financial statements of interim or
annual periods ending after December 15, 2002.  The adoption of this interpretation did not have a material effect on the Companys financial position or results of operations.

In
January, 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, in an effort to expand upon and strengthen existing accounting guidance that addresses when a company should include in its financial statements the
assets, liabilities and activities of another entity.  The objective of this interpretation is not to restrict the use of variable interest entities but to improve financial reporting by companies involved with variable interest entities. 
Until now, one company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests.  This interpretation changes that by requiring a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. The consolidation
requirements of this interpretation apply immediately to variable interest entities created after January 31, 2003.  The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15,
2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established.  The adoption of this interpretation has not and is not expected to
have a material effect on the Companys financial position or results of operations.

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Item 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking
Statement

The Private Securities Litigation Act of 1995 contains safe harbor provisions regarding forward-looking statements.  When used in this discussion, the words
believes, anticipates, contemplates, expects, and similar expressions are intended to identify forward-looking statements.  Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected.  Those risks and uncertainties include changes in interest rates, the ability to control costs and expenses, and general economic conditions.  The Company undertakes no
obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Comparison of the Three Months Ended March 31, 2003 and 2002

Total interest income of $4,650,000 for the three-month period ended March 31, 2003
compared to $5,253,000 for the same three-month period in 2002, a decrease of $603,000 or 11.5%.  The overall decrease in total interest income is attributed principally to a decrease in interest and fees on loans of $750,000 or 16.2%. 
This is partially offset by an increase in taxable interest income from investments of $191,000.  Income from interest and fees on loans decreased due to decreases in both volume and yields within the loan portfolio.

Average gross loans, including loans available for sale, at March 31, 2003 were $231.5 million, a decrease of $15.3 million or 6.2% from $246.8 million at March 31, 2002.   Virtually all major segments
within the loan portfolio reflected net declines in average balances compared to March 31, 2002. The most significant declines occurred within the real estate, commercial real estate, and consumer segments.  Average real estate loans decreased
$4.5 million or 17.8%, average commercial real estate loans decreased $3.6 million or 5.0%, and average consumer loans decreased $2.4 million or 16.8%.  The decline within the average loan portfolio was brought about by general market
activity.

Interest and fees on loans also decreased due to a decline in the net yield on interest earning assets as a result of the historically low interest rate environment.  The tax
equivalent yield on interest earning assets fell from 7.14% at March 31, 2002 to 6.04% at March 31, 2003.  As interest rates fell throughout 2001 and 2002, the Banks variable rate earning assets repriced downward, and continue to do so,
while new loans with lower yields are being added to the portfolio.  The net yield on interest earning assets also decreased due to a shift in the earning asset composition.  Investments, which generally have a lower yield than loans, as a
percent of earning assets at March 31, 2003 were 26.5% compared to 19.2% at March 31, 2002.

While interest and fee income from loans decreased, taxable investment interest income increased due to
an increase in volume within the investment portfolio.  Average total investments were $85.4 million at March 31, 2003, an increase of $29.8 million from $55.6 million at March 31, 2002.  Average mortgage-backed securities represented the
largest increase within the taxable investment securities of $27.0 million.  As the interest rate on overnight funds decreased throughout 2002, management felt it prudent to invest in higher yielding, short-term duration, mortgage-backed
securities, which also provide liquidity to the Company through monthly repayments of principal and interest.

Total interest expense of $1,721,000 for the three-month period ended March 31, 2003
represented a decrease of $504,000 from the $2,225,000 reported for the same three-month period in 2002.  The change is comprised primarily of a decrease in interest expense on deposits of $516,000.  Although average interest-bearing
deposits increased $4.8 million, interest expense decreased for the period.    This resulted from a general decline in the Banks cost of funds. The Banks cost of deposits decreased from 2.97% at March 31, 2002 to 2.19% at
March 31, 2003.   The Bank continued to see a shift in consumer preference within the interest bearing deposits from time deposits to savings.  Average time deposits decreased $16.3 million from March 31, 2002, while the

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average savings products increased $15.0 million or 33.9%.  Due to the low interest rate environment, consumer preference has shifted towards the more liquid products and
away from the fixed maturity products.

Net interest income of $2,929,000 for the three months ended March 31, 2003 compared to $3,028,000 for the same three-month period in 2002, a decrease of
$99,000.

The provision for loan losses for the three months ended March 31, 2003 was $150,000, a decrease of $155,000 from March 31, 2002.  Management felt the decrease in the provision
expense was warranted as a result of its recurring quarterly analysis of loan loss reserve adequacy.  The details of the analysis and methodology are discussed further under the Risk Elements section that follows.

Total other income for the three-month period ended March 31, 2003 of $1,206,000 compared to $484,000 for the three-month period ended March 31, 2003, an increase of $722,000.  This increase consists primarily of an
increase in service charges on deposit accounts of $115,000 and an increase in the gains on loan sales of $607,000.  Service charge fee income increased primarily due to the new Bounce Protection program implemented in October
2002.

Gains of $533,000 were recorded on the sale of $15.7 million of fixed rate, 1-4 family residential mortgages to the Federal Home Loan Mortgage Corporation (Freddie Mac) for the
three-month period ended March 31, 2003.   Student loans totaling $6.6 million were also sold in the first quarter of 2003 resulting in a gain of $99,000.  For the three-month period ended March 31, 2002, $15.1 million of fixed rated,
1-4 family residential mortgages were sold resulting in a net gain of $25,000.

Total other expense of $2,732,000 for the three months ended March 31, 2003 compared to $2,356,000 for the same
three-month period in 2002.  This represented an increase of $376,000 or 16.0%.   The increase was primarily derived from an increase in salaries and employee benefits expense of $127,000 and an increase in other expense of
$148,000.   The increases in salaries and employee benefits resulted principally from additional personnel as well as an increase in the cost of employee benefits.

Other expense
increased due to a variety of reasons.  Although the bounce protection program increased the Companys fee income for the three months ended March 31, 2003, it also caused increases in other expenses of $36,000 due to commissions paid to
the program provider and $18,000 for a provision to establish a reserve for potential losses from demand deposit overdrafts as a result of this program. The Company also saw an increase in examination fees and federal deposit insurance of $12,000
and $21,000, respectively, as a result of the latest Office of the Comptroller of the Currency (OCC) examination.  In March 2003, the Company recorded a loss of $39,000 on the sale of other real estate owned.  Partially offsetting these
increases in other expense was a decrease in contributions of $37,000 due to the discontinuation and reduction of one time contributions that occurred in 2003.  Credit bureau fees also decreased $28,000 for the three months ended March 31, 2003
due to a decline in volume based expenses.

Net income for the three-month period ended March 31, 2003 was $876,000, an increase of $260,000 from the $616,000 reported at March 31, 2002. 
Earnings per share for the three-month period ended March 31, 2003 were $0.32, an increase of $0.10 from $0.22 per share earned during the same three-month period in 2002.

Financial
Condition

Total assets remained relatively unchanged from December 31, 2002 with an increase of $272,000 or 0.1% to $337.8 million at March 31, 2003. The increase in total assets is due to
an increase in federal funds sold and cash and due from banks of $9.5 million and $8.1 million, respectively.  The increase in cash and overnight funds was due to the decrease in available for sale securities and loans.  Available for sale
securities decreased $8.6 million from the $75.9 million reported at December 31, 2002.  This decrease was principally due to the sale of $5.1 million of mortgage backed securities, which resulted in a net gain of $48,000.  The additional
decline in available for sale securities was due to the normal principal pay-downs and prepayments on the

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mortgage backed securities. Total gross loans (including loans available for sale) decreased $10.4 million from December 31, 2002 due to general economic conditions and the
sale of $6.6 million in student loans discussed above.

Total deposits of $268.3 million at March 31, 2003 represented a decrease of $3.0 million or 1.1% from $271.3 million at December 31,
2002.  With the exception of noninterest-bearing demand and savings, which increased $3.4 million and $853,000, respectively, all deposit products had net decreases during the period.  The most significant decrease was within money market
accounts, which decreased $4.1 million.  This decrease resulted from the transfer of approximately $2.8 million in deposit accounts to short term borrowings as a result of the Company entering into a repurchase agreement with an existing
customer.  Time deposits have also decreased $2.4 million from December 31, 2002, which is due to consumer preference resulting from the economic decline and low interest rate environment.

At
March 31, 2003, the Company serviced approximately $85.4 million in sold fixed rate mortgages. Sales of fixed rate mortgages for the three-month period ended March 31, 2003 totaled $15.7 million with net gains of $533,000. Management does anticipate
future sales of fixed rate mortgages; however, the extent to which the Company participates in the secondary market will be dependent upon demand for fixed rate mortgages in the market place, liquidity needs of the Company and interest rate risk
exposure.  Management will continue to obtain the necessary documentation to allow loans to be sold in the secondary market, so that if liquidity or market conditions dictate, management will be able to respond to these conditions.

Management has calculated and monitored risk-based and leverage capital ratios in order to assess compliance with regulatory guidelines.  The following schedule presents certain regulatory capital ratio
requirements along with the Companys position at March 31, 2003:

|                            |  | Actual |        |       |  |               |   |                  |     
|--------------------------- |  | ------ | ------ | ----- |  | ------------- | - | ---------------- | ----
|                            |  |        |        |       |  |               |   |                  |     
|                            |  | Amount |        | Ratio |  | Minimum Ratio |   | Well Capitalized |     
|                            |  |        |        |       |  |               |   |                  |     
|Tier 1 risk - based capital |  | $      | 30,261 |       |  | 14.08         | % |                  | 4.00
|Total risk - based capital  |  |        | 32,951 |       |  | 15.33         |   |                  | 8.00
|Leverage capital            |  |        | 30,261 |       |  | 8.93          |   |                  | 4.00
|                            |  |        |        |       |  |               |   |                  |     

As the above table illustrates, the Company exceeds both the minimum and well-capitalized
regulatory capital requirements at March 31, 2003.

On October 18, 2002, the Company announced that its subsidiary bank had entered into an agreement with the Banks primary regulator, the
Office of the Comptroller of the Currency (OCC).  The agreement is designed to evaluate and enhance certain areas of the Banks operations, including management, credit administration, audit, information technology and
regulatory compliance.  There are no stipulations that limit or restrict the Banks ability to pay dividends or require the Bank to increase its capital position.  Management is committed to addressing the concerns identified within
the agreement and is working diligently to implement the suggestions in a timely and effective manner.  Exclusive of additional personnel expenses, exam related expenditures were approximately $278,000, of which $227,000 were recorded in
2002.  The Company anticipates incurring additional operating expenses in connection with complying with the agreement throughout 2003.  Potentially impacted areas would include: staffing levels, legal and consulting fees and higher
deposit insurance premiums.

A copy of the agreement is included as an exhibit to a Form 8-K filed by Slippery Rock Financial Corporation on October 18, 2002.

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LIQUIDITY

The principal functions of the Companys asset/liability management program are to provide adequate
liquidity and to monitor interest rate sensitivity.  Liquidity represents the ability to meet the cash flow requirements of both depositors and customers requesting bank credit.  Asset liquidity is provided by repayments and the management
of maturity distributions for loans and securities.  An important aspect of asset liquidity lies in maintaining adequate levels of adjustable rate, short term, or relatively risk free interest earning assets.  Management evaluates the
Companys liquidity position over 30 day, 60 day, and 90+ day time horizons.  The analysis not only identifies liquidity within the balance sheet, but off balance sheet as well.  It identifies anticipated sources and uses of funds as
well as potential sources and uses.  Anticipated needs would include liquidity for credit demand, commitments to purchase assets, and anticipated deposit decreases.  Anticipated sources would include cash (net of reserve requirements),
maturing investment securities, daily fed funds sold, anticipated deposit increases, and the repayment of loans and mortgage backed securities.  Potential uses would include unfunded loan commitments available on lines of credit. 
Potential sources would include borrowing capacity available to the Company through the Federal Home Loan Bank (FHLB). At March 31, 2003, for the 30-day horizon, the Company had a net anticipated funding position of 4.2% of total
assets.  This ratio was 1.3% at December 31, 2002.  Management views this ratio to be at an adequate level.

Management also monitors its liquidity by the loans to deposits
ratio.  The gross loans (including loans held for sale) to deposits ratio was 83.2% at March 31, 2003 as compared to 86.1% at December 31, 2002 and 92.5% at March 31, 2002.

The
Companys liquidity plan allows for the use of long-term advances or short-term lines of credit with the FHLB as a source of funds.  Borrowing from the FHLB not only provides a source of liquidity for the Company, but also serves as a tool
to reduce interest rate risk.  The Company may structure borrowings from FHLB to match those of customer credit requests, and therefore, lock in interest rate spreads over the lives of the loans.  At March 31, 2003, the Company continued
to have three such matched funding loans outstanding totaling $132,000.

The Company continues to also have short-term borrowing availability through FHLB RepoPlus advances. 
RepoPlus advances are short-term borrowings maturing within one year, bearing a fixed rate of interest and subject to prepayment penalty.  At March 31, 2003 and 2002, the Company had no RepoPlus advances
outstanding.  The Companys remaining borrowing capacity with FHLB was $124.9 million at March 31, 2003.

In March 2001, the Company entered into a Convertible Select with a Strike Rate
advance with the FHLB for general liquidity purposes in the amount of $30.0 million at a rate of 5.11%.  The 10year/1year advance has a 10 year maturity with the opportunity to reprice quarterly, if the strike rate is attained, beginning 1 year
from the original advance date. The strike rate of 7.50% is tied to the 3-month London Inter-bank Offering Rate (LIBOR); accordingly, the advance will maintain at its fixed rate unless 3-month LIBOR rises to 7.50%.  At March 31,
2003 the 3-month LIBOR was 1.28%.  Interest is paid monthly to the FHLB at a rate of 5.11%. The advance will mature in March 2011 and is subject to prepayment penalties.

In addition to
borrowing from the FHLB as a source for liquidity, as mentioned earlier, the Company also continued activity in the secondary mortgage market.  Specifically, the Company sold fixed rate residential real estate mortgages to Freddie Mac. 
The sales to Freddie Mac not only provide an opportunity for the Company to remain competitive in the market place by allowing it to offer a fixed rate mortgage product, but also provide an additional source of liquidity.  Loan sales on the
secondary market also provide management an additional tool to use in managing interest rate risk exposure within the balance sheet.  The Company continues to service all loans sold to Freddie Mac.

The Statement of Cash Flows, for the three-month period ended March 31, 2003, indicated an increase in cash and cash equivalents of $17.8 million.  Cash was provided from proceeds from sales of mortgage loans and student
loans of $16.1 million and $6.7 million, respectively.  Proceeds from sales, maturities, and repayments

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of available for sale and held to maturity securities of $8.9 million, and a net decrease in loans of $3.6 million also caused an increase in cash and cash equivalents. 
Cash was used during the period for the origination of loans held for sale of $16.2 million.  The net decrease in deposits of $3.0 million was primarily a result of the repurchase agreement discussed above and can be seen in the net increase in
short term borrowings of $2.8 million.  Cash dividends paid during the three-month period ended March 31, 2003 totaled $416,000.  The Company also purchased 25,000 shares of treasury stock during the first quarter of 2003 for
$383,000.  Cash and cash equivalents totaled $31.3 million at March 31, 2003, an increase of $17.8 million from $13.5 million at December 31, 2002.

Management is not aware of any conditions,
including any regulatory recommendations or requirements, which would adversely affect its liquidity or ability to meet its funding needs in the normal course of business.

RISK
ELEMENTS

The following schedule presents the non-performing assets for the last five quarters:

|                                                                                                                                      |  | Mar 2003               |       | Dec 2002 |   | Sept 2002 |   | Jun 2002 |       | Mar 2002 |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----- | -------- | - | --------- | - | -------- | ----- | -------- | -
|                                                                                                                                      |  |                        |       |          |   |           |   |          |       |          |  
|                                                                                                                                      |  | (dollars in thousands) |      
|Non-performing and restructured loans                                                                                                 |  |                        |       |          |   |           |   |          |       |          |  
|Loans past due 90 days or more                                                                                                        |  | $                      | 42    |          | $ | 66        |   | $        | 31    |          | $
|Non-accrual loans                                                                                                                     |  |                        | 3,201 |          |   | 4,518     |   |          | 5,297 |          |  
|Restructured loans                                                                                                                    |  |                        | 17    |          |   | 462       |   |          | 467   |          |  
|                                                                                                                                      |  |                        |       |          |   |           |   |          |       |          |  
|Total non-performing and restructured loans                                                                                           |  |                        | 3,260 |          |   | 5,046     |   |          | 5,795 |          |  
|                                                                                                                                      |  |                        |       |          |   |           |   |          |       |          |  
|Other non-performing assets                                                                                                           |  |                        |       |          |   |           |   |          |       |          |  
|Other real estate owned                                                                                                               |  |                        | 458   |          |   | 356       |   |          | 456   |          |  
|Repossessed assets                                                                                                                    |  |                        | 93    |          |   | 92        |   |          | 83    |          |  
|                                                                                                                                      |  |                        |       |          |   |           |   |          |       |          |  
|Total other non-performing assets                                                                                                     |  |                        | 551   |          |   | 448       |   |          | 539   |          |  
|                                                                                                                                      |  |                        |       |          |   |           |   |          |       |          |  
|Total non-performing assets                                                                                                           |  | $                      | 3,811 |          | $ | 5,494     |   | $        | 6,334 |          | $
|                                                                                                                                      |  |                        |       |          |   |           |   |          |       |          |  
|Non-performing and restructured loans as a percentage of total loans(1)                                                               |  |                        | 1.47  | %        |   | 2.17      | % |          | 2.47  | %        |  
|Non-performing assets and restructured loans as a percentage of total loans and other non-performing assets and
restructured loans(1) |  |                        | 1.72  | %        |   | 2.36      | % |          | 2.70  | %        |  

(1) Excludes loans held for sale.

The allowance for loan losses at March 31, 2003 totaled $2,916,000 or 1.31% of total gross loans (including loans held for sale) as compared to $3,110,000 or 1.33% at December 31, 2002.  Provisions for loan losses were
$150,000 and $305,000 for the three-month periods ended March 31, 2003 and 2002.  Based on the Banks methodology for evaluating the level of the loan loss allowance and the recent decline in the loan portfolio, management felt it was
appropriate to lower the provision for loan losses in the first quarter of 2003.

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In determining the level at which the allowance for loan losses should be maintained, management relies on in-house quarterly reviews of significant loans and commitments
outstanding, including a continuing review of problem or non-performing loans and overall portfolio quality.  Commercial and commercial real estate loans are risk-rated by the credit administration department, the special asset committee and
the loan review committee.  Consumer and residential real estate loans are generally reviewed in the aggregate due to their relative smaller dollar size and homogeneous nature. Specific provision and allowance allocations are made for
risk-rated loans that have gone before the loan review committee.  These allocations are based upon specific borrower data, such as non-performance, delinquency, financial performance, capacity to repay, and collateral valuation. 
Non-account specific allocations are made for all remaining loans within the portfolio based on recent charge-off history, other known trends and expected losses.  In addition, allocations are made for qualitative factors such as changes in the
local, regional and national economies, industry trends, loan growth, and loan administration.   A quarterly report and recommendation is presented to and approved by the Board of Directors.  Management believes the allowance is
adequate to cover probable losses inherent within the loan portfolio. However, no assurances can be made concerning the future financial condition of borrowers, the deterioration of which would require additional provisions in subsequent
periods.

A loan may be classified as nonaccrual if, in the opinion of management, doubts as to the collectibility of the account arise.  In addition, commercial, financial and agricultural
loans are classified as nonaccrual when the loans become 90 days or more past due, and all other loans 120 days or more past due.  At the time the account is placed on nonaccrual status, all previously accrued interest is charged against
current earnings. At the time the accrual of interest is discontinued, future income is recognized only when cash is received depending on managements assessment of the collectibility of principal.  At March 31, 2003, the Company had
nonaccrual loans of $3,201,000.

A loan is considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect all principal and interest
amounts due according to the contractual terms of the loan agreement.  Impaired loans at March 31, 2003 were $4,095,000, of which, $3,037,000 were also classified as nonaccrual. The average balance in 2003 of impaired loans was
$4,257,000.   Impaired loans had a related allowance allocation of $1,133,000 and income recognized in 2003 for impaired loans totaled $13,000.

Three borrowers accounted for $2.9 million
of total impaired loans at March 31, 2003.   The largest credit is a $2.5 million participation loan, of which, the Company retained $1.4 million. The loan was classified as impaired during the fourth quarter of 2001 as a result of the
borrowers deteriorating financial condition.  In 2002, the borrower filed for bankruptcy relief.  As part of the work-out arrangement for this credit, the guarantors have pledged additional collateral in the form of marketable
securities sufficient to cover all but approximately $164,000 of the debt.  The Company has recorded a charge off of $117,000 at March 31, 2003 representing its portion of the collateral short-fall.  Covenants within the securities
collateral pledge establish a target date in May 2003 for final resolution of the matter.  Should the target date be reached without resolution, the Company plans to liquidate the securities under the collateral pledge.

The second largest borrower within the impaired loan accounts has one credit totaling $750,000 pertaining to a working capital line of credit secured by equipment and inventory for a start-up business venture. 
Although the loan has performed in the past and continues to perform in accordance with the contractual agreement, management classified the loan as impaired and placed it in non-accrual status during the second quarter of 2001 due to the
deterioration of the financial strength of the business entity.  The Company has obtained additional collateral in the form of marketable securities sufficient to cover 100% of the outstanding debt, as a result, the Company placed this loan
back in accrual status during the first quarter of 2003 and anticipates placing the loan on a scheduled pay-back in the second quarter of 2003.

The third largest impaired loan borrower has a
$700,000 participated loan for a dairy operation.  The Company was cross-collateralized on cattle, feed, and real estate, including facilities.  In 1999, the Bank recorded a $300,000 charge off pertaining to the cattle portion of the
loan.  The borrower subsequently filed for bankruptcy

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relief, and the Company continues to pursue foreclosure proceedings on the real estate portion of the loan through the bankruptcy court.  As a result of prudent
collateral valuations subsequent to the original charge off, the Company has recorded charge offs of $100,000, $190,000, and $101,000 in 2000, 2001, and 2002, respectively, resulting principally from valuations on the remaining feed stored on the
property.  Management will continue its collateral valuations until final resolution of the matter, which may result in additional charge-offs.

Management does not consider any of the
remaining non-performing loans to pose any significant risk to the capital position or future earnings of the Company.

Management believes none of the non-performing assets, including other real
estate owned, at March 31, 2003, pose any significant risk to the operations, liquidity or capital position of the Company.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Market risk for the Company is comprised
primarily from interest rate risk exposure and liquidity risk.   Since virtually all of the interest-earning assets and paying liabilities are at the Bank, virtually all of the interest rate risk and liquidity risk lies at the Bank
level.  The Bank is not subject to currency exchange risk or commodity price risk, and has no trading portfolio, and therefore, is not subject to any trading risk.  In addition, the Bank does not participate in hedging transactions such as
interest rate swaps and caps.  Changes in interest rates will impact both income and expense recorded and also the market value of long-term interest-earning assets.  Interest rate risk and liquidity risk management is performed at the
Bank level.  Although the Bank has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the immediate trade area.

One of the principal functions of the Companys asset/liability management program is to monitor the level to which the balance sheet is subject to interest rate risk.  The goal of the asset/liability program is to
manage the relationship between interest rate sensitive assets and liabilities, thereby minimizing the fluctuations in the net interest margin, which achieves consistent growth of net interest income during periods of changing interest
rates.

Interest rate sensitivity is the result of differences in the amounts and repricing dates of a banks rate sensitive assets and rate sensitive liabilities. These differences, or
interest rate repricing gap, provide an indication of the extent that the Companys net interest income is affected by future changes in interest rates.  During a period of rising interest rates, a positive gap, a position of
more rate sensitive assets than rate sensitive liabilities, is desired. During a falling interest rate environment, a negative gap is desired, that is, a position in which rate sensitive liabilities exceed rate sensitive assets.

At March 31, 2003, the Company had a cumulative negative gap of $41.9 million at the one-year horizon.  The gap analysis indicates that if interest rates were to rise 100 basis points (1.00%), the
Companys net interest income would decline at the one-year horizon because the Companys rate sensitive liabilities would reprice faster than rate sensitive assets.  Conversely, if rates were to fall 100 basis points, the Company
would earn more in net interest income. However, not all assets and liabilities with similar maturities and repricing opportunities will reprice at the same time or to the same degree.  The pricing on all deposit products, for example, is
determined by management, and therefore can be controlled as to the extent and timing of repricing.  As a result the Companys gap position does not necessarily predict the impact on interest income given a change in interest rate
levels.

Management also manages interest rate risk with the use of simulation modeling which measures the sensitivity of future net interest income as a result of changes in interest rates. 
The analysis is based on repricing opportunities for variable rate assets and liabilities and upon contractual maturities of fixed rate instruments.

The simulation also calculates net interest
income based upon rate increases or decreases of + or- 300 basis

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points (or 3.00%) in 100 basis point (or 1.00%) increments.  The analysis reprices the balance sheet and forecasts future cash flows over a one-year horizon at the new
interest rate levels.  The cash flows are then totaled to calculate net interest income.  Assumptions are made for loan and investment pre-payment speeds and are incorporated into the simulation as well.  Loan and investment
pre-payment speeds will increase as interest rates decrease and slow as interest rates rise.  The current analysis indicates that, given a 300 basis point overnight decrease in interest rates, the Company would experience a potential $2,740,000
or 23.3% decline in net interest income.  If rates were to increase 300 basis points, the analysis indicates that the Companys net interest income would increase $1,627,000 or 13.9%.  It is important to note, however, that this
exercise would be of a worst-case scenario.  It would be more likely to have incremental changes in interest rates, rather than a single significant increase or decrease.  When management believes interest rate movements will occur, it can
restructure the balance sheet and thereby the ratio of rate sensitive assets to rate sensitive liabilities which in turn will effect the net interest income.  It is important to note; however, that in gap analysis and simulation modeling not
all assets and liabilities with similar maturities and repricing opportunities will reprice at the same time or to the same degree and therefore, could effect forecasted results.

Much of the
Companys deposits have the ability to reprice immediately; however, deposit rates are not tied to an external index.  As a result, although changing market interest rates impact repricing, the Company retains much of the control over
repricing by determining itself the extent and timing of repricing of deposit products.   In addition, the Company maintains a significant portion of its investment portfolio as available for sale securities and also has a significant
variable rate loan portfolio, which is used to offset rate sensitive liabilities.

Changes in market interest rates can also affect the Companys liquidity position through the impact rate
changes may have on the market value of the available for sale portion of the investment portfolio.  Increases in market rates can adversely impact the market values and therefore, make it more difficult for the Bank to sell available for sale
securities needed for general liquidity purposes without incurring a loss on the sale.  This issue is addressed by the Company with the use of borrowings from the Federal Home Loan Bank (FHLB) and the selling of fixed rate mortgages
as a source of liquidity to the Company.

The Companys liquidity plan allows for the use of long-term advances or short-term lines of credit with the FHLB as a source of funds. 
Borrowing from FHLB not only provides a source of liquidity for the Company, but also serves as a tool to reduce interest risk as well.  The Company may structure borrowings from FHLB to match those of customer credit requests, and therefore,
lock in interest rate spreads over the lives of the loans.

In addition to borrowing from the FHLB as a source for liquidity, the Company also participates in the secondary mortgage
market.  Specifically, the Company sells fixed rate, residential real estate mortgages to the Federal Home Loan Mortgage Corporation (Freddie Mac).  The sales to Freddie Mac not only provide an opportunity for the Bank to
remain competitive in the market place, by allowing it to offer a fixed rate mortgage product, but also provide an additional source of liquidity and an additional tool for management to limit interest rate risk exposure.  The Bank continues to
service all loans sold to Freddie Mac.

Item 4.  Controls and Procedures

Within the 90 days prior to the date of this Form 10-Q, the Company carried out an
evaluation, under the supervision and with the participation of the Companys management, including the Companys President and Chief Executive Officer along with the Companys Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.  Based upon that evaluation, the Companys President and Chief Executive Officer along with the Companys Chief
Financial Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the
Companys periodic SEC filings.  There have been no significant changes in the Companys internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its
evaluation.

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##### Table of Contents

PART II  OTHER INFORMATION

|Item 1. Legal Proceedings                                  
|-----------------------------------------------------------
|                                                           
|                                                           
|Item 2. Changes in Securities and Use of Proceeds          
|                                                           
|                                                           
|Item 3. Defaults Upon Senior Securities                    
|                                                           
|                                                           
|Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of shareholders of Slippery
Rock Financial Corporation took place on April 15, 2003.  The following two (2) matters were voted upon:

(1) Election of the four (4) persons listed in CLASS II of the Proxy Statement dated
March 31, 2003 whose terms expire in 2006.

| | CLASS II Directors:                                                                         
| | --------------------------------------------------------------------------------------------
| |                                                                                             
| | Mr. Robert M. Greenberger Ms. Brenda K. McBride Mr. William C. Sonntag Mr. Norman P. Sundell

(2) Such other business as may properly come before the meeting or any adjournment thereof.

Continuing CLASS I directors whose terms expire in 2005 are:

| | Mr. John W. Conway        
| | --------------------------
| | Mr. William D. Kingery    
| | Mr. Scott A. McDowell     
| | Mr. Charles C. Stoops, Jr.

Continuing CLASS III directors whose terms expire in 2004
are:

| | Mr. Robert E. Gregg     
| | ------------------------
| | Mr. Thomas D. McClymonds
| | Mr. S.P. Snyder         

The following table presents the results of the vote tabulation

|Issue |  | Description                                      |  | Votes For |  | Votes Against
|----- |  | ------------------------------------------------ |  | --------- |  | -------------
|      |  |                                                  |  |           |  |              
|1     |  | Election of CLASS II Directors                   |  |           |  |              
|      |  | Mr. Robert M. Greenberger                        |  | 1,611,581 |  | 6,948        
|      |  | Ms. Brenda K. McBride                            |  | 1,618,529 |  |             
|      |  | Mr. William C. Sonntag                           |  | 1,616,137 |  | 2,392        
|      |  | Mr. Norman P. Sundell                            |  | 1,617,713 |  | 816          
|2     |  | No other issues were brought before the meeting. |  |           |  |              

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##### Table of Contents

|Item 5. Other Information                 
|------------------------------------------
|                                          
|                                          
|Item 6. Exhibits and Reports on Form 8  K
|                                          
|                                          
|                                          
|Exhibit Number                            
|2                                         
|3                                         
|                                          
|3                                         
|                                          
|4                                         
|                                          
|10                                        
|                                          
|11                                        
|                                          
|15                                        
|                                          
|18                                        
|                                          
|19                                        
|                                          
|22                                        
|                                          
|23                                        
|                                          
|24                                        
|                                          
|99                                        
|                                          
|99                                        
|                                          
|99                                        
|                                          
|                                          
|                                          
|                                          
|                                          

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##### Table of Contents

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.

|SLIPPERY ROCK FINANCIAL CORPORATION | 
|----------------------------------- | 
|(Registrant)                        | 



|Date:  May 13, 2003 | By: | /s/ WILLIAM C. SONNTAG             | 
|------------------- | --- | ---------------------------------- | 
|                    |     |                                    | 
|                    |     | William C. Sonntag President & CEO | 
|                    |     |                                    | 
|Date:  May 13, 2003 | By: | /s/ MARK A. VOLPONI                | 
|                    |     |                                    | 
|                    |     | Mark A. Volponi Treasurer          | 

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##### Table of Contents

SECTION 302 CERTIFICATION

I, William C. Sonntag, President and Chief Executive Officer of Slippery Rock Financial
Corporation (the Company), certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of Slippery Rock Financial Corporation;                                                                                                                                                                                                                                                                                    
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 4. | The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Company and have:                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation, to the Companys auditors and the audit committee of
Companys board of directors:                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 6. | The Companys other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

|Date:  May 13, 2003 | /s/ WILLIAM C. SONNTAG              | 
|------------------- | ----------------------------------- | 
|                    |                                     | 
|                    | President & Chief Executive Officer | 
|                    |                                     | 

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##### Table of Contents

SECTION 302 CERTIFICATION

I, Mark A. Volponi, Chief Financial Officer of Slippery Rock Financial Corporation
(the Company), certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of Slippery Rock Financial Corporation;                                                                                                                                                                                                                                                                                    
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 4. | The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Company and have:                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation, to the Companys auditors and the audit committee of
Companys board of directors:                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                               
| | 6. | The Companys other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

|Date:  May 13, 2003 | /s/ MARK A. VOLPONI     | 
|------------------- | ----------------------- | 
|                    |                         | 
|                    | Chief Financial Officer | 

23