SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-K
(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934

     For the Fiscal Year Ended December 31, 2001

[ ]  TRANSITIONAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _________________  to __________________

Commission File Number: 0-25903

                                IBT BANCORP, INC.
                           ---------------------------
             (Exact name of registrant as specified in its charter)

              Pennsylvania                                    25-1532164
---------------------------------------------           ------------------------
(State or other jurisdiction of incorporation              (I.R.S. Employer
 or organization)                                         Identification No.)

309 Main Street, Irwin, Pennsylvania                           15642
----------------------------------------                ------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:           (724) 863-3100
                                                        ------------------------

Securities registered pursuant to Section 12(b) of the Act:           None
                                                            --------------------

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $1.25 par value
                          -----------------------------
                                (Title of Class)

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

         Based  on  the  closing   sales  price  of  $29.15  per  share  of  the
registrant's  common  stock on March 1, 2002,  as reported  on the OTC  Bulletin
Board,  the  aggregate  market  value of voting  and  non-voting  stock  held by
non-affiliates of the registrant was approximately $77.4 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

     1.   Portions of 2001 Annual Report to Stockholders (Parts II and IV)
     2.   Portions  of  Proxy   Statement   for  the  2002  Annual   Meeting  of
          Stockholders. (Part III)

<PAGE>

                                     PART I

Forward-Looking Statements

         IBT Bancorp, Inc. (the "Company" or "Registrant") may from time to time
make  written  or  oral  "forward-looking   statements,"   including  statements
contained in the Company's  filings with the Securities and Exchange  Commission
(including  this Annual  Report on Form 10-K and the exhibits  thereto),  in its
reports to stockholders and in other  communications  by the Company,  which are
made in good faith by the Company  pursuant to the "safe  harbor"  provisions of
the private securities litigation reform act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rate,   market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and saving habits; and the success of the Company at managing the risks involved
in the foregoing.

         The Company  cautions that the foregoing  list of important  factors is
not  exclusive.  The Company does not  undertake  to update any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the Company.

Item 1.  Business
-------  --------

General

         IBT Bancorp, Inc. is a Pennsylvania corporation headquartered in Irwin,
Pennsylvania,  which  provides a full  range of  commercial  and retail  banking
services  through its wholly owned  banking  subsidiary,  Irwin Bank & Trust Co.
(collectively, the "Company").

         Irwin Bank & Trust Co. (the "Bank") was  incorporated in 1922 under the
laws of  Pennsylvania  as a  commercial  bank under the name "Irwin  Savings and
Trust  Company."  The Bank engages in a full service  mortgage,  commercial  and
consumer  banking  business,  as well as trust and a variety of deposit services
provided to its customers.  At December 31, 2001, the Bank operated  through its
main office,  five branch offices,  a loan center, and a trust office as well as
through five supermarket  branches under the name "Irwin Bank Extra." The Bank's
main  office,  full  service  branch  offices,  loan  center,  trust  office and
supermarket  branches are located in the  Pennsylvania  counties of Westmoreland
and Allegheny. The Bank's web site is "www.irwinbank.com."


<PAGE>

         References to the Company or Registrant  used  throughout this document
generally  refers to the  consolidated  entity which includes the main operating
company, the Bank, unless the context indicates otherwise.

Competition

         The  Registrant's  primary  market area  consists of  Westmoreland  and
Allegheny  counties,  Pennsylvania,  and is one of many  financial  institutions
serving this market area. The competition for deposit  products comes from other
insured financial institutions such as commercial banks, thrift institutions and
credit unions in the Registrant's market area. Deposit competition also includes
a number of insurance products sold by local agents and investment products such
as mutual funds and other  securities sold by local and regional  brokers.  Loan
competition comes from other insured  financial  institutions such as commercial
banks, thrift institutions and credit unions.

                                        2
<PAGE>

Lending Activities

Analysis of Loan Portfolio

         The following table sets forth the composition of the Registrant's loan
         portfolio  in  dollar  amounts  and in  percentages  of the  respective
         portfolios at the dates indicated.

<TABLE>
<CAPTION>
                                                                             At December 31,
                                ----------------------------------------------------------------------------------------------------
                                        2001                 2000                 1999               1998                1997
                                  -----------------    -----------------    ----------------  ------------------   -----------------
                                      $         %          $         %          $        %        $          %        $         %
                                  --------   ------    --------   ------    --------  ------  --------    ------   --------   ------
                                                                          (Dollars in Thousands)

<S>                             <C>        <C>       <C>        <C>      <C>         <C>     <C>         <C>     <C>        <C>
Type of Loans:
-------------
  Mortgage......................  $173,214    54.55%   $152,753    51.95    $130,348   49.56  $123,494     51.31   $107,240   48.97
  Installment...................    64,053    20.17      65,327    22.22      61,983   23.57    52,418     21.78     45,321   20.69
  Commercial....................    55,185    17.38      52,676    17.92      47,294   17.98    45,232     18.79     42,003   19.18
  Home equity lines of credit...    11,001     3.47      10,067     3.42       8,886    3.38     8,588      3.57      8,860    4.05
  PHEAA (1).....................     6,950     2.19       6,632     2.26       6,166    2.34     5,043      2.10      4,604    2.10
  Municipal.....................     5,369     1.69       5,945     2.02       6,347    2.41     3,616      1.50      7,870    3.59
  Credit cards..................        32      .01          --       --       1,780     .68     1,808       .75      2,022     .93
  Other.........................     1,715      .54         611      .21         210     .08       477       .20      1,081     .49
                                  --------   ------    --------   ------    --------- ------  --------    ------   --------  ------
Total loans.....................   317,519   100.00%    294,011   100.00%    263,014  100.00%  240,676    100.00%   219,001  100.00%
                                             ======               ======              ======              ======             ======
Less:
  Unearned discount.............        --                   --                   --                --                   --
  Deferred loan origination
    fees and costs..............       273                  178                  146               144                  174
  Allowance for loan losses.....     2,114                1,919                2,366             2,228                2,340
                                  --------             --------             --------          --------             --------
Total loans, net................  $315,132             $291,914             $260,502          $238,304             $216,487
                                  ========             ========             ========          ========             ========
</TABLE>

--------------------
(1)  Pennsylvania Higher Education Assistance Authority.



                                        3
<PAGE>

         Loan Maturity  Table.  The following  table sets forth  maturities  and
interest rate  sensitivity  for all categories of loans as of December 31, 2001.
Scheduled  repayments are reported in the maturity  category in which payment is
due.

<TABLE>
<CAPTION>
                                     Home
                                     equity                                                 Credit
                                     lines of                          PHEAA                Cards
                           Mortgage  credit(2) Installment Commercial   (1)     Municipal    (2)       Other    Total
                           -------- ---------- ----------- ---------- --------  ---------   ----    ---------  --------
                                                        (In Thousands)
<S>                       <C>       <C>         <C>         <C>        <C>      <C>       <C>        <C>      <C>
1 year or less............ $ 10,447  $11,001     $10,503     $ 9,662    $   --   $5,369    $    32    $1,715   $ 48,729
                           --------   ------      ------     -------    ------   ------     ------    ------   --------

After 1 year:
  1 to 5 years............   34,439       --      29,167      12,571     6,950       --         --        --     83,127
  After 5 years...........  128,328       --      24,383      32,952        --       --         --        --    185,663
                           --------  -------     -------     -------    ------   ------    -------    ------   --------
Total due after one year..  162,767       --      53,550      45,523     6,950       --         --        --    268,790
                           --------  -------     -------     -------    ------   ------    -------    ------   --------
Total amount due.......... $173,214  $11,001     $64,053     $55,185    $6,950   $5,369    $    32    $1,715   $317,519
                           ========  =======     =======     =======    ======   ======    =======    ======   ========
</TABLE>

----------------------
(1)  PHEAA loans are sold when  repayment  begins;  assumption is that all PHEAA
     loans will mature in 1 to 5 years.
(2)  Home equity  credit lines and credit card loans have no stated  maturities;
     therefor they are classified as due in one year or less.


         The  following  table sets forth,  as of December 31, 2001,  the dollar
amount of all loans due after  December  31,  2002,  based upon  fixed  rates of
interest or floating or adjustable interest rates.


                                                      Floating or
                                    Fixed Rates     Adjustable Rates      Total
                                    -----------     ----------------      -----
                                                     (In Thousands)

Mortgage(1) .................         $155,319         $  7,448         $162,767
Installment .................           52,174            1,376           53,550
Commercial ..................           28,061           17,462           45,523
PHEAA .......................               --            6,950            6,950
                                      --------         --------         --------
     Total ..................         $235,554         $ 33,236         $268,790
                                      ========         ========         ========


--------------------------
(1)      Included in the mortgage  loans  portfolio are  commercial  real estate
         loans.  Commercial  real  estate  loans are fixed  rate  loans that are
         primarily callable loans, which reprice every three, five or ten years,
         based upon the interest rate on similar loans at the time of repricing.
         See "Mortgage Loans."

         Mortgage Loans. The Registrant's  primary lending activity  consists of
the origination of residential and commercial mortgage loans secured by property
in its primary market area. The mortgage loan portfolio consists of one-to four-
family   residential   mortgage  loans,   commercial  real  estate  loans,   and
construction loans.

         The Registrant had  approximately  $81.2 million of one- to four-family
residential  mortgage loans in its mortgage loan portfolio at December 31, 2001.
The Registrant  generally  originates one- to four-family  residential  mortgage
loans in amounts of up to 80% of the appraised  value of the mortgaged  property
without requiring mortgage insurance.  The Registrant will originate residential
mortgage  loans in an amount  up to 95% of the  appraised  value of a  mortgaged
property, however, mortgage insurance for the borrower is

                                        4
<PAGE>

required. The Registrant offers residential fixed rate loans and adjustable rate
loans with amortization periods ranging from 15 to 30 years.  Interest rates for
adjustable  rate  loans for  residences  adjust  every 12 months  based upon the
weekly average yield on the one year U.S. Treasury securities,  plus a margin of
2.75 percentage points. These adjustable rate loans have an interest rate cap of
2% per year and 6% over the life of the loan,  and are  originated for retention
in the portfolio.

         Fixed rate loans are  underwritten in accordance with Federal  National
Mortgage Association ("FannieMae") guidelines.  Currently, loans underwritten in
accordance with FannieMae guidelines are generally sold in the secondary market.
However,  the number of  saleable  loans  could vary  materially  as a result of
market  conditions.  The Registrant  generally charges a higher interest rate if
loans are not saleable under FannieMae  guidelines.  At December 31, 2001, $98.6
million of the Registrant's mortgage portfolio consisted of long-term fixed rate
mortgage  loans of which $1.4  million  were  classified  as held for sale.  The
Registrant  does not  service  any  loans  that are sold and the  Registrant  is
generally not liable for these loans (i.e., "nonrecourse loans").

         Substantially  all of the  Registrant's  one- to four-family  mortgages
include "due on sale" clauses,  which are  provisions  giving the Registrant the
right to declare a loan  immediately  payable if the borrower sells or otherwise
transfers an interest in the property to a third party.

         Property  appraisals on real estate securing the  Registrant's  one- to
four-family  residential loans over $250,000 are made by appraisers  approved by
the Board of Directors.  Appraisals are performed in accordance  with applicable
regulations and policies. The Registrant obtains title insurance policies on all
purchase money first mortgage real estate loans originated.

         The  Registrant's  commercial  real estate mortgage loans are long-term
loans  secured  primarily  by  multi-family  dwelling  units.   Essentially  all
originated  commercial real estate loans are within its market area.  Commercial
real estate  loans are  originated  at both fixed rate and  adjustable  rates of
interest. Fixed rate loans are primarily callable loans having terms of up to 15
years,  with principal and interest  payments  calculated  using up to a 20 year
amortization period. Callable loans reprice every three, five or ten years based
upon the  interest  rate on  similar  loans at the time of  repricing.  At these
specific time periods,  the  Registrant  has the right but not the obligation to
either accelerate the loan balance or adjust the interest rate of these loans.

         Adjustable  rate  commercial  mortgage loans have interest rates set at
the six month U.S. treasury bill rate, plus a margin of up to 3.75%.  Adjustable
rate  commercial  mortgage loans have terms of up to 20 years and generally have
no maximum interest rate.

         As of December 31, 2001, the Registrant's  commercial real estate loans
totaled  $70.2 million of the mortgage  portfolio.  Typically,  commercial  real
estate loans are  originated in amounts up to 75% of the appraised  value of the
mortgaged property.

         The Registrant  also  originates  loans to finance the  construction of
one-to  four-family  dwellings.  Generally,  the  Registrant  only makes interim
construction  loans  to  individuals  if it  also  makes  the  long-term  one-to
four-family  residential  mortgage  loan on the property.  Interim  construction
loans generally have terms of up to nine months with fixed rates of interest. At
December 31, 2001,  such loans totaled $14.0 million of the  Registrant's  total
mortgage loan portfolio.

         Construction  financing  is  generally  considered  to involve a higher
degree of risk of loss than long- term  financing  on  improved,  occupied  real
estate.  Risk of loss on a  construction  loan is  dependent  largely  upon  the
accuracy  of the initial  estimate  of the  property's  value at  completion  of
construction and

                                        5
<PAGE>

development and the estimated cost (including interest) of construction.  During
the  construction  phase,  a number of factors  could  result in delays and cost
overruns.  If the estimate of  construction  costs proves to be inaccurate,  the
Registrant  may be  required  to advance  funds  beyond  the  amount  originally
committed  to permit  completion  of the  development.  If the estimate of value
proves to be inaccurate,  the  Registrant may be confronted,  at or prior to the
maturity of the loan,  with a project  having a value which is  insufficient  to
assure full repayment.

         Installment  Loans.  Installment loans primarily consist of home equity
term  loans and to a lesser  extent  automobile  loans.  Home  equity  loans are
secured primarily by one- to four-family  residences.  The Registrant originates
these  loans with fixed  rates  with  terms of up to 20 years.  These  loans are
subject to 80% combined  loan-to-value  limitation,  including  any  outstanding
mortgages or liens,  without requiring mortgage  insurance.  The Registrant will
originate  home  equity  loans  in an  amount  up 100% of the  appraised  value,
however,  mortgage  insurance for the borrower may be required.  The  Registrant
originates automobile loans with fixed rates of interest and terms of up to five
years. At December 31, 2001, home equity term loans totaled $58.9 million.

         Commercial  Loans.  Commercial  business  loans  consist of  equipment,
accounts  receivables,  inventory,  and other business purpose loans. Such loans
are generally secured by either the underlying collateral and/or by the personal
guarantees of the borrower.

         Unlike  residential  mortgage  loans,  which  generally are made on the
basis of the borrower's ability to make repayment from his or her employment and
other income and which are secured by real property whose value tends to be more
easily ascertainable,  commercial business loans typically are made on the basis
of the borrower's ability to make repayment from the cash flow of the borrower's
business. As a result, the availability of funds for the repayment of commercial
business  loans may be  substantially  dependent  on the success of the business
itself and the general economic environment.

         Home Equity Lines of Credit.  Revolving home equity lines of credit are
secured  primarily by one- to  four-family  residences.  The lines of credit are
generally  subject to an 80% combined  loan to value  limitation,  including all
outstanding mortgages and liens.

         Loan Approval  Authority and Underwriting.  The Registrant  establishes
various  lending  limits  for its  officers  and  maintains  an  officer  review
committee.  Certain  officers  generally  have  authority to approve loans up to
$250,000.  Loans up to $700,000  are  approved by an officers  review  committee
("ORC").  The ORC  consists of the  President  and at least four other  officers
appointed by the President. All loans over $700,000 are approved by the Board of
Directors.

         Upon  receipt  of a  completed  loan  application  from  a  prospective
borrower,  a credit report is ordered.  Income and certain other  information is
verified. If necessary,  additional financial  information may be requested.  An
appraisal or other  estimate of value of the real estate  intended to be used as
security  for the  proposed  loan  is  obtained.  Appraisals  are  performed  by
independent appraisers.

         Title insurance is generally required on all purchase money real estate
mortgage loans.  Borrowers also must obtain fire and casualty  insurance.  Flood
insurance  is also  required on loans  secured by property  that is located in a
flood zone.

         Loan  Commitments.   Written   commitments  are  given  to  prospective
borrowers on all approved  mortgage loans.  Generally,  the commitment  requires
acceptance  within  30 days of the  date of  issuance.  At  December  31,  2001,
commitments to cover originations of mortgage loans totaled $16.7 million.

                                        6
<PAGE>

         Loans to One Borrower.  Federal regulations limit loans to one borrower
in an amount equal to 15% of unimpaired capital and unimpaired  surplus.  If the
loan is secured by readily marketable collateral, the limit is 25% of unimpaired
capital and unimpaired  surplus.  At December 31, 2001, the Registrant's loan to
one borrower limit was approximately $7.4 million.

         Classified  Assets.  Federal  regulations  provide for a classification
system for problem assets of insured  institutions,  including assets previously
treated as "scheduled items." Under this classification  system,  problem assets
of insured  institutions are classified as "substandard,"  "doubtful" or "loss."
An asset is  considered  "substandard"  if it is  inadequately  protected by the
current  net worth and  paying  capacity  of the  obligor  or of the  collateral
pledged,  if  any.  "Substandard"  assets  include  those  characterized  by the
"distinct  possibility" that the insured institution will sustain "some loss" if
the deficiencies are not corrected. Assets classified as "doubtful" have all the
weaknesses   inherent  in  those  classified   "substandard,"   with  the  added
characteristic  that the  weaknesses  present make  "collection  of principal in
full," on the basis of currently existing facts,  conditions and values, "highly
questionable and improbable."  Assets  classified as "loss" are those considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without the  establishment  of a specific loss reserve is not warranted.  Assets
that do not expose the Registrant to risk  sufficient to warrant  classification
in one of the above categories, but which possess some weakness, are required to
be designated "special mention" by management.

         When  an  insured  institution  classifies  problem  assets  as  either
"substandard"  or "doubtful," it may establish  allowances for loan losses in an
amount deemed  prudent by  management.  When an insured  institution  classifies
problem  assets as "loss," it is required  either to establish an allowance  for
losses  equal to 100% of that portion of the assets so  classified  or to charge
off such amount. An institution's  determination as to the classification of its
assets and the  amount of its  allowances  is  subject to review by the  Federal
Deposit  Insurance  Corporation  ("FDIC") which may order the  establishment  of
additional loss allowances.

         The following table sets forth the  Registrant's  classified  assets in
accordance with its classification system.

                                       At December 31, 2001
                                       --------------------
                                          (In Thousands)
Special Mention....................           $12,885
Substandard........................             3,147
Doubtful...........................                --
Loss...............................                --
                                              -------
      Total........................           $16,032
                                              =======

         Other Real Estate Owned.  Real estate  acquired by the  Registrant as a
result of  foreclosure  or by deed in lieu of foreclosure is classified as other
real estate owned until such time as it is sold. When other real estate owned is
acquired,  it is recorded at the lower of the unpaid balance of the related loan
or its fair value less disposal costs. Any write-down of other real estate owned
is charged to operations.

         Allowance  for  Losses on Loans.  It is the  policy  of  management  to
provide  for  losses on  unidentified  loans in its  portfolio  in  addition  to
classified  loans. A provision for loan losses is charged to operations based on
management's  evaluation  of the  potential  losses  that may be incurred in the
Registrant's loan portfolio. Management also periodically performs valuations of
other real estate owned and establishes  allowances to reduce book values of the
properties to their net realizable values when necessary.

                                        7
<PAGE>

         The  allowance  for  losses  on loans  is  maintained  at a level  that
represent's  management's  best estimates of losses in the loan portfolio at the
balance sheet date.  However,  there can be no assurance  that the allowance for
loan losses will be adequate to cover losses which may be realized in the future
and that additional provisions for losses on loans will not be required.

         Analysis of the  Allowance for Loan Losses.  The  following  table sets
forth information with respect to the Registrant's  allowance for loan losses at
the dates indicated:

<TABLE>
<CAPTION>
                                                                           December 31,
                                               ------------------------------------------------------------------
                                                    2001         2000          1999          1998          1997
                                                 ---------    ---------     ---------     ---------     ---------
                                                                      (Dollars in Thousands)
<S>                                            <C>          <C>           <C>           <C>           <C>
Total loans outstanding ......................   $ 317,246    $ 293,833     $ 262,868     $ 240,532     $ 218,827
                                                 =========    =========     =========     =========     =========
Average loans outstanding ....................   $ 304,080    $ 279,400     $ 251,574     $ 226,984     $ 205,399
                                                 =========    =========     =========     =========     =========
Allowance balances (at beginning of  period)..   $   1,919    $   2,366     $   2,228     $   2,340     $   2,240
Provision (credit):
   Mortgage ..................................         200           30            30            30            30
   Installment ...............................         100           30            30            30            30
   Commercial ................................         200          240           225           225           225
   Home equity lines of credit ...............          --           --            --            --            --
   PHEAA .....................................          --           --            --            --            --
   Municipal .................................          --           --            --            --            --
   Credit cards ..............................          --           --            15            15            15
   Other .....................................          --           --            --            --            --
Net (charge-offs) recoveries:
  Mortgage ...................................        (203)         (34)          (21)          (19)          (10)
  Installment ................................         (90)         (72)          (24)          (28)          (27)
  Commercial .................................         (14)        (616)         (102)         (324)         (104)
  Home equity lines of credit ................          --           --            --            --           (11)
  PHEAA ......................................          --           --            --            --            --
  Municipal ..................................          --           --            --            --            --
  Credit cards ...............................           2          (25)          (15)          (41)          (48)
  Other ......................................          --           --            --            --            --
                                                 ---------    ---------     ---------     ---------     ---------
Allowance balance (at end of period) .........   $   2,114    $   1,919     $   2,366     $   2,228     $   2,340
                                                 =========    =========     =========     =========     =========
Allowance for loan losses as a percent
  of total loans outstanding .................      0.67 %         0.65%         0.90%         0.93%         1.07%
                                                 =========    =========     =========     =========     =========
Net loans charged off as a percent of
  average loans outstanding ..................      0.10 %        (0.27)%       (0.06)%       (0.18)%       (0.10)%
                                                 =========    =========     =========     =========     =========
</TABLE>
                                        8
<PAGE>

         Allocation of the Allowance For Loan Losses.  The following  table sets
forth the  allocation  of the  Registrant's  allowance  for loan  losses by loan
category  and the  percent of loans in each  category to total loans at the date
indicated.

<TABLE>
<CAPTION>
                                                                              At December 31,
                                   -------------------------------------------------------------------------------------------------
                                            2001                2000              1999                 1998              1997
                                   ---------------------   ----------------  ------------------  ----------------- -----------------
                                                  % of              % of                % of               % of               % of
                                                  Loans             Loans               Loans              Loans             Loans
                                                to Total           to Total            to Total           to Total          to Total
                                       Amount      Loans   Amount   Loans    Amount     Loans    Amount    Loans    Amount   Loans
                                       ------      -----   ------   -----    ------     -----    ------    -----    ------   -----
                                                                         (Dollars in Thousands)
<S>                                   <C>        <C>      <C>      <C>      <C>       <C>       <C>       <C>      <C>      <C>
At end of period allocated to:
  Mortgage.......................      $1,120      54.55% $  651     51.95%  $  603     49.56%   $  604     51.31%  $  565    48.97%
  Installment....................         409      20.17     414     22.22      345     23.57       380     21.78      324    20.69
  Commercial.....................         501      17.38     786     17.92    1,293     17.98     1,100     18.79    1,301    19.18
  Home equity lines of credit....          60       3.47      51      3.42       54      3.38        44      3.57       45     4.05
  PHEAA..........................          11       2.19      10      2.26        9      2.34         8      2.10        7     2.10
  Municipal......................           8       1.69       1      2.02       10      2.41         5      1.50       12     3.59
  Credit cards...................          --        .01      --        --       45       .68        80       .75       71      .93
  Other..........................           5        .54       6       .21        7       .08         7       .20       15      .49
                                       ------     ------   -----    ------   ------    ------    ------    ------   ------   ------
Total allowance..................      $2,114     100.00%  $1,919   100.00%  $2,366    100.00%   $2,228    100.00%  $2,340   100.00%
                                       ======     ======   ======   ======   =======   ======    ======    ======   ======   ======
</TABLE>

                                        9
<PAGE>

Nonperforming and Problem Assets

         Loan  Delinquencies.  When a loan becomes 16 days past due, a notice of
nonpayment is sent to the borrower.  Telephone  collection calls, letters and/or
visits to the borrower are initiated within 16 days of the due date missed in an
effort  to  resolve  the  delinquency.  Generally,  if the loan  continues  in a
delinquent  status for 90 days past due and no repayment  plan has been reached,
foreclosure, liquidation or other legal proceedings may be initiated.

         Loans are reviewed on a monthly  basis and are placed on a  non-accrual
status  when the loan  becomes  more than 90 days  delinquent  and when,  in our
opinion, the collection of additional interest is doubtful. Interest accrued and
unpaid at the time a loan is  placed on  nonaccrual  status is  charged  against
interest income. Subsequent interest payments, if any, are either applied to the
outstanding  principal balance or recorded as interest income,  depending on the
assessment of the ultimate collectibility of the loan.

         Nonperforming  Assets.  The  following  table  sets  forth  information
regarding nonaccrual loans and real estate owned, as of the dates indicated.  No
loans were  categorized  as troubled debt  restructurings  within the meaning of
SFAS 15 and $1.0 million was  classified as impaired loans within the meaning of
SFAS 114, as amended by SFAS 118.

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                              At December 31,
                                              ----------------------------------------------
                                               2001      2000      1999      1998      1997
                                              ------    ------    ------    ------    ------
                                                            (Dollars In Thousands)
<S>                                         <C>       <C>       <C>       <C>       <C>
Loans accounted for on a non-accrual basis:
  Mortgage ................................   $  940    $   --    $   --    $   --    $   29
  Home equity lines of credit .............       --        --        60        --        --
  Installment .............................       27        --        --        --        --
  Commercial ..............................       60        --        91        12       205
  PHEAA ...................................       --        --        --        --        --
  Municipal ...............................       --        --        --        --        --
  Credit cards ............................       --        --        --        --        --
  Other ...................................       --        --        --        --        --
                                              ------    ------    ------    ------    ------
Total .....................................   $1,027    $   --       151        12       234
                                              ------    ------    ------    ------    ------
Accruing loans which are contractually past
  due 90 days or more:
  Mortgage ................................      559     1,067       998       788       362
  Installment .............................        3        10        21         3        21
  Commercial ..............................        7       157       568       629       631
  Home equity lines of credit .............       --        --        --        --        --
  PHEAA ...................................       --        --        --        --        --
  Municipal ...............................       --        --        --        --        --
  Credit cards ............................       --        --         3         8         9
  Other ...................................       --        --        --        --        --
                                              ------    ------    ------    ------    ------
Total .....................................      569     1,234     1,590     1,428     1,023
                                              ------    ------    ------    ------    ------
Total non-accrual and accrual loans .......    1,596     1,234     1,741     1,440     1,257
                                              ------    ------    ------    ------    ------
Other real estate owned ...................      239       132       141       128        37
                                              ------    ------    ------    ------    ------
Other non-performing assets ...............       --        --        --        --        --
                                              ------    ------    ------    ------    ------
Total non-performing assets ...............   $1,835    $1,366    $1,882    $1,568    $1,294
                                              ======    ======    ======    ======    ======
Total non-accrual and accrual loans
  to net loans ............................      .51%      .42%      .67%      .60%      .58%
                                              ======    ======    ======    ======    ======
Total non-accrual and accrual loans to
  total assets ............................      .30%      .25%      .39%      .35%      .34%
                                              ======    ======    ======    ======    ======
Total non-performing assets to total assets      .35%      .28%      .42%      .38%      .35%
                                              ======    ======    ======    ======    ======
</TABLE>
                                       11

<PAGE>

Investment Activities

         The Registrant maintains a level of liquid assets, including short-term
securities and certain other  investments,  which varies  depending upon several
factors, including: (i) the yields on investment alternatives, (ii) management's
judgment as to the  attractiveness  of the yields then  available in relation to
other  opportunities,  (iii)  expectation  of  future  yield  levels,  and  (iv)
management's  projections  as to the  short-term  demand for funds to be used in
loan  origination  and  other  activities.   Investment  securities,   including
mortgage-backed  securities,  are classified at the time of purchase, based upon
management's  intentions  and  abilities,  as  securities  held to  maturity  or
securities  available  for sale.  Debt  securities  acquired with the intent and
ability to hold to maturity are classified as held to maturity and are stated at
cost and adjusted for  amortization of premium and accretion of discount,  which
are  computed  using the level yield method and  recognized  as  adjustments  of
interest income.  All other debt securities are classified as available for sale
to serve principally as a source of liquidity.

         Current  regulatory  and  accounting  guidelines  regarding  investment
securities  (including  mortgage  backed  securities)  require the Registrant to
categorize  securities as "held to maturity," "available for sale" or "trading."
As of December 31, 2001, the Registrant had securities  classified as "available
for sale" in the amount of $163.0  million and had no  securities  classified as
"held to maturity" or "trading."  Securities  classified as "available for sale"
are reported for financial  reporting purposes at the fair market value with net
changes  in the  market  value  from  period to period  included  as a  separate
component of  stockholders'  equity,  net of income taxes. At December 31, 2001,
the Registrant's  securities  available for sale had an amortized cost of $160.9
million  and market  value of $163.0  million.  Changes  in the market  value of
securities  available for sale do not affect the Company's  income. In addition,
changes in the market value of  securities  available for sale do not affect the
Bank's regulatory capital requirements or its loan-to-one borrower limit.

         At December 31, 2001,  the  Registrant's  investment  portfolio  policy
allowed investments in instruments such as: (i) U.S. Treasury obligations,  (ii)
U.S.   federal  agency  or  federally   sponsored  agency   obligations,   (iii)
mortgage-backed  securities,  (iv) banker's  acceptances,  (v)  certificates  of
deposit,  and (vi) investment grade corporate  bonds, and commercial  paper. The
board of directors may authorize additional investments.

         As a source of liquidity and to  supplement  the  Registrant's  lending
activities,   the  Registrant   has  invested  in  residential   mortgage-backed
securities.  Mortgage-backed  securities  can serve as collateral for borrowings
and, through repayments,  as a source of liquidity.  Mortgage-backed  securities
represent a participation  interest in a pool of  single-family or other type of
mortgages.  Principal  and  interest  payments  are  passed  from  the  mortgage
originators, through intermediaries (generally quasi-governmental agencies) that
pool and repackage the  participation  interests in the form of securities.  The
quasi-governmental  agencies  guarantee the payment of principal and interest to
investors and include the Federal Home Loan Mortgage Corporation ("FreddieMac"),
Government National Mortgage Association ("GinnieMae"), and FannieMae.

         Mortgage-backed  securities  typically are issued with stated principal
amounts.  The  securities  are backed by pools of mortgages that have loans with
interest  rates that are  within a set range and have  varying  maturities.  The
underlying  pool of mortgages can be composed of either fixed rate or adjustable
rate mortgage  loans.  Mortgage-backed  securities are generally  referred to as
mortgage participation certificates or pass-through  certificates.  The interest
rate risk characteristics of the underlying pool of mortgages (i.e.,

                                       12
<PAGE>

fixed rate or adjustable  rate) and the  prepayment  risk,  are passed on to the
certificate holder. The life of a mortgage-backed pass-through security is equal
to the life of the underlying  mortgages.  Expected  maturities will differ from
contractual  maturities due to scheduled  repayments  and because  borrowers may
have  the  right  to call or  prepay  obligations  with  or  without  prepayment
penalties.  Mortgage-backed  securities  issued by  FreddieMac,  GinnieMae,  and
FannieMae make up a majority of the pass-through certificates market.

Investment  Portfolio.  The following table sets forth the carrying value of the
Registrant's investment securities portfolio at the dates indicated:

<TABLE>
<CAPTION>
                                                              At December 31
                                                    ------------------------------
                                                        2001       2000       1999
                                                    --------   --------   --------
                                                             (In Thousands)
<S>                                               <C>        <C>        <C>
Securities available for sale:
  Obligations of U.S. government agencies .......   $ 62,544   $ 97,812   $ 90,744
  Mortgage-backed securities ....................     55,526     44,132     47,005
  Obligations of state and political subdivisions     31,843     18,910     10,536
  Federal home loan bank stock ..................      2,102      1,964      1,964
  Equity securities .............................     10,214      4,236        230
  Other securities ..............................        739        820        584
                                                    --------   --------   --------
     Total securities available for sale ........   $162,968   $167,874   $151,063
                                                    ========   ========   ========
</TABLE>
                                       13

<PAGE>

         Investment Portfolio Maturities. The following table sets forth certain
information  regarding carrying values,  weighted average yields, and maturities
of the  Registrant's  investment  securities  portfolio as of December 31, 2001.
Actual maturities may differ from contractual  maturities as certain instruments
have call features which allow prepayment of obligations.

<TABLE>
<CAPTION>
                                                                  As of December 31, 2001
                                ----------------------------------------------------------------------------------------------------
                                                                       After Five            More than                Total
                                One Year or Less  One to Five Years    to Ten Years          Ten Years       Investment Securities
                                ----------------- -----------------  -----------------  -----------------  -------------------------
                                Carrying Average  Carrying  Average   Carrying Average  Carrying  Average  Carrying Average  Market
                                 Value    Yield     Value    Yield     Value    Yield    Value     Yield    Value    Yield    Value
                                -------  -------   -------  -------   -------- -------  --------  -------  -------  -------  ------
                                                                  (Dollars in Thousands)
<S>                            <C>       <C>    <C>          <C>    <C>        <C>    <C>         <C>    <C>        <C>   <C>
Obligations of U.S.
    government agencies......... $7,075    5.57%  $32,876      5.03%  $16,476    5.95%  $  6,117    7.27%  $ 62,544   5.55% $ 62,544
Mortgage-backed securities......     --      --        --        --        --      --     55,526    6.41     55,526   6.41    55,526
Obligations of state and
    political subdivisions (1)..     --      --       221      5.28     5,174    5.18     26,448    5.03     31,843   5.05    31,843
Federal home loan bank stock....     --      --        --        --        --      --      2,102    6.75      2,102   6.75     2,102
Equity securities...............     --      --        --        --        --      --     10,214    5.18     10,214   5.18    10,214
Other securities  ..............     --      --       525      7.15        31    7.06        183    1.91        739   5.85       739
                                 ------           -------             -------           --------           --------         --------
     Total...................... $7,075    5.57%  $33,622      5.06%  $21,681    5.77%  $100,590    5.97%  $162,968   5.74% $162,968
                                 ======   =====   =======    ======   =======  ======    =======   =====   ========  =====  ========
</TABLE>


--------------------
(1)      Average yields have not been computed on a tax-equivalent basis.


                                       14
<PAGE>

Sources of Funds

         General.  Deposits are the major source of the  Registrant's  funds for
lending and other investment purposes.  In addition to deposits,  the Registrant
derives funds from the amortization,  prepayment or sale of loans, maturities of
investment securities and operations.  Scheduled loan principal repayments are a
relatively  stable source of funds,  while deposit inflows and outflows and loan
prepayments are  significantly  influenced by general  interest rates and market
conditions.  The  Registrant  can also borrow  from the  Federal  Home Loan Bank
("FHLB") of Pittsburgh.

         Deposits.  Consumer and commercial  deposits are attracted  principally
from within the Registrant's primary market area through the offering of a broad
selection of deposit  instruments  including  checking,  regular savings,  money
market deposits,  term certificate accounts and individual  retirement accounts.
Deposit account terms vary according to the minimum balance  required,  the time
periods  the funds must  remain on deposit and the  interest  rate,  among other
factors.  The Registrant regularly evaluates the internal cost of funds, surveys
rates  offered by competing  institutions,  reviews the  Registrant's  cash flow
requirements  for lending and  liquidity  and executes  rate changes when deemed
appropriate.  The Registrant does not obtain funds through brokers,  nor does it
solicit funds outside the Commonwealth of Pennsylvania.

         The following  table indicates the amount of certificates of deposit of
$100,000 or more by time remaining at December 31, 2001 (in thousands).


                                                  Certificates of
  Maturity Periods                                    Deposit
  ----------------                                  -----------
  Three months or less......................           $20,949
  Over three through six months.............             7,368
  Over six through twelve months............             8,278
  Over twelve months........................             9,204
                                                       -------
        Total...............................           $45,799
                                                       =======

         Borrowings.   Deposits  are  the  primary   source  of  funds  for  the
Registrant's  lending and investment  activities as well as for general business
purposes. Should the need arise, the Registrant has a maximum borrowing capacity
with the FHLB of $245.2 million.  At December 31, 2001, FHLB borrowings totalled
$35.0 million, of which $2.0 million were short-term.

Personnel

         As of December  31,  2001,  the  Registrant  had 147  full-time  and 59
part-time  employees.  None of the  Registrant's  employees are represented by a
collective bargaining group.

Regulation

         Set forth below is a brief  description of certain laws which relate to
the regulation of the Registrant and the Bank. The description  does not purport
to be complete and is qualified in its entirety by reference to applicable  laws
and regulations.

Regulation of the Company

         General.  The Company, as a bank holding company under the Bank Holding
Company  Act of  1956,  as  amended  ("BHCA"),  is  subject  to  regulation  and
supervision by the Board of Governors of the Federal  Reserve  System  ("Federal
Reserve") and by the Pennsylvania Department of Banking (the "Department").

                                       15
<PAGE>

The Company is required to file annually a report of its operations with, and is
subject  to  examination  by,  the  Federal  Reserve  and the  Department.  This
regulation and oversight is generally intended to ensure that the Company limits
its  activities to those allowed by law and that it operates in a safe and sound
manner without endangering the financial health of its subsidiary banks.

         Under the BHCA,  the  Company  must  obtain the prior  approval  of the
Federal  Reserve  before it may acquire  control of another bank or bank holding
company, merge or consolidate with another bank holding company,  acquire all or
substantially  all of the assets of another  bank or bank  holding  company,  or
acquire direct or indirect ownership or control of any voting shares of any bank
or bank holding  company if, after such  acquisition,  the bank holding  company
would directly or indirectly own or control more than 5% of such shares.

         Federal  statutes impose  restrictions on the ability of a bank holding
company and its nonbank  subsidiaries  to obtain  extensions  of credit from its
subsidiary bank, on the subsidiary bank's investments in the stock or securities
of the  holding  company,  and on the  subsidiary  bank's  taking of the holding
company's  stock or securities as collateral  for loans to any borrower.  A bank
holding company and its subsidiaries are also prevented from engaging in certain
tie-in arrangements in connection with any extension of credit, lease or sale of
property, or furnishing of services by the subsidiary bank.

         A bank  holding  company is required to serve as a source of  financial
and  managerial  strength  to its  subsidiary  banks  and  may not  conduct  its
operations in an unsafe or unsound manner. In addition,  it is the policy of the
Federal  Reserve that a bank holding company should stand ready to use available
resources to provide  adequate capital to its subsidiary banks during periods of
financial stress or adversity and should maintain the financial  flexibility and
capital-raising  capacity  to obtain  additional  resources  for  assisting  its
subsidiary  banks. A bank holding  company's  failure to meet its obligations to
serve  as a source  of  strength  to its  subsidiary  banks  will  generally  be
considered by the Federal Reserve to be an unsafe and unsound  banking  practice
or a violation of the Federal Reserve regulations, or both.

         Non-Banking  Activities.  The business  activities of the Company, as a
bank holding company, are restricted by the BHCA. Under the BHCA and the Federal
Reserve's bank holding company  regulations,  the Company may only engage in, or
acquire or control  voting  securities  or assets of a company  engaged  in, (1)
banking or managing or controlling banks and other subsidiaries authorized under
the BHCA and (2) any BHCA activity the Federal  Reserve has  determined to be so
closely  related to  banking or  managing  or  controlling  banks to be a proper
incident thereto.  These include any incidental activities necessary to carry on
those  activities,  as well as a lengthy  list of  activities  that the  Federal
Reserve has determined to be so closely related to the business of banking.

         Financial  Modernization.  The  Gramm-Leach-Bliley  Act   (the   "Act")
permits greater affiliation among banks,  securities firms, insurance companies,
and other  companies under a new type of financial  services  company known as a
"financial  holding company." A financial holding company  essentially is a bank
holding company with significantly expanded powers.  Financial holding companies
are  authorized  by  statute  to  engage  in a number  of  financial  activities
previously  impermissible  for  bank  holding  companies,  including  securities
underwriting,  dealing and market making; sponsoring mutual funds and investment
companies;  insurance  underwriting and agency; and merchant banking activities.
The Act  also  permits  the  Federal  Reserve  and the  Treasury  Department  to
authorize  additional  activities  for financial  holding  companies if they are
"financial in nature" or  "incidental" to financial  activities.  A bank holding
company may become a financial holding company ("FHC") if each of its subsidiary
banks is well capitalized,  well managed,  and has at least a "satisfactory" CRA
rating.  A financial  holding company must provide notice to the Federal Reserve
within 30 days after commencing  activities  previously determined by statute or
by the Federal Reserve and Department of the Treasury to be

                                       16
<PAGE>

permissible. In fiscal 2000, the Company submitted notice to the Federal Reserve
and became a financial holding company.

         Regulatory  Capital  Requirements.  The  Federal  Reserve  has  adopted
capital  adequacy  guidelines  pursuant  to which it  assesses  the  adequacy of
capital in examining  and  supervising  a bank holding  company and in analyzing
applications  to it under the  BHCA.  The  Federal  Reserve's  capital  adequacy
guidelines are similar to those imposed on the Bank by the FDIC. See "Regulation
of the Bank - Regulatory Capital Requirements."

Regulation of the Bank

         General.  As a  Pennsylvania  chartered,  Bank  Insurance  Fund ("BIF")
insured  commercial  bank,  the Bank is  subject  to  extensive  regulation  and
examination by the Department and by the FDIC, which insures its deposits to the
maximum  extent  permitted  by law.  The federal and state laws and  regulations
applicable to banks regulate,  among other things,  the scope of their business,
their investments, the reserves required to be kept against deposits, the timing
of the  availability  of  deposited  funds  and the  nature  and  amount  of and
collateral  for  certain  loans.  The laws and  regulations  governing  the Bank
generally have been promulgated to protect depositors and not for the purpose of
protecting  stockholders.  This regulatory  structure also gives the federal and
state banking agencies extensive discretion in connection with their supervisory
and enforcement  activities and examination  policies,  including  policies with
respect to the  classification  of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulation, whether by
the Department,  the FDIC or the United States  Congress,  could have a material
impact on the Company, the Bank and their operations.

         Federal law provides the federal banking regulators, including the FDIC
and the Federal Reserve,  with substantial  enforcement powers. This enforcement
authority  includes,  among  other  things,  the  ability to assess  civil money
penalties,  to  issue  cease-and-desist  or  removal  orders,  and  to  initiate
injunctive  actions against  banking  organizations  and  institution-affiliated
parties, as defined. In general,  these enforcement actions may be initiated for
violations  of laws and  regulations  and  unsafe or  unsound  practices.  Other
actions or inactions  may provide the basis for  enforcement  action,  including
misleading or untimely reports filed with regulatory authorities.

         Pennsylvania  Savings Bank Law. The Pennsylvania Banking Code ("Banking
Code") contains  detailed  provisions  governing the  organization,  location of
offices,  rights and responsibilities of trustees,  officers, and employees,  as
well as corporate powers, savings and investment operations and other aspects of
the Bank and its affairs. The Banking Code delegates extensive rule-making power
and  administrative  discretion to the  Department so that the  supervision  and
regulation  of state  chartered  commercial  banks may be  flexible  and readily
responsive  to  changes  in  economic  conditions  and in  savings  and  lending
practices.

         The Banking Code provides state chartered  commercial banks with all of
the  powers  enjoyed  by  federal  savings  and loan  associations,  subject  to
regulation by the  Department.  The Federal  Deposit  Insurance  Corporation Act
("FDIA"),  however, prohibits state chartered banks from making new investments,
loans,  or becoming  involved in activities as principal and equity  investments
which are not permitted for national  banks unless (1) the FDIC  determines  the
activity or investment  does not pose a significant  risk of loss to the BIF and
(2) the  bank  meets  all  applicable  capital  requirements.  Accordingly,  the
additional  operating  authority  provided  to the Bank by the  Banking  Code is
significantly restricted by the FDIA.

         Federal Deposit  Insurance.  The FDIC is an independent  federal agency
that insures the  deposits,  up to  prescribed  statutory  limits,  of federally
insured banks and savings  institutions  and safeguards the safety and soundness
of the  banking  and  savings  industries.  The FDIC  administers  two  separate
insurance funds,

                                       17
<PAGE>

the BIF,  which  generally  insures  commercial  bank  and  state  savings  bank
deposits,  and the Savings  Insurance Fund  ("SAIF"),  which  generally  insures
savings  association  deposits.  The Bank is a member of the BIF and its deposit
accounts are insured by the FDIC, up to prescribed limits.

         The FDIC is authorized to establish  separate annual deposit  insurance
assessment rates for members of the BIF and the SAIF, and to increase assessment
rates if it determines  such increases are  appropriate to maintain the reserves
of either insurance fund. In addition,  the FDIC is authorized to levy emergency
special  assessments  on BIF and SAIF  members.  The  FDIC's  deposit  insurance
premiums  are  assessed  through a  risk-based  system  under  which all insured
depository  institutions  are placed into one of nine  categories  and  assessed
insurance premiums based upon their level of capital and supervisory evaluation.
The  FDIC  has  set  the  deposit  insurance  assessment  rates  for  BIF-member
institutions for the first six months of 2001 at 0% to .027% of insured deposits
on an annualized  basis,  with the assessment rate for most  institutions set at
0%.

         In addition,  all insured  institutions of the FDIC are required to pay
assessments  at an annual rate of  approximately  .0202% of insured  deposits to
fund interest payments on bonds issued by the Financing  Corporation,  an agency
of the Federal  government  established to  recapitalize  the predecessor to the
SAIF.  These  assessments  will continue until the Financing  Corporation  bonds
mature in 2017.

         Regulatory  Capital  Requirements.  The  FDIC has  promulgated  capital
adequacy  requirements  for  state-chartered  banks that, like the Bank, are not
members of the Federal Reserve  System.  At December 31, 2001, the Bank exceeded
all regulatory capital requirements and was classified as "well capitalized."

         The FDIC's capital  regulations  establish a minimum 3% Tier 1 leverage
capital requirement for the most highly-rated state-chartered, non-member banks,
with an  additional  cushion  of at least 100 to 200 basis  points for all other
state-chartered,  non-member banks, which effectively increases the minimum Tier
1 leverage ratio for such other banks to 4% to 5%. Under the FDIC's  regulation,
the highest-rated  banks are those that the FDIC determines are not anticipating
or experiencing  significant growth and have well diversified risk, including no
undue interest rate risk exposure, excellent asset quality, high liquidity, good
earnings and, in general,  which are considered a strong  banking  organization,
rated composite 1 under the Uniform Financial Institutions Rating System. Tier 1
or core capital is defined as the sum of common  stockholders' equity (including
retained earnings), noncumulative perpetual preferred stock and related surplus,
and minority interests in consolidated subsidiaries, minus all intangible assets
other than certain purchased  mortgage servicing rights and purchased credit and
relationships.

         The FDIC's  regulations also require that  state-chartered,  non-member
banks meet a  risk-based  capital  standard.  The  risk-based  capital  standard
requires the  maintenance  of total capital  (which is defined as Tier 1 capital
and  supplementary  (Tier  2)  capital)  to  risk  weighted  assets  of  8%.  In
determining the amount of risk- weighted  assets,  all assets,  plus certain off
balance sheet assets,  are multiplied by a risk-weight  of 0% to 100%,  based on
the risks  the FDIC  believes  are  inherent  in the type of asset or item.  The
components of Tier 1 capital for the risk-based  standards are the same as those
for the leverage capital  requirement.  The components of supplementary (Tier 2)
capital include cumulative  perpetual  preferred stock,  mandatory  subordinated
debt, perpetual subordinated debt,  intermediate-term preferred stock, up to 45%
of unrealized  gains on equity  securities  and a bank's  allowance for loan and
lease losses.  Allowance for loan and lease losses  includable in  supplementary
capital is limited to a maximum of 1.25% of risk-weighted  assets.  Overall, the
amount of supplementary capital that may be included in total capital is limited
to100% of Tier 1 capital.

         A bank that has less than the minimum leverage  capital  requirement is
subject to various  capital plan and activities  restriction  requirements.  The
FDIC's regulations also provide that any insured  depository  institution with a
ratio of Tier 1 capital to total  assets  that is less than 2.0% is deemed to be
operating in an

                                       18
<PAGE>

unsafe or unsound  condition  pursuant to Section  8(a) of the FDIA and could be
subject to potential termination of deposit insurance.

         The Bank is also subject to minimum capital requirements imposed by the
Department  on   Pennsylvania-chartered   depository  institutions.   Under  the
Department's  capital  regulations,  a  Pennsylvania  bank or savings  bank must
maintain a minimum leverage ratio of Tier 1 capital (as defined under the FDIC's
capital regulations) to total assets of 4%. In addition,  the Department has the
supervisory  discretion to require a higher leverage ratio for any  institutions
based on the institution's  substandard performance in any of a number of areas.
The  Bank  was in  compliance  with  both  the  FDIC  and  Pennsylvania  capital
requirements as of December 31, 2001.

         Affiliate  Transaction  Restrictions.  Federal laws strictly  limit the
ability  of banks to engage in  transactions  with their  affiliates,  including
their bank holding  companies.  Such transactions  between a subsidiary bank and
its parent company or the nonbank  subsidiaries  of the bank holding company are
limited to 10% of a bank  subsidiary's  capital and surplus and, with respect to
such parent company and all such nonbank subsidiaries, to an aggregate of 20% of
the bank  subsidiary's  capital and surplus.  Further,  loans and  extensions of
credit generally are required to be secured by eligible  collateral in specified
amounts.  Federal law also requires that all transactions between a bank and its
affiliates  be  on  terms  as  favorable  to  the  bank  as  transactions   with
non-affiliates.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Pittsburgh,  which is one of 12 regional FHLBs. Each FHLB serves as a reserve or
central bank for its members within its assigned region.  It is funded primarily
from  funds  deposited  by member  institutions  and  proceeds  from the sale of
consolidated  obligations  of the FHLB System.  It makes loans to members (i.e.,
advances) in accordance with policies and procedures established by the Board of
Trustees of the FHLB.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Pittsburgh  in an amount  equal to the  greater of 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations  at the  beginning  of  each  year or 5% of the  Bank's  outstanding
advances  from the FHLB. At December 31, 2001,  the Bank was in compliance  with
this requirement.

         Federal  Reserve System.  The Federal  Reserve  requires all depository
institutions  to maintain non-  interest  bearing  reserves at specified  levels
against their  transaction  accounts  (primarily  checking and NOW accounts) and
non-personal  time  deposits.  The  balances  maintained  to  meet  the  reserve
requirements imposed by the Federal Reserve may be used to satisfy the liquidity
requirements that are imposed by the Department.  At December 31, 2001, the Bank
met its reserve requirements.

         Restrictions on Dividends.  The  Pennsylvania  Banking Code states,  in
part,  that  dividends  may be  declared  and paid only out of  accumulated  net
earnings and may not be declared or paid unless surplus  (retained  earnings) is
at least equal to  contributed  capital.  The Bank has not  declared or paid any
dividends  which  cause the Bank's  retained  earnings  to be reduced  below the
amount required.  Finally,  dividends may not be declared or paid if the Bank is
in default in payment of any assessment due the FDIC.

         The  Federal  Reserve has issued a policy  statement  on the payment of
cash dividends by bank holding companies,  which expresses the Federal Reserve's
view that a bank holding  company  should pay cash  dividends only to the extent
that the holding  company's  net income for the past year is sufficient to cover
both the cash dividends and a rate of earnings retention that is consistent with
the holding  company's  capital  needs,  asset  quality  and  overall  financial
condition. The Federal Reserve also indicated that it would be inappropriate for
a  company  experiencing  serious  financial  problems  to  borrow  funds to pay
dividends.  Furthermore, under the federal prompt corrective action regulations,
the Federal Reserve may prohibit a bank

                                       19

<PAGE>

holding  company  from  paying  any  dividends  if the  holding  company's  bank
subsidiary is classified as "undercapitalized."

Item 2.  Properties
-------  ----------

         At December 31, 2001,  the  Registrant  operated  from its main office,
five branch offices and five supermarket  branch offices and a loan office and a
trust office, all located in southwestern Pennsylvania. The total net book value
of the  Registrant's  investment in premises and equipment at December 31, 2001,
was approximately  $4.7 million.  The main office of the Company and of the Bank
and two branch  offices  are owned by the Bank and the  remaining  three  branch
offices,  five supermarket  branch offices,  and the Bank's trust division,  are
leased by the Bank.  These leases have initial terms of one to twenty years, and
all leases contain renewal options for additional years.

Item 3.  Legal Proceedings
-------  -----------------

         The Registrant is periodically  involved as a plaintiff or defendant in
various  legal  actions,   such  as  actions  to  enforce  liens,   condemnation
proceedings  on properties in which the  Registrant  holds  mortgage  interests,
matters  involving the making and servicing of mortgage  loans and other matters
incident to the  Registrant's  business.  In the opinion of management,  none of
these actions individually or in the aggregate is believed to be material to the
financial condition or results of operations of the Registrant.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year ended December 31, 2001.

                                     Part II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
--------------------------------------------------------------------------------
         Matters
         -------

         The  information  contained under the section  captioned  "Stock Market
Information" in the 2001 Annual Report to Stockholders  (the "Annual Report") is
incorporated herein by reference.

Item 6.  Selected Financial Data
-------  -----------------------

         The information contained in the table captioned "Financial Highlights"
in the Annual Report is incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
--------  ----------------------------------------------------------

         The information contained in the section captioned "Market Risk" in the
Annual Report is incorporated herein by reference.

                                       20

<PAGE>

Item 8.  Financial Statements and Supplementary Data
-------  -------------------------------------------

         The  Registrant's  financial  statements  listed in Item 14 herein  are
incorporated herein by reference.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
--------------------------------------------------------------------------------
         Financial Disclosure
         --------------------

         None.

                                    Part III

Item 10.  Directors and Executive Officers of the Registrant
--------  --------------------------------------------------

         The information  contained under the sections  captioned "Section 16(a)
Beneficial  Ownership  Reporting  Compliance"  and  "Proposal  I--  Election  of
Directors" and "--  Biographical  Information"  in the 2002 Proxy  Statement are
incorporated herein by reference.

Item 11.  Executive Compensation
--------  ----------------------

         The  information  contained under the section  captioned  "Director and
Executive  Compensation"  in the  Proxy  Statement  is  incorporated  herein  by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
--------  --------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners

                  Information  required by this item is  incorporated  herein by
                  reference  to the Section  captioned  "Voting  Securities  and
                  Principal  Holders  Thereof -- Security  Ownership  of Certain
                  Beneficial Owners" of the Proxy Statement.

         (b)      Security Ownership of Management

                  Information  required by this item is  incorporated  herein by
                  reference to the sections  captioned  "Voting  Securities  and
                  Principal  Holders  Thereof -- Security  Ownership  of Certain
                  Beneficial  Owners" and  "Proposal I -- Election of Directors"
                  of the Proxy Statement.

         (c)      Management of the Company knows of no arrangements,  including
                  any pledge by any person of  securities  of the  Company,  the
                  operation of which may at a subsequent date result in a change
                  in control of the registrant.

Item 13.  Certain Relationships and Related Transactions
--------  ----------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference to the section  captioned  "Proposal I -- Election of  Directors"  and
"Voting Securities and Principal Holders Thereof" of the Proxy Statement.

                                       21
<PAGE>

                                     Part IV

Item 14.  Exhibits, Financial Statements, and Reports on Form 8-K
--------  -------------------------------------------------------

         (a)      Listed below are all financial statements and  exhibits  filed
                  as part of this report, and are incorporated by reference.

         1.       The  consolidated  statements  of financial  conditions of IBT
                  Bancorp, Inc. and subsidiary as of December 31, 2001 and 2000,
                  and the related consolidated  statements of income, changes in
                  stockholders'  equity  and cash flows for each of the years in
                  the three year period ended  December 31, 2001,  together with
                  the  related  notes and the  independent  auditors'  report of
                  Edwards Sauer & Owens, independent accountants.

         2.       Schedules omitted as they are not applicable.

         3.       Exhibits
<TABLE>
<CAPTION>
                     <S>         <C>
                            3(i)    Articles of Incorporation of IBT Bancorp, Inc.*
                            3(ii)   Bylaws of IBT Bancorp, Inc.*
                           10       Change In Control Severance Agreement with Charles G. Urtin**
                           10.1     Deferred Compensation Plan For Bank Directors**
                           10.2     Retirement Agreement Between Irwin Bank & Trust Co. And
                                    J. Curt Gardner**
                           10.3     Death Benefit Only Deferred Compensation Plan For Bank Directors
                                    effective as of January 1, 1990**
                           10.4     Retirement and Death Benefit Deferred Compensation Plan For
                                    Bank Directors effective as of January 1, 1990**
                           10.5     2000 Stock Option Plan***
                           13       Portions of the 2001 Annual Report to Shareholders
                           21       Subsidiaries of IBT Bancorp, Inc. (see "Item 1 - Business")
                           23       Consent of Edwards, Sauer & Owens
                           -------------------------
                           *        Incorporated by reference to the identically
                                    numbered  exhibits of the Registrant's  Form
                                    10 (file no. 0-25903)
                           **       Incorporated by reference to the identically
                                    numbered  exhibits of the Registrant's  Form
                                    10K for December 31, 1999.
                           ***      Incorporated  by reference to the definitive
                                    proxy  statement of the Registrant  filed on
                                    March 17, 2000.
</TABLE>

         (b)      None

                                       22

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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 as of March 15, 2002.

                                         IBT BANCORP, INC.


                                         By:   /s/Charles G. Urtin
                                               ---------------------------------
                                               Charles G. Urtin, President and
                                               Chief Executive Officer
                                               (Duly Authorized Representative)

         Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,
this report has been signed below on March 15, 2002 by the following  persons on
behalf of the registrant and in the capacities indicated.

<TABLE>
<CAPTION>
<S>                                                         <C>

/s/Richard L. Ryan                                            /s/J. Curt Gardner
-----------------------------------------------------         -----------------------------------------------------
Richard L. Ryan                                               J. Curt Gardner
Director                                                      Chairman of the Board



/s/Charles G. Urtin                                           /s/Thomas Beter
-----------------------------------------------------         -----------------------------------------------------
Charles G. Urtin, President, Chief Executive                  Thomas Beter
Officer, and Director                                         Director
(Principal Executive, Financial, and Accounting
Officer)



/s/Edwin A. Paulone                                           /s/Robert Rebich, Jr.
-----------------------------------------------------         -----------------------------------------------------
Edwin A. Paulone                                              Robert Rebich, Jr.
Director                                                      Director



/s/Grant J. Shevchik                                          /s/Robert C. Whisner
------------------------------------------------------        -----------------------------------------------------
Grant J. Shevchik                                             Robert C. Whisner
Director                                                      Director



/s/Robert Bowell
------------------------------------------------------
Robert Bowell
Executive Vice President, Secretary and
Treasurer

</TABLE>
                                       23