THREE RIVERS BANCORP, INC. Form 10-Q 09-30-2001

10-Q 1 doc1.htm THREE RIVERS BANCORP, INC. Form 10-Q 09-30-2001

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

FORM 10-Q

(Mark One)
/X/	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 2001
/ /	TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission File No. 0-29083 THREE RIVERS BANCORP, INC. (Exact name of registrant as specified in its charter)

Pennsylvania (State or other jurisdiction of incorporation or organization)	25-1843375 (I.R.S. Employer Identification No.)
2681 Mosside Boulevard, Monroeville, PA 15146-33151 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (412) 666-8063
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 THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Class Common Stock, par value $0.01 per share	Outstanding at November 1, 2001 8,516,038

THREE RIVERS BANCORP, INC. INDEX
				Page No.
PART I. FINANCIAL INFORMATION:

	Item 1. Quarterly Financial Statements

		Consolidated Balance Sheets -
			September 30, 2001, December 31, 2000,
			and September 30, 2000		3

		Consolidated Statements of Income -
			Three and Nine Months Ended September 30, 2001,
			and 2000		4

		Consolidated Statement of Changes
			in Stockholders' Equity -
			Nine Months Ended
			September 30, 2001		6

		Consolidated Statements of Cash Flows -
			Nine Months Ended
			September 30, 2001, and 2000		7

		Notes to Consolidated Financial
			Statements		8

	Item 2. Management's Discussion and Analysis
			of Consolidated Financial Condition
			and Results of Operations		19

	Item 3. Quantitative and Qualitative Discussion About Market Risk				36

PART II. OTHER INFORMATION:

	Item 4. Submission of Matters to a Vote of Security Holders				37

	Item 6. Exhibits and Reports on Form 8-K				37

THREE RIVERS BANCORP, INC. CONSOLIDATED BALANCE SHEETS (In thousands)

		September 30, 2001 (Unaudited)		December 31, 2000			September 30, 2000 (Unaudited)
ASSETS
Cash and due from banks		$	77,619	$	15,471		$	16,858
Investment securities available for sale			377,540		416,745			448,981
Loans			571,215		488,956			483,173
Less:	Unearned income		19		31			39
	Allowance for loan losses		7,774		5,393			5,281

Net loans			563,422		483,532			477,853

Premises and equipment			4,731		4,775			4,924
Accrued income receivable			6,528		6,465			6,906
Goodwill and core deposit intangibles			13,359		2,446			2,542
Bank owned life insurance			13,400		12,942			12,840
Other assets			1,548		4,685			13,525

	TOTAL ASSETS	$	1,058,147	$	947,061		$	984,429


LIABILITIES
Non-interest bearing deposits		$	114,716	$	86,181		$	86,409
Interest bearing deposits			653,871		545,809			536,534

Total deposits			768,587		631,990			622,943

Federal funds purchased and securities sold under
	agreements to repurchase		--		4,100			12,500
Other short-term borrowings			--		5,066			62,726
Advances from Federal Home Loan Bank			189,200		234,876			224,876
Long-term debt			554		633			1,789

Total borrowed funds			189,754		244,675			301,891


Other liabilities			13,366		11,672			9,255

	TOTAL LIABILITIES		971,707		888,337			934,089


STOCKHOLDERS' EQUITY
Preferred stock, no par value; 5,000,000 shares
	authorized; no shares issued or
	outstanding for the periods presented		-		-			-
Common stock, par value $.01 per share; 20,000,000
	shares authorized; 8,516,038, 6,675,212 and
	6,674,212 issued and outstanding at
	September 30, 2001, December 31, 2000
	and September 30, 2000, respectively.		85		67			67
Surplus			38,794		22,487			22,479
Retained earnings			43,091		40,819			40,190
Accumulated other comprehensive income (loss)			4,470		(4,649	)		(12,396	)

TOTAL STOCKHOLDERS' EQUITY			86,440		58,724			50,340

	TOTAL LIABILITIES AND
	STOCKHOLDERS' EQUITY	$	1,058,147	$	947,061		$	984,429


See accompanying notes to consolidated financial statements.

THREE RIVERS BANCORP, INC. CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share data) Unaudited

				Three Months Ended September 30,				Nine Months Ended September 30,
				2001		2000		2001		2000
INTEREST INCOME
	Interest and fees on loans and loans held for sale:
		Taxable		$	11,573	$	9,927	$	31,478	$	29,034
		Tax exempt			98		157		386		529
	Deposits with banks				57		7		67		16
	Federal funds sold				194		--		281		--
	Investment securities available for sale				5,790		7,458		18,162		23,455

			Total Interest Income		17,712		17,549		50,374		53,034

INTEREST EXPENSE
	Deposits				7,234		6,530		20,372		17,172
	Federal funds purchased and securities
		sold under agreements to repurchase			3		267		31		872
	Other short-term borrowings				7		368		16		1,284
	Advances from Federal Home Loan Bank				3,360		4,009		10,982		13,442
	Long-term debt				10		46		35		150

		Total Interest Expense			10,614		11,220		31,436		32,920

NET INTEREST INCOME					7,098		6,329		18,938		20,114

	Provision for loan losses				300		150		750		450


NET INTEREST INCOME AFTER PROVISION FOR
		LOAN LOSSES			6,798		6,179		18,188		19,664

NON-INTEREST INCOME
	Trust fees				30		39		90		189
	Net realized gain (loss) on investment securities				82		--		79		(501	)
	Net realized gain on loans held for sale				2		--		9		1
	Wholesale cash processing fees				235		152		538		417
	Service charges on deposit accounts				506		529		1,499		1,460
	Bank owned life insurance				156		141		458		429
	Other income				351		350		971		1,019

		Total Non-Interest Income			1,362		1,211		3,644		3,014

NON-INTEREST EXPENSE
	Salaries and employee benefits				2,650		2,405		7,590		7,333
	Net occupancy expense				465		432		1,393		1,410
	Equipment expense				397		380		1,227		1,222
	Professional fees				307		353		1,039		900
	Supplies, postage, and freight				297		220		742		740
	Miscellaneous taxes and insurance				280		183		743		531
	FDIC deposit insurance expense				36		29		95		87
	Amortization of goodwill and core deposit intangibles				206		98		396		296
	Spin-off costs				--		--		--		777
	OREO expense				3		1,134		15		2,500
	Other expense				1,003		969		2,558		2,961

		Total Non-Interest Expense		$	5,644	$	6,203	$	15,798	$	18,757

See accompanying notes to consolidated financial statements.

CONTINUED ON NEXT PAGE


CONSOLIDATED STATEMENT OF INCOME CONTINUED FROM PREVIOUS PAGE (In thousands, except per share data) Unaudited

			Three Months Ended September 30,				Nine Months Ended September 30,
			2001		2000		2001		2000

INCOME BEFORE INCOME TAXES			$	2,516	$	1,187	$	6,034	$	3,921
	Provision for income taxes			579		342		1,139		366


INCOME FROM CONTINUING OPERATIONS			$	1,937	$	845	$	4,895	$	3,555

Loss from discontinued Mortgage Banking
	Operations, net of income taxes			-		-		-		(267	)


NET INCOME			$	1,937	$	845	$	4,895	$	3,288


PER COMMON SHARE DATA:
	Basic:
		Income from continuing operations	$	0.23	$	0.13	$	0.67	$	0.53
		Net income		0.23		0.13		0.67		0.49
		Average shares outstanding		8,515,678		6,674,212		7,296,319		6,671,995
	Diluted:
		Income from continuing operations	$	0.23	$	0.13	$	0.67	$	0.53
		Net income		0.23		0.13		0.67		0.49
		Average shares outstanding		8,550,491		6,674,224		7,312,974		6,672,247
	Cash dividends declared		$	0.12	$	0.12	$	0.36	$	0.24

See accompanying notes to consolidated financial statements.

THREE RIVERS BANCORP, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands) Unaudited

		Preferred Stock		Common Stock		Surplus		Retained Earnings			Accumulated Other Comprehensive Income			Total

Balance, January
	1, 2001	$	-	$	67	$	22,487	$	40,819		$	(4,649	)	$	58,724
Net Income			-		-		-		4,895			-			4,895
Other
	comprehensive
	income, net
	of tax		-		-		-		-			9,119			9,119

	Comprehensive
	income														14,014

Shares issued as
	a result of the
	acquisition of
	PA Capital		-		18		16,282		-			-			16,300
Dividends declared			-		-		-		(2,623	)		-			(2,623	)
Stock options
	exercised
	(3,149 shares)		-		-		25		-			-			25

Balance,
	September 30,
	2001	$	-	$	85	$	38,794	$	43,091		$	4,470		$	86,440


See accompanying notes to consolidated financial statements.

THREE RIVERS BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Unaudited

		Nine Months Ended September 30,
		2001			2000
OPERATING ACTIVITIES
Net income		$	4,895		$	3,288
Loss from discontinued mortgage banking operations			--			267

Income from continuing operations			4,895			3,555
Adjustments to reconcile net income to net cash
	provided by operating activities:
Provision for loan losses			750			450
Depreciation and amortization			107			146
Amortization expense of goodwill and core deposit intangibles			396			296
Net amortization (accretion) of investment securities			236			(274	)
Net realized (gains) losses on investment securities			(79	)		501
Net realized gains on loans and loans held for sale			(9	)		(1	)
Decrease in accrued income receivable			396			598
(Decrease) increase in accrued expense payable			(90	)		478
Net decrease in other assets			348			382
Net decrease in other liabilities			(2,564	)		(1,967	)

Net cash provided by operating activities			4,386			4,164


INVESTING ACTIVITIES
Purchases of investment securities and other short-term investments -
	available for sale		(68,646	)		(14,895	)
Proceeds from maturities of investment securities and
	other short-term investments - available for sale		49,618			37,356
Proceeds from sales of investment securities and
	other short-term investments - available for sale		82,870			57,956
Long-term loans originated			(131,771	)		(64,024	)
Principal collected on long-term loans			132,767			51,048
Loans sold or participated			1,568			9,994
Net decrease in credit card receivable and other short-term loans			1,043			(116	)
Net cash received from PA Capital Bank Acquisition			39,994			--
Purchases of premises and equipment			(469	)		(531	)
Sale/retirement of premises and equipment			--			493

Net cash provided by investing activities			106,974			77,281


FINANCING ACTIVITIES
Net increase in deposits			8,310			50,248
Net (decrease) increase in federal funds purchased, securities sold
	under agreements to repurchase, and other short-term borrowings		(9,169	)		49,076
Net principal repayments of advances from
	Federal Home Loan Bank		(45,676	)		(185,000	)
Repayments of long-term debt			(79	)		(579	)
Common stock dividends paid			(2,623	)		(2,637	)
Proceeds from stock options exercised			25			77

Net cash used by financing activities			(49,212	)		(88,815	)


NET INCREASE (DECREASE) IN CASH EQUIVALENTS			62,148			(7,370	)
CASH EQUIVALENTS AT JANUARY 1			15,471			24,228

CASH EQUIVALENTS AT SEPTEMBER 30		$	77,619		$	16,858



See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

On April 1, 2000, USBANCORP, Inc. executed its approved Board of Directors plan to split it's banking subsidiaries into two separate publicly traded companies and Three Rivers Bancorp, Inc. ("Three Rivers Bancorp, Inc." or "the Company") was formed. On this date, Three Rivers Bank was spun-off from USBANCORP, Inc. and into the Company.

Under the tax-free spin-off plan, 100% of the shares of Three Rivers Bancorp, Inc., were distributed as a dividend to the shareholders of USBANCORP as a 1 for 2 stock dividend based on their existing USBANCORP ownership. Standard Mortgage Company ("SMC"), a mortgage banking company, a subsidiary of Three Rivers Bank, was internally spun-off from Three Rivers Bank to the USBANCORP prior to consummation of the Three Rivers Bank spin-off. As a result of the spin-off of SMC, on April 1, 2000, total assets and equity at Three Rivers Bank decreased by $10,159,000, the net equity of SMC.

For the spin-off of Three Rivers Bank to be considered "tax-free", USBANCORP, Inc. petitioned to and received from the Internal Revenue Service a private letter ruling. This private letter ruling contains certain commitments on the part of the Company including no change in control for a two-year period and a requirement to raise capital within one year after the spin-off. The requirement to raise capital could include issuing capital stock in connection with a business combination.

On February 1, 2001, the Company and The Pennsylvania Capital Bank ("PA Capital Bank") announced that they signed a definitive agreement for the Company to acquire all the stock of PA Capital Bank and to merge PA Capital Bank into Three Rivers Bank. This acquisition was completed on July 1, 2000 (see Note #3), and pursuant to a supplemental IRS ruling, the acquisition was approved to satisfy the capital raising requirements set forth in the original private letter ruling. In accordance with this decision, the shareholders of USBANCORP, Inc. who received the stock of the Company in the spin-off are deemed to have received a non-taxable dividend from USBANCORP, Inc.

2. Basis of Presentation

The consolidated financial statements include the accounts of Three Rivers Bancorp, Inc. and its wholly owned subsidiary, Three Rivers Bank and Trust Company ("Three Rivers Bank"). Intercompany accounts and transactions have been eliminated in preparing the consolidated financial statements.

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments that are of a normal recurring nature and are considered necessary for a fair presentation have been included. They are not, however, necessarily indicative of the results of consolidated operations for a full-year.

For further information, refer to the consolidated financial statements and accompanying notes included in the Company's annual financial statements for the year ended December 31, 2000, filed with the Securities and Exchange Commission as part of Three Rivers Bancorp, Inc.'s Form 10K filing.

Basic earnings per share includes only the weighted average common shares outstanding. Diluted earnings per share includes the weighted average common shares outstanding and any dilutive common stock equivalent shares in the calculation.

On a consolidated basis, cash equivalents include cash and due from banks, interest-bearing deposits with banks, and federal funds sold and securities purchased under agreements to resell. The Company's results are included in the consolidated federal income tax return of USBANCORP, Inc. through March 31, 2000. For the portion of the year beginning April 1, 2000, the Company filed its own consolidated federal income tax return with the Internal Revenue Service. During the first nine months of 2001, the Company made payments of $1,625,000 for federal income taxes. During the first quarter 2000, the Company made payments to USBANCORP, Inc. for federal income taxes, which totaled $1,382,000. During the second and third quarters of 2000, the Company made payments totaling $1,265,000 for federal income taxes. Total interest expense paid amounted to $31,526,000 in 2001's first nine months compared to $32,442,000 in the same 2000 period.

3. Acquisition

Pursuant to the definitive agreement signed by the Company and The Pennsylvania Capital Bank ("PA Capital Bank) on February 1, 2001, the Company completed its acquisition of PA Capital Bank on July 1, 2001. On that date, the Company acquired all the stock of PA Capital Bank and merged PA Capital Bank into Three Rivers Bank.

The acquisition was accounted for under the purchase method of accounting. The transaction pricing was calculated using an underlying exchange ratio of 4.61. The price of the Company's stock at February 1, 2001, the determination date, was $9.00, which created a value of $41.50 a share for PA Capital's stock. Each PA Capital Bank shareholder received 90% of the deal price in the Company's stock and 10% in cash.

The total merger consideration given for PA Capital's nets assets totaled $20.0 million. This consisted of the issuance of 1,837,677 shares of the Company's stock and $3.4 million in cash. The cash component was comprised of a $1.8 million payment to PA Capital shareholders and a $1.6 million payment to cash out existing PA Capital Bank stock option holders.

At the acquisition date, the fair value of PA Capital's net assets totaled approximately $16 million, which included cash of $43.4 million, loans receivable with a fair value of $83.7 million, investment securities and other assets of $12.7, deposits with a fair value of $123.5 million and other liabilities of $279,000. As a result of the transaction, $4.8 million of core deposit intangible ($3.1 million net of taxes) was recorded and will be amortized over 11 years. Additionally, the fair value adjustments required by purchase accounting rules consisted of $582,000 (378,000 net of taxes) and will be amortized over eight years. Goodwill arising from the transaction totaled $6.5 million, which will be accounted for in accordance with Statement #142 as discussed in Note #4.

Pro forma combined historical results of operations for the current year up to the most recent interim statement of financial condition date as though the Company and PA Capital Bank had been combined at the beginning of the year are presented below. These unaudited condensed pro forma combined statements of operations are presented as if the acquisition had been effective on January 1, 2001 and 2000, respectively.

The unaudited condensed pro forma combined statements of operations include the estimated effect of pro forma adjustments that would have been realized had the acquisition actually occurred at the beginning of the respective periods.

			Pro Forma combined for the nine months ended September 30, 2001		Pro Forma combined for the nine months ended September 30, 2000
			(In thousands, except per share data) (Unaudited)
Interest income			$	55,465	$	60,988
Interest expense				34,383		37,276

Net interest income before provision
	for loan losses			21,082		23,712
Provision for loan losses				845		815

Net interest income after provision
	for loan losses			20,237		22,897
Non-interest income				3,966		3,608
Non-interest expense				16,978		20,333

Income before income taxes				7,225		6,172
Provision for income taxes				1,373		1,088

Income from continuing operations				5,852		5,084
Loss from discontinued mortgage
	banking operations, net of income taxes			--		267

Net income			$	5,852	$	4,817


PER COMMON SHARE DATA
	Basic:
		Income from continuing operations	$	0.69	$	0.60
		Net income		0.69		0.57
		Average shares outstanding		8,514,700		8,509,672
	Diluted:
		Income from continuing operations	$	0.69	$	0.60
		Net income		0.69		0.57
		Average shares outstanding		8,533,722		8,509,924

4. Recent Accounting Pronouncement

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, Business Combinations. Statement 141 eliminates the pooling-of-interests method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. Statement 141 also includes new criteria to recognize intangible assets separately from goodwill. The requirements of Statement 141 are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001 (i.e., the acquisition date is July 1, 2001 or after).

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Under Statement 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually, or more frequently if impairment indicators arise, for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The amortization provisions of Statement 142 requiring nonamortization of goodwill and indefinite lived intangible assets apply to goodwill and indefinite lived intangible assets acquired after June 30, 2001. However, the impairment provisions of Statement 142 apply to these assets upon adoption of Statement 142. With respect to goodwill and intangible assets acquired prior to July 1, 2001, companies are required to adopt Statement 142 in their fiscal year beginning after December 15, 2001. The Company will apply the nonamortization provisions of Statement 142 to the $6.5 million of goodwill recorded on July 1, 2001 as a result of the PA Capital acquisition. The Company has no other goodwill recorded on its balance sheet that would be impacted by the provisions of Statement 142.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The primary objectives of this statement are to establish a single accounting model for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and to broaden the presentation of discontinued operations to include more disposal transactions. Although Statement 144 supersedes FASB Statement No. 121 on impairment of long-lived assets, many of the requirements of Statement 121 regarding the test for and measurement of impairment losses of long-lived assets were retained. The Company will adopt Statement 144 on January 1, 2002. The adoption of this statement is not expected to have a material impact on the Company's results of operations or financial position.

5. Derivative Transactions

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, which is required to be adopted in years after June 15, 2000. The Company has adopted the new statement effective January 1, 2001. The statement requires the Company to recognize all derivatives on the balance sheet at fair value.

Derivatives that are not designated as hedges must be adjusted to fair value through earnings. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in derivatives' fair value will be either offset against the changes in fair value or expected future cash flows of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

The Company uses various interest rate contracts, such as interest rate swaps, caps and floors, to help manage interest rate and market valuation risk exposure, which is incurred in normal banking activities. These interest rate contracts function as hedges against specific assets or liabilities in the Consolidated Balance Sheet. The Company monitors and controls all derivative products with a comprehensive Board of Director approved hedging policy. This policy permits a total maximum notional amount outstanding of $300 million for interest rate swaps, and interest rate caps/floors.

As of September 30, 2001, the Company had one derivative transaction outstanding in the form of a interest rate swap agreement. Prior to July 25, 2001, this swap agreement was hedged by a $40 million FHLB Repo advance, which rendered the hedge 100% effective. Accordingly, there was no effect on the income statement for the change in the fair value of the hedge and the related Repo advance. However, on July 25, 2001, the FHLB Repo advance, which served as the underlying debt obligation of the swap agreement, matured and, as a result of having additional liquidity resulting from the PA Capital Bank acquisition, was not replaced with an additional FHLB Repo advance. Therefore, effective July 25, 2001, hedge accounting was terminated. As a result of the debt payoff, the Company recognized a charge to earnings of $277,000 on July 25, 2001, which was recorded as a charge to other non-interest expense. Changes in the fair value of the swap, which matured October 25, 2001, are reflected in earnings. The changes in the fair value of the swap from July 25, 2001 thru October 25, 2001 approximated the changes in the net cash due on the swap during this same period.

6. Comprehensive Income

Comprehensive income totaled $8.4 million and $5.4 million for the three months ended September 30, 2001 and 2000, respectively, and $14.0 million and $8.1 million for the nine months ended September 30, 2001 and 2000, respectively. Differences between comprehensive income and net income for these periods result entirely from investment security unrealized holding gains, net of income taxes.

7. Investment Securities

Securities classified as available for sale include securities that may be sold to effectively manage interest rate risk exposure, prepayment risk, and other factors (such as liquidity requirements). These available for sale securities are reported at estimated fair value with unrealized aggregate appreciation/(depreciation) excluded from income and credited/(charged) to a separate component of shareholders' equity on a net of tax basis. The change in the estimated fair value of the available for sale portfolio does inject more volatility in the book value of equity, but has no impact on regulatory capital. The Company presently does not engage in trading activity. Realized gain or loss on securities sold was computed upon the adjusted cost of the specific securities sold. The book and estimated fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale:


				September 30, 2001
		Book Value		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
U.S. Treasury		$	4,582	$	123	$	--		$	4,705
U.S. Agency			25,994		310		--			26,304
State and municipal			29,083		107		(189	)		29,001
U.S. Agency mortgage-backed
	securities		291,705		7,194		(297	)		298,602
Other securities *			19,523		--		(595	)		18,928

	Total	$	370,887	$	7,734	$	(1,081	)	$	377,540

* Other investment securities include corporate notes and bonds, asset-backed securities, and equity securities.

Maintaining investment quality is a primary objective of the Company's investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody's Investor's Service or Standard & Poor's rating of "A." At September 30, 2001, 98.6% of the portfolio was rated "AAA" compared to 98.0% at September 30, 2000. Less than 1.1% of the portfolio was rated below "A" or unrated on September 30, 2001.

8. Loans

The loan portfolio of the Company consists of the following (in thousands):


		September 30, 2001		December 31, 2000		September 30, 2000
Commercial		$	76,968	$	44,569	$	48,244
Commercial loans secured
	By real estate		293,138		237,830		224,808
Real estate - mortgage			179,369		181,066		182,547
Consumer			21,740		25,491		27,574

	Loans		571,215		488,956		483,173
Less: Unearned income			19		31		39

Loans, net of unearned income		$	571,196	$	488,925	$	483,134

Real estate-construction loans were not material at these presented dates and comprised 3.0% of total loans net of unearned income at September 30, 2001. The Company has no credit exposure to foreign countries or highly leveraged transactions.

9. Allowance for Loan Losses

An analysis of the changes in the allowance for loan losses follows (in thousands, except ratios):


		Three Months Ended September 30,						Nine Months Ended September 30,
		2001			2000			2001			2000
Balance at beginning of period		$	5,699		$	5,064		$	5,393		$	5,021
Charge-offs:
	Commercial		--			--			67			184
	Real estate-mortgage		--			--			82			146
	Consumer		174			14			228			66

	Total charge-offs		174			14			377			396

Recoveries:
	Commercial		1			75			1			89
	Real estate-mortgage		1			--			38			98
	Consumer		8			6			30			19

	Total recoveries		10			81			69			206


Net charge-offs (recoveries)			164			(67	)		308			190
Allowance for loan losses from PA Capital			1,939			--			1,939			--
Provision for loan losses			300			150			750			450

Balance at end of period		$	7,774		$	5,281		$	7,774		$	5,281


As a percent of average loans and loans held
	for sale, net of unearned income:
	Annualized net charge-offs (recoveries)		0.11	%		(0.06	)%		0.08	%		0.05	%
	Annualized provision for loan losses		0.21	%		0.13	%		0.19	%		0.13	%
Allowance as a percent of loans and loans
	held for sale, net of unearned income		1.36	%		1.09	%		1.36	%		1.09	%
Total classified loans		$	18,239		$	10,626		$	18,239		$	10,626

10. Non-performing Assets

Non-performing assets are comprised of (i) loans which are on a non-accrual basis, (ii) loans which are contractually past due 90 days or more as to interest or principal payments some of which are insured for credit loss, and (iii) other real estate owned (real estate acquired through foreclosure and in-substance foreclosures). All loans, except for loans that are insured for credit loss, are placed on non-accrual status upon becoming 90 days past due in either principal or interest. In addition, if circumstances warrant, the accrual of interest may be discontinued prior to 90 days. In all cases, payments received on non-accrual loans are credited to principal until full recovery of principal has been recognized; it is only after full recovery of principal that any additional payments received are recognized as interest income. The only exception to this policy is for residential mortgage loans wherein interest income is recognized on a cash basis as payments are received.

The following table presents information concerning non-performing assets (in thousands, except percentages):


		September 30, 2001			December 31, 2000			September 30, 2000

Non-accrual loans		$	3,044		$	2,324		$	2,271
Loans past due 90
	days or more		164			201			--
Other real estate owned			131			70			3,836

Total non-performing assets		$	3,339		$	2,595		$	6,107

Total non-performing
	assets as a percent
	of loans and loans
	held for sale, net
	of unearned income,
	and other real estate owned		0.58	%		0.53	%		1.25	%

The Company is unaware of any additional loans which are required to either be charged-off or added to the non-performing asset totals disclosed above. Other real estate owned is recorded at the lower of 1)fair value minus estimated costs to sell, or 2)carrying cost.

The following table sets forth, for the periods indicated, (i) the gross interest income that would have been recorded if non-accrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period, (ii) the amount of interest income actually recorded on such loans, and (iii) the net reduction in interest income attributable to such loans (in thousands).

		Three Months Ended September 30,						Nine Months Ended September 30,
		2001			2000			2001			2000
Interest income due in accordance
	with original terms	$	25		$	13		$	46		$	40
Interest income recorded			(6	)		(2	)		(8	)		(6	)

Net reduction in interest income		$	19		$	11		$	38		$	34

11. Goodwill and Core Deposit Intangible Assets

The Company's balance sheet shows both tangible assets (such as loans, buildings, and investments) and intangible assets (such as goodwill and core deposit intangibles). The Company now carries $6.5 million of goodwill and $6.9 million of core deposit intangible assets on its balance sheet. In accordance with FAS #142, which was adopted July 1, 2001, the Company is not amortizing the $6.5 million of goodwill. The Company will, however, periodically review the goodwill for impairment as prescribed by FAS #142. The majority of these intangible assets came from the1998 acquisition of two National City Branch offices in Allegheny County with $27 million in deposits, the 1999 acquisition of a First Western Branch with $21 million in deposits and the recent acquisition of PA Capital Bank (see Note #3). A reconciliation of the Company's intangible asset balances is as follows (in thousands):


Balance at December 31, 2000		$	2,446
	Increase from PA Capital Bank Acquisition		11,309
	Amortization expense		(396	)

Balance at September 30, 2001		$	13,359

The Company is amortizing core deposit intangibles over periods ranging from five to eleven years, using the straight?line method of amortization. It is important to note that this intangible amortization expense is not a future cash outflow. The following table reflects the future amortization expense of the intangible assets (in thousands):


Remaining 2001			$	206
		2002		824
		2003		824
		2004		824
		2005		824
	2006 and after			3,357

		Total	$	6,859

12. Federal Home Loan Bank Borrowings

Total FHLB borrowings consist of the following at September 30, 2001, (in thousands, except percentages):


Maturing	Amount		Weighted Average Rate

2001	$	33,200		6.71	%
2002		6,000		7.25
2005		50,000		7.06
2010 and after		100,000		6.01


	$	189,200		6.45	%

All of the above borrowings bear a fixed-rate of interest. All FHLB stock along with an interest in mortgage loans and mortgage-backed securities, with an aggregate statutory value equal to the amount of the advances, have been pledged as collateral with the Federal Home Loan Bank of Pittsburgh to support these borrowings.

13. Capital

The Company is subject to various capital requirements administered by the federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that as of September 30, 2001, the Company meets all capital adequacy requirements to which it is subject.

As of September 30, 2001, and 2000, as well as, December 31, 2000, the Federal Reserve categorized the Company as "Well Capitalized" under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since notification that management believes have changed the Company's classification category.

As of September 30, 2001

Actual

For Capital
Adequacy Purposes

To Be Well Capitalized
Under Prompt
Corrective Action
Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

(In thousands, except ratios)

Total Capital (to Risk Weighted Assets)

Three Rivers Bancorp, Inc.

76,150

12.63

48,247

8.00

60,309

10.00

Three Rivers Bank

75,971

12.60

48,243

8.00

60,304

10.00

Tier 1 Capital (to Risk Weighted Assets)

Three Rivers Bancorp, Inc.

68,611

11.38

24,124

4.00

36,185

6.00

Three Rivers Bank

68,433

11.35

24,122

4.00

36,182

6.00

Tier 1 Capital (to Average Assets)

Three Rivers Bancorp, Inc.

68,611

6.64

41,861

4.00

52,326

5.00

Three Rivers Bank

68,433

6.62

41,859

4.00

52,323

5.00

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
("M.D.& A.")

COMPARISON OF FINANCIAL CONDITION AT September 30, 2001 AND DECEMBER 31, 2000

.....BALANCE SHEET OVERVIEW..... The Company's total consolidated assets were $1.1 billion at September 30, 2001, compared with $947 million at December 31, 2000, which represents an increase of $153 million. This increase resulted primarily from the PA Capital Bank purchase, which increased total assets $147 million. During the first nine months of 2001, total loans increased $82.3 million as a result of purchased PA Capital loans of $83.7 million, which were primarily commercial loans and commercial loans secured by real estate. Additionally, loan principal paydowns exceeded originations for the nine month period. Total investment securities decreased $39.2 million during the first nine months of 2001 as a result of principal repayments received and sale activity exceeding purchases. Cash and due from banks increased $62.1 million during the first nine months of 2001. This increase primarily resulted from the net cash received from the PA Capital Bank acquisition of $40 million.

Total deposits increased by $137 million, or 21.6%, since December 31, 2000. This increase resulted primarily from $128 million in deposits received from the PA Capital Bank acquisition. The Company's total borrowed funds position decreased $55 million, or 22.4%, during the period. Total equity increased by $28 million due to the issuance of additional shares in connection with the PA Capital Bank acquisition and an increase in comprehensive income.

.....LOAN QUALITY..... The following table sets forth information concerning Three Rivers Bancorp, Inc.'s loan delinquency and other non-performing assets. At all dates presented, the Company had no troubled debt restructurings which involved forgiving a portion of interest or principal on any loans at a rate materially less than that of market rates: (in thousands, except percentages):


			September 30, 2001			December 31, 2000			September 30, 2000
Total loan delinquency (past due
	30 to 89 days)		$	5,592		$	5,329		$	4,245
	Total non-accrual loans			3,044			2,324			2,271
	Total non-performing assets*			3,339			2,595			6,107
	Loan delinquency, as a percentage
		of total loans and loans held
		for sale, net of unearned income		0.98	%		1.09	%		0.88	%
	Non-accrual loans, as a percentage
		of total loans and loans held
		for sale, net of unearned income		0.53	%		0.48	%		0.47	%
	Non-performing assets, as a percentage
		of total loans and loans held for sale,
		net of unearned income, and other
		real estate owned		0.58	%		0.53	%		1.25	%

*Non-performing assets are comprised of (i) loans that are on a non-accrual basis, (ii) loans that are contractually past due 90 days or more as to interest and principal payments some of which are insured for credit loss, and (iii) other real estate owned. All loans, except for loans that are insured for credit loss, are placed on non-accrual status upon becoming 90 days past due in either principal or interest.

Between September 30, 2001, and December 31, 2000, total loan delinquency increased $263,000 while loans outstanding, net of unearned income, increased $82.3 million, thus causing the delinquency ratio to decrease 11 basis points to 0.98%. Total non-performing assets increased by $744,000 since December 31,2000 causing the non-performing assets to total loans, net of unearned income, and OREO ratio to increase to 0.58%. This ratio, however, was positively offset by the increase in total loans, net of unearned income, and OREO.

.....ALLOWANCE FOR LOAN LOSSES..... As a financial institution which assumes lending and credit risks as a principal element of its business, the Company anticipates that credit losses will be experienced in the normal course of business. Accordingly, the Company consistently applies a comprehensive methodology and procedural discipline that is updated on a quarterly basis to determine both the adequacy of the allowance for loan losses and the necessary provision for loan losses to be charged against earnings. This methodology includes:

•	a detailed review of all criticized and impaired loans to determine if any specific reserve allocations are required on an individual loan basis. The specific reserve established for these criticized and impaired loans is based on careful analysis of the loan's performance, the related collateral value, cash flow considerations and the financial capability of any guarantor.
•	the application of formula driven reserve allocations for certain higher risk commercial and commercial real-estate loans are calculated by using a three-year migration analysis of net losses incurred within each risk grade for the entire commercial loan portfolio. The difference between estimated and actual losses is reconciled through the dynamic nature of the migration analysis.
•	the application of formula driven reserve allocations to installment and mortgage loans which are based upon historical charge?off experience for those loan types. The residential mortgage loan allocation is based upon the Company's five-year historical average of actual loan charge?offs experienced in that category. The same methodology is used to determine the allocation for consumer loans except the allocation is based upon an average of the most recent actual three-year historical charge?off experience for consumer loans.
•	the application of formula driven reserve allocations is based upon review of historical losses and qualitative factors, which include but are not limited to, economic trends, delinquencies, concentrations of credit, trends in loan volume, experience and depth of management, examination and audit results, effects of any changes in lending policies and trends in policy exceptions.

After completion of this process, a formal meeting of the Loan Loss Reserve Committee is held to make qualitative adjustments to the formula driven results and evaluate the adequacy of the provision. The Company believes that the procedural discipline, systematic methodology, and comprehensive documentation of this quarterly process is in full compliance with all regulatory requirements and provides appropriate support for accounting purposes.

When it is determined that the prospects for recovery of the principal of a loan have significantly diminished, the loan or the determined uncollectible portion is immediately charged against the allowance account; subsequent recoveries, if any, are credited to the allowance account. In addition, non?accrual and large delinquent loans are reviewed monthly to determine potential losses. Consumer loans are considered losses when they are 90 days past due, except loans that are insured for credit loss.

The Company's policy is to individually review, as circumstances warrant, each of its commercial and commercial mortgage loans to determine if a loan is impaired. At a minimum, credit reviews are mandatory for all commercial and commercial mortgage loans with balances in excess of $500,000 within each calendar year. The Company has also identified two pools of small dollar value homogeneous loans that are evaluated collectively for impairment. These separate pools are for residential mortgage loans and consumer loans. Individual loans within these pools are reviewed and removed from the pool if factors such as significant delinquency in payments of 90 days or more, bankruptcy, or other negative economic concerns indicate impairment

The following table sets forth changes in the allowance for loan losses and certain ratios for the periods ended (in thousands, except percentages):


				September 30, 2001			December 31, 2000			September 30, 2000
Allowance for loan losses				$	7,774		$	5,393		$	5,281
Allowance for loan losses as a
	percentage of each of
	the following:
		total loans and loans
			held for sale,
			net of unearned income		1.36	%		1.10	%		1.09	%
		total delinquent loans
			(past due 30 to 89 days)		139.02			101.20			124.41
		total non-accrual loans			255.39			232.06			232.54
		total non-performing assets			232.82			207.82			81.05

Since December 31, 2000, the balance in the allowance for loan losses has increased $2.4 million while the balance of total loans increased by $82.3 million. The increase in the allowance primarily results from $1.9 million acquired from PA Capital Bank. Additionally, the increase in the allowance for loan losses resulted from an increase in outstanding loan levels, as well as a shift of the loan portfolio from 1-4 family mortgage loans to loans that are more commercial in nature. The Company's allowance for loan losses at September 30, 2001, was 255% of non-accrual loans.

For impaired loans, the measurement of impairment may be based upon: 1) the present value of expected future cash flows discounted at the loan's effective interest rate; 2) the observable market price of the impaired loan; or 3) the fair value of the collateral of a collateral dependent loan.

The Company had loans totaling $480,000 at September 30, 2001, and $593,000 at September 30, 2000, being specifically identified as impaired and a corresponding allocation reserve of $300,000 at September 30, 2001 and $50,000 at September 30, 2000. The average outstanding balance for loans being specifically identified as impaired was $484,000 for the first nine months of 2001 compared to $600,000 for the first nine months of 2000. All of the impaired loans are collateral dependent, therefore the fair value of the collateral of the impaired loans is evaluated in measuring the impairment. There was no interest income recognized on impaired loans during the first nine months of 2001 or 2000.

The following table sets forth the allocation of the allowance for loan losses among various categories. This allocation is determined by using the consistent quarterly procedural discipline that was discussed above. This allocation, however, is not necessarily indicative of the specific amount or specific loan category in which future losses may ultimately occur (in thousands, except percentages):


		September 30, 2001					December 31, 2000					September 30, 2000
		Amount		Percent of Loans in Each Category To Loans			Amount		Percent of Loans in Each Category To Loans			Amount		Percent of Loans in Each Category To Loans
Commercial		$	2,231		13.5	%	$	605		9.1	%	$	514		10.0	%
Commercial
	loans secured
	by real estate		5,011		51.3			4,103		48.7			2,474		46.5
Real estate -
	mortgage		272		31.4			300		37.0			315		37.8
Consumer			134		3.8			139		5.2			164		5.8
Allocation to
	General risk		126		-			246		-			1,814		-

	Total	$	7,774		100.0	%	$	5,393		100.0	%	$	5,281		100.0	%

Although real estate-mortgage loans comprise approximately 31% of the Company's total loan portfolio, only $272,000 or 3.5% of the total allowance for loan losses is allocated against this loan category. The real estate-mortgage loan allocation is based upon the Company's five-year historical average of actual loan charge-offs experienced in that category. The disproportionately higher allocations for commercial loans and commercial loans secured by real estate reflect the increased credit risk associated with this type of lending and the Company's historical loss experienced in these categories.

At September 30, 2001, management of the Company believes the allowance for loan losses is adequate to cover estimated losses within the Company's loan portfolio.

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

.....PERFORMANCE OVERVIEW..... Three Rivers Bancorp, Inc. was spun off from USBANCORP, Inc. on April 1, 2000. Accordingly, the following results for the three months ended September 30, 2001 and 2000 represent quarters in which Three Rivers Bancorp, Inc. operated as an independent company.

Under the tax-free spin-off plan, 100% of the shares of Three Rivers Bancorp, Inc, were distributed as a dividend to the shareholders of the USBANCORP as a 1 for 2 stock dividend based on their existing USBANCORP ownership. Standard Mortgage Company (SMC), a mortgage banking company, a subsidiary of Three Rivers Bank, was internally spun-off from Three Rivers Bank to the USBANCORP prior to consummation of the Three Rivers Bank spin-off.

The Company's income from continuing operations for the third quarter of 2001 totaled $1.9 million or $0.23 per share on a diluted basis. The third quarter 2001 results are higher when compared with the $845,000 or $0.13 per diluted share for the third quarter of 2000.

The Company's return on equity (ROE) averaged 9.39% for the third quarter of 2001 compared to 6.97% ROE in the third quarter of 2000.

Net interest income increased by $769,000, or 12.2%, as a result of declining interest rates causing an increase in the net interest margin from 2.68% in the third quarter of 2000 to 2.83% in the third quarter of 2001. The Company's equity base has been positively affected by the issuance of additional shares in connection with the PA Capital Bank acquisition. Furthermore, the equity base has been positively affected by an increase in other comprehensive income due to an increase in value of the Company's available for sale securities portfolio. The following table summarizes some of the Company's key performance indicators (in thousands, except per share and ratios):


	Three Months Ended
	September 30, 2001			September 30, 2000
Income from continuing operations	$	1,937		$	845
Diluted earnings per share		0.23			0.13
Return on average equity		9.39	%		6.97	%
Return on average assets		0.74			0.34	%
Average diluted common shares outstanding		8,550			6,674

.....NET INTEREST INCOME AND MARGIN..... The Company's net interest income represents the amount by which interest income on earning assets exceeds interest paid on interest bearing liabilities. Net interest income is a primary source of the Company's earnings; it is affected by interest rate fluctuations as well as changes in the amount and mix of earning assets and interest bearing liabilities. It is the Company's philosophy to strive to optimize net interest income performance in varying interest rate environments. The following table compares the Company's net interest income performance for the third quarter of 2001 to the third quarter of 2000 (in thousands, except percentages):

		Three Months Ended September 30,
		2001			2000			Net Change			% Change
Interest Income		$	17,712		$	17,549		$	163			0.9
Interest Expense			10,614			11,220			(606	)		(5.4	)

Net interest income			7,098			6,329			769			12.2
Tax-equivalent adjustment			103			115			(12	)		(10.4	)

Net tax-equivalent interest income		$	7,201		$	6,444		$	757			11.7

Net interest margin			2.83	%		2.68	%		0.15	%		N/M
	N/M - Not meaningful

Three Rivers Bancorp's net interest income on a tax-equivalent basis increased by $757,000, or 11.7%, due primarily to the increase of the net interest margin percentage and an increase in average earning assets. The net interest margin increased 15 basis points to 2.83%, reflecting a 20 basis point decrease in the cost of funds, which was partially offset by a 21 basis point decrease in the earning asset yield. Total average earning assets increased $44.6 million during the third quarter 2001 compared to the same period of 2000. This resulted from a $108.3 million, or 22.7%, increase in total loans, a $4.5 million increase in deposits with other banks and a $22.8 million increase in federal funds sold. These increases, however, were partially offset by a decrease in investments of $91.0 million, or 19.2%.

During the third quarter, the Company used the cash flow from mortgage backed securities to pay down FHLB Borrowings, which reduced interest rate risk and decreased margin compression as a result of the leverage program the Company has had in place over the last five years.

A leverage program is one strategy the Company may use to leverage its capital. The maximum amount of leveraging the Company can perform is controlled by internal policy requirements to maintain a minimum asset leverage ratio of no less than 6.0% (see further discussion under Capital Resources) and to limit net interest income variability to ±7.5% and net income variability to ±15% over a twelve month period. (See further discussion under Interest Rate Sensitivity).

...COMPONENT CHANGES IN NET INTEREST INCOME... Regarding the separate components of net interest income, the Company's total tax-equivalent interest income for the third quarter of 2001 increased by $151,000 or 0.9% when compared to the same 2000 period. This increase was due to the $44.5 million or 4.7% increase in total average earning assets. Within the earning asset base, the yield on the total loan portfolio decreased by 37 basis points to 7.97% due to the downward repricing of floating-rate loans. The yield on total investment securities decreased by 23 basis points to 6.12% due to the increased prepayments and the corresponding increase in the amortization of premiums.

The Company's total interest expense for the third quarter of 2001 decreased by $606,000, or 5.4% when compared to the same 2000 period. This lower interest expense was due to the 20 basis point decrease in the yield on interest bearing liabilities, to an average of 5.13% for the third quarter 2001. This lower yield, however, was partially offset by an increase in total average interest bearing liabilities of $1.7 million, or 0.2%.

The increase in interest-bearing liabilities results from an increase in total deposits of $97.7 million, or 18.2%. This, however, was partially offset by a decrease in borrowed funds of $96.0 million, or 31.9%. The increase in total deposits is primarily the result of deposits acquired in connection with the PA Capital Bank acquisition. The proceeds received from investment security principal and interest receipts as well as from the growth of the deposit base were used to pay down the higher costing borrowings as well as to fund loan originations. FHLB advances had an average cost of 6.70% in the third quarter of 2001, which was 61 basis points higher than their cost in the prior year third quarter and 207 basis points greater than the average cost of deposits, which was 4.63% in the third quarter. Overall, the Company's total cost of funds decreased by 20 basis points to 5.13%.

It is recognized that interest rate risk does exist from this use of borrowed funds to leverage the balance sheet. To neutralize a portion of this risk, the Company has executed a $40 million hedge transaction, which helps fix the variable funding costs associated with the use of short-term borrowings to fund earning assets. (See further discussion under Note# 5) The Company also has asset liability policy parameters that limit the maximum amount of borrowings to 40% of total assets. For the third quarter of 2001, the level of short-term borrowed funds and FHLB advances to total assets averaged 19.5%. At quarter end, the Company had borrowed funds to total assets of 17.9%, which is within the parameters set by the Board of Directors of the Company. The Company plans to continue to use cash flow from mortgage-backed securities and increasing deposits to pay down borrowings during the next several quarters.

The table that follows provides an analysis of net interest income on a tax-equivalent basis setting forth (i) average assets, liabilities, and stockholders' equity, (ii) interest income earned on interest earning assets and interest expense paid on interest bearing liabilities, (iii) average yields earned on interest earning assets and average rates paid on interest bearing liabilities, (iv) Three Rivers Bancorp's interest rate spread (the difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities), and (v) Three Rivers Bancorp's net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of this table, loan balances include non-accrual loans and interest income on loans includes loan fees or amortization of such fees which have been deferred, as well as, interest recorded on non-accrual loans as cash is received. Additionally, a tax rate of approximately 35% is used to compute tax equivalent yields.

Three Months Ended September 30 (In thousands, except percentages)

						2001 Actual									2000 Actual
			Average Balance			Interest Income/ Expense			Yield/ Rate			Average Balance			Interest Income/ Expense			Yield/ Rate
Interest earning assets:
	Loans and loans held
		for sale, net of
		unearned income	$	584,936		$	11,707			7.97	%	$	476,653		$	10,122			8.34	%
	Deposits with banks			5,061			57			4.97			599			7			4.45
	Federal funds sold			22,831			194			3.42			32			-			1.67
	Total investment securities			383,045			5,857			6.12			474,059			7,535			6.35

Total interest earning
	Assets/interest income			995,873			17,815			7.16			951,343			17,664			7.37
Non-interest earning assets:
	Cash and due from banks			16,647									14,961
	Premises and equipment			4,822									5,153
	Other assets			37,015									16,069
	Allowance for loan losses			(7,843	)								(5,164	)

TOTAL ASSETS			$	1,046,514								$	982,362


Interest bearing liabilities:
	Interest bearing deposits:
		Interest bearing demand	$	47,242		$	98			0.84	%	$	41,901		$	78			0.74	%
		Savings		59,128			274			1.88			64,010			364			2.26
		Money markets		100,364			791			3.20			47,446			383			3.21
		Other time		426,442			6,071			5.77			382,131			5,705			5.94

	Total interest bearing deposits			633,176			7,234			4.63			535,488			6,530			4.85
	Short term borrowings:
		Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings		1,194			10			3.35			38,089			635			6.52
	Advances from
		Federal Home Loan Bank		203,379			3,360			6.70			261,131			4,009			6.09
	Long-term debt			573			10			7.02			1,900			46			9.81

Total interest bearing
	liabilities/interest expense			838,322			10,614			5.13			836,608			11,220			5.33

Non-interest bearing liabilities:
	Demand deposits			113,868									87,897
	Other liabilities			11,848									9,372
Stockholders' equity				82,476									48,485

TOTAL LIABILITIES
	AND STOCKHOLDERS' EQUITY		$	1,046,514								$	982,362

Interest rate spread										2.02	%								2.02	%
Net interest income/
	net interest margin						7,201			2.83	%					6,444			2.68	%
Tax-equivalent adjustment							(103	)								(115	)

Net Interest Income						$	7,098								$	6,329

.....PROVISION FOR LOAN LOSSES.....The Company's provision for loan losses for the third quarter of 2001 totaled $300,000 or 0.21% of average total loans which represents a $150,000 increase from the provision level experienced in the 2000 third quarter. The Company recognized net loan charge-offs of $164,000, or 0.11%, on an annualized basis, of average loans in the third quarter of 2001. The Company applies a consistent methodology and procedural discipline to evaluate the adequacy of the allowance for loan losses at on a quarterly basis. (See further discussion in Note# 9 to the consolidated financial statements herein and the Allowance for Loan Losses section of the MD&A.)

.....NON-INTEREST INCOME.....Non-interest income for the third quarter of 2001 totaled $1.4 million which represents a $151,000, or 12.5%, increase when compared to the same 2000 quarter.

.....NON-INTEREST EXPENSE.....Non-interest expense for the third quarter of 2001 totaled $5.6 million which represents a $559,000, or 9.0%, decrease when compared to the same 2000 quarter. This decrease was primarily due to the following items:

•	a $1.1 million decrease in OREO expense, which is primarily the result of a write down of an Other Real Estate Owned property during the third quarter of 2000 that was acquired through a foreclosure on a commercial real estate loan.
•	the above decrease, however, was partially offset by a $245,000, or 10.2%, increase in salaries and employee benefits, a $97,000 increase in miscellaneous taxes resulting from an increased Pennsylvania shares tax liability and a $108,000 increase in amortization of goodwill and core deposit intangibles resulting from the PA Capital Bank purchase.

.....INCOME TAX EXPENSE.....The Company's provision for income taxes for the third quarter of 2001 increased $237,000 to $579,000 from the quarter ending September 30, 2000 as a result of a higher level of pretax earnings for the three months ended September 30, 2001. The Company's tax-free asset holdings consist primarily of municipal investment securities, bank owned life insurance, and commercial loan tax anticipation notes. A net deferred income tax liability of $3.5 million has been provided as of September 30, 2001, on the differences between taxable income for financial and tax reporting purposes.

.....NET OVERHEAD BURDEN.....The Company's efficiency ratio (non-interest expense divided by total revenue) decreased to 66.09% for the three months ended September 30, 2001 compared to 81.1% for the same period of 2000. Significant factors contributing to the lower efficiency ratio in 2001 is a decreased level of non-interest expense that resulted from OREO charges recognized during the third quarter of 2000 and an increase in the net interest margin recognized during the third quarter of 2001.

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

.....PERFORMANCE OVERVIEW.....Three Rivers Bancorp, Inc. was spun off from USBANCORP, Inc. on April 1, 2000. Accordingly, the following results for the nine months ended September 30, 2001 represent a period in which Three Rivers Bancorp, Inc operated as an independent company, while the results for the nine months ended September 30, 2000 represent a period in which the Company operated as a subsidiary of USBANCORP, Inc. for the three months ended March 31, 2000.

Under the tax-free spin-off plan, 100% of the shares of Three Rivers Bancorp, Inc, were distributed as a dividend to the shareholders of the USBANCORP as a 1 for 2 stock dividend based on their existing USBANCORP ownership. Standard Mortgage Company (SMC), a mortgage banking company and subsidiary of Three Rivers Bank, was internally spun-off from Three Rivers Bank to the USBANCORP prior to consummation of the Three Rivers Bank spin-off.

As a result of the spin-off, the pre-tax results of the first nine months of 2000 were negatively affected by $777,000 of spin-off related costs, which negatively effected earnings per share by $0.08. During the first quarter of 2000, the Internal Revenue Service completed its examination of USBANCORP, Inc.'s federal income tax returns (of which the Company was included) through the 1997 tax year. As a result of a change in the estimate of the Company's income tax liability, the Company reversed tax expense accruals of $750,000, resulting in an income tax provision for the first nine months of 2000 of only $366,000.

The Company's income from continuing operations for the first nine months of 2001 totaled $4.9 million or $0.67 per share on a diluted basis. The results from the first nine months of 2001 are lower when compared to the results from the first nine months of 2000, exclusive of the aforementioned spin-off costs, of $4.1 million or $0.61 per diluted share.

The Company's return on equity (ROE) averaged 9.43% for the first nine months of 2001 compared to 10.16% ROE reported in the first nine months of 2000.

Net interest income decreased by $1.2 million, or 6.0%, as a result of declining interest rates causing compression in the net interest margin from 2.78% in the first nine months of 2000 to 2.71% in the first nine months of 2001. The Company's equity base has been positively affected by the issuance of additional shares in connection with the PA Capital Bank acquisition. Furthermore, the equity base has been positively affected by an increase in other comprehensive income due to an increase in value of the Company's available for sale securities portfolio. The following table summarizes some of the Company's key performance indicators (in thousands, except per share and ratios):


	Nine Months Ended September 30, 2001			Nine Months Ended September 30, 2000
Income from continuing operations	$	4,895		$	3,555
Diluted earnings per share		0.67			0.53
Return on average equity		9.43	%		10.16	%
Return on average assets		0.67	%		0.47	%
Average diluted common shares outstanding		7,313			6,674

.....NET INTEREST INCOME AND MARGIN.....The Company's net interest income represents the amount by which interest income on earning assets exceeds interest paid on interest bearing liabilities. Net interest income is a primary source of the Company's earnings; it is affected by interest rate fluctuations as well as changes in the amount and mix of earning assets and interest bearing liabilities. It is the Company's philosophy to strive to optimize net interest income performance in varying interest rate environments. The following table compares the Company's net interest income performance for the first nine months of 2001 to the first nine months of 2000 (in thousands, except percentages):

		Nine Months Ended September 30,
		2001			2000			Net Change			% Change
Interest Income		$	50,374		$	53,034		$	(2,660	)		(5.0	)
Interest Expense			31,436			32,920			(1,484	)		(4.5	)

Net interest income			18,938			20,114			(1,176	)		(5.8	)
Tax-equivalent adjustment			314			445			(131	)		(29.4	)

Net tax-equivalent interest income		$	19,252		$	20,559		$	(1,307	)		(6.4	)

Net interest margin			2.71	%		2.78	%		(0.07	)%		N/M
	N/M - Not meaningful

Three Rivers Bancorp's net interest income on a tax-equivalent basis decreased by $1.3 million, or 6.4%, due primarily to compression of the net interest margin percentage. Total average earning assets decreased $41.1 million during the first nine months of 2001 compared to the same period of 2000. This resulted from a $101.1 million, or 20.3%, decrease in investment securities, which was partially offset by an increase in total loans of $49.0 million, or 10.3%.

The income reduction from this decrease in earning assets was coupled with a 7 basis point decline in the net interest margin to 2.71%. The drop in the net interest margin reflects a 8 basis point decrease in the earning asset yield and a 18 basis point increase in the cost of funds. During the first nine months of 2001, the Company used the cash flow from mortgage backed securities to pay down FHLB Borrowings, which reduced interest rate risk and decreased further margin compression as a result of the leverage program the Company has had in place over the last five years.

...COMPONENT CHANGES IN NET INTEREST INCOME...Regarding the separate components of net interest income, the Company's total tax-equivalent interest income for the first nine months of 2001 decreased by $2.8 million or 5.2% when compared to the same 2000 period. This decrease was due to the $41.1 million or 4.2% decrease in total average earning assets. Within the earning asset base, the yield on the total loan portfolio decreased by 19 basis points to 8.04% due to the downward repricing of floating-rate loans and the overall decline in the interest rate environment. The yield on total investment securities decreased by 18 basis points to 6.18% due to the increased prepayments and the corresponding increase in the amortization of premiums.

The Company's total interest expense for the first nine months of 2001 decreased by $1.5 million, or 4.5%, when compared to the same 2000 period. This lower interest expense was due to the decrease in average interest bearing liabilities of $64.4 million, or 7.5%. This, however, was partially offset by an 18 basis point increase in the yield on interest bearing liabilities, to an average of 5.27% for the first nine months of 2001.

The decrease in interest-bearing liabilities results from a decrease in borrowed funds of $127.7 million, or 36.1%, which was partially offset by an increase in total deposits of $63.3 million, or 12.5%. The increase in total deposits is primarily the result of deposits acquired in connection with the PA Capital Bank acquisition and the result of special rate incentives offered by the Bank to increase the certificate of deposit portfolio. As a result, certificate of deposits increased $53.4 million, or 15.1%. The proceeds received from investment security principal and interest receipts as well as from the growth of the deposit base were used to pay down the higher costing borrowings as well as to fund loan originations. FHLB advances had an average cost of 6.54% in the first nine months of 2001, which was 67 basis points higher than their cost in the prior year first nine months and 178 basis points greater than the average cost of deposits, which was 4.76% in the first nine months of 2001. Overall, the Company's total cost of funds increased by 18 basis points to 5.27%.

It is recognized that interest rate risk does exist from this use of borrowed funds to leverage the balance sheet. To neutralize a portion of this risk, the Company has executed a $40 million hedge transaction which helps fix the variable funding costs associated with the use of short-term borrowings to fund earning assets. (See further discussion under Note# 5) The Company also has asset liability policy parameters that limit the maximum amount of borrowings to 40% of total assets. For the first nine months of 2001, the level of short-term borrowed funds and FHLB advances to total assets averaged 23.2%. The Company plans to continue to use cash flow from mortgage-backed securities and increasing deposits to pay down borrowings during the next several quarters.

Nine Months Ended September 30 (In thousands, except percentages)

						2001 Actual									2000 Actual
			Average Balance			Interest Income/ Expense			Yield/ Rate			Average Balance			Interest Income/ Expense			Yield/ Rate
Interest earning assets:
	Loans and loans held
		for sale, net of
		unearned income	$	523,911		$	31,973			8.04	%	$	474,953		$	29,681			8.23	%
	Deposits with banks			2,080			67			4.24			1,125			16			1.84
	Federal funds sold			10,149			281			3.65			12			-			1.99
	Total investment securities			396,730			18,367			6.18			497,874			23,782			6.36

Total interest earning
	Assets/interest income			932,870			50,688			7.21			973,964			53,479			7.29
Non-interest earning assets:
	Cash and due from banks			14,949									15,607
	Premises and equipment			4,784									5,277
	Other assets			27,899									15,129
	Allowance for loan losses			(6,306	)								(5,090	)

TOTAL ASSETS			$	974,196								$	1,004,887


Interest bearing liabilities:
	Interest bearing deposits:
		Interest bearing demand	$	43,319		$	261			0.80	%	$	42,030		$	246			0.78	%
		Savings		58,164			831			1.91			63,901			999			2.09
		Money markets		64,430			1,492			3.10			50,012			1,168			3.12
		Other time		405,900			17,788			5.86			352,550			14,759			5.56

	Total interest bearing deposits			571,813			20,372			4.76			508,493			17,172			4.49
	Short term borrowings:
		Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings		1,279			47			4.91			46,262			2,154			6.12
	Advances from
		Federal Home Loan Bank		224,553			10,982			6.54			305,763			13,443			5.87
	Long-term debt			589			35			8.02			2,092			151			9.62

Total interest bearing
	liabilities/interest expense			798,234			31,436			5.27			862,610			32,920			5.09

Non-interest bearing liabilities:
	Demand deposits			95,697									86,224
	Other liabilities			11,054									9,385
Stockholders' equity				69,211									46,668

TOTAL LIABILITIES
	AND STOCKHOLDERS' EQUITY		$	974,196								$	1,004,887

Interest rate spread										1.95	%								2.20	%
Net interest income/
	net interest margin						19,252			2.71	%					20,559			2.78	%
Tax-equivalent adjustment							(314	)								(445	)

Net Interest Income						$	18,939								$	20,114

.....PROVISION FOR LOAN LOSSES.....The Company's provision for loan losses for the first nine months of 2001 totaled $750,000 or 0.19% of average total loans, which represents a $300,000 increase from the provision level experienced in the same period of 2000. The Company recognized net loan charge-offs of $308,000, or 0.08% of average loans, on an annualized basis, in the first nine months of 2001. The Company applies a consistent methodology and procedural discipline to evaluate the adequacy of the allowance for loan losses at on a quarterly basis. (See further discussion in Note# 9 to the consolidated financial statements herein and the Allowance for Loan Losses section of the MD&A.)

.....NON-INTEREST INCOME.....Non-interest income for the first nine months of 2001 totaled $3.6 million, which represents a $630,000, or 20.9%, increase when compared to the same 2000 period. This increase was primarily due to the recognition of a net loss' from security sales of $501,000 during the first nine months of 2000.

.....NON-INTEREST EXPENSE.....Non-interest expense for the first nine months of 2001 totaled $15.8 million which represents a $3.0 million, or 15.8%, decrease when compared to the same 2000 period. This decrease was primarily due to the following items:

•	as a result of the spin-off on April 1, 2000, the Company incurred $777,000 of related expenses in the first nine months of 2000.
•	a $2.5 million decrease in OREO expense, which is primarily the result of a $2.3 million write down of an Other Real Estate Owned property during the first nine months of 2000 that was acquired through a foreclosure on a commercial real estate loan.
•	a $403,000, or 13.6%, decrease in other expenses during the first nine months of 2001 compared to the same 2000 period. The decrease is primarily the result of a decrease in expenses incurred for services provided by USBANCORP, Inc. of $596,000.
•	the above decreases, however, were partially offset by a $139,000, or 15.4%, increase in professional fees and a $212,000, or 39.9%, increase in miscellaneous taxes and insurance. Professional fees increased as a result of the formation of the Company, while the increase in miscellaneous taxes resulted from an increase in the liability for Pennsylvania shares tax. Additionally, salaries and employee benefits increased $257,000, or 3.5%, during the nine months ended September 30, 2001 when compared to the same period of 2000. This increase results from an increase in full time equivalent employees and normal salary increases.

.....INCOME TAX EXPENSE.....The Company's provision for income taxes for the first nine months of 2001 increased $773,000 to $1.1 million from the nine months ended September 30, 2000 as a result of the Company changing it's first quarter 2000 income tax liability estimate by approximately $750,000, which resulted in a negative provision. This resulted from an Internal Revenue Service examination of USBANCORP, Inc.'s tax returns thru 1997, which included the Company. Additionally, a refund from USBANCORP, Inc. offset the tax provision for the nine months ended September 30, 2001 for federal income tax overpayments made during the 1998 and 1999 tax years. During that time, Three Rivers Bank was a consolidated entity of USBANCORP, Inc., and as outlined by the tax separation agreement entered into by the Companies at spin-off, the Company is entitled to Three Rivers Bank's portion of such overpayments. The Company's tax-free asset holdings consist primarily of municipal investment securities, bank owned life insurance, and commercial loan tax anticipation notes. A net deferred income tax liability of $3.5 million has been provided as of September 30, 2001, on the differences between taxable income for financial and tax reporting purposes.

.....NET OVERHEAD BURDEN.....The Company's efficiency ratio (non-interest expense divided by total revenue) decreased to 68.99% for the nine months ended September 30, 2001 compared to 79.6% for the same period of 2000. Contributing to the lower efficiency ratio in 2001 is a decreased level of non-interest expense that resulted from spin-off costs and OREO charges recognized during the nine months of 2000. Furthermore, the efficiency ratio for the first nine months of 2001 was positively impacted by a higher level of non-interest income, which resulted from the net realized losses incurred from investment security sales during the nine months ended September 30, 2000. This, however, was partially offset by the compression experienced in the net interest margin during the nine months ended September 30, 2001.

INTEREST RATE SENSITIVITY

Asset/liability management involves managing the risks associated with changing interest rates and the resulting impact on the Company's net interest income, net income and capital. The management and measurement of interest rate risk at Three Rivers Bancorp is performed by using the following tools: 1) simulation modeling which analyzes the impact of interest rate changes on net interest income, net income and capital levels over specific future time periods. The simulation modeling forecasts earnings under a variety of scenarios that incorporate changes in the absolute level of interest rates, the shape of the yield curve, prepayments and changes in the volumes and rates of various loan and deposit categories. The simulation modeling also incorporates all off balance sheet hedging activity as well as assumptions about reinvestment and the repricing characteristics of certain assets and liabilities without stated contractual maturities; 2)static "GAP" analysis which analyzes the extent to which interest rate sensitive assets and interest rate sensitive liabilities are matched at specific points in time; and 3) market value of portfolio equity sensitivity analysis. The overall interest rate risk position and strategies are reviewed by senior management and the Company's Board of Directors on an ongoing basis.

The following table presents a summary of the Company's static GAP positions (in thousands, except for the GAP ratios):


		September 30, 2001			December 31, 2000			September 30, 2000
Six month cumulative GAP
	RSA	$	323,099		$	241,289		$	239,775
	RSL		(462,880	)		(236,417	)		(258,713	)
	Off-balance sheet hedges		(40,000	)		(40,000	)		40,000

GAP		$	(99,781	)	$	44,872		$	(58,938	)

	GAP ratio		0.76X			1.23X			0.80X

	GAP as a % of total assets		(9.43	)%		4.74	%		(5.99	)%
One year cumulative GAP
	RSA	$	447,761		$	329,646		$	323,631
	RSL		(550,491	)		(380,962	)		(352,314	)
Off-balance sheet hedges			--			--			40,000

	GAP	$	(102,730	)	$	(51,316	)	$	(68,683	)

	GAP ratio		0.81X			0.87X			0.82X

	GAP as a % of total assets		(9.71	)%		(5.42	)%		(6.98	)%

When September 30, 2001, is compared to December 31, 2000, both the Company's six month and one year cumulative GAP ratios remained relatively unchanged.

Management places primary emphasis on simulation modeling to manage and measure interest rate risk. The Company's asset liability management policy seeks to limit net interest income variability over the first twelve months of the forecast period to ±7.5% and net income variability to ±15.0% based upon varied economic rate forecasts which include interest rate movements of up to 200 basis points and alterations of the shape of the yield curve. Additionally, the Company also uses market value sensitivity measures to further evaluate the balance sheet exposure to changes in interest rates. Market value of portfolio equity sensitivity analysis captures the dynamic aspects of long-term interest rate risk across all time periods by incorporating the net present value of expected cash flows from the Company's assets and liabilities. The Company monitors the trends in market value of portfolio equity sensitivity analysis on a quarterly basis.

The following table presents an analysis of the sensitivity inherent in the Company's net interest income, net income and market value of portfolio equity. The interest rate scenarios in the table compare the Company's base forecast or most likely rate scenario at September 30, 2001, to scenarios which reflect ramped increases and decreases in interest rates of 200 basis points along with performance in a stagnant rate scenario with interest rates held flat at the September 30, 2001, levels. The Company's most likely rate scenario is based upon published economic consensus estimates. Each rate scenario contains unique prepayment and repricing assumptions that are applied to the Company's expected balance sheet composition that was developed under the most likely interest rate scenario.


							Change In
Interest Rate	Variability of Net			Variability			Market Value of
Scenario	Interest Income			Net Income			Portfolio Equity

Base		0	%		0	%		0	%
Flat		2.1			4.5			(3.8	)
200bp increase		4.7			10.2			(8.6	)
200bp decrease		(7.1	)		(15.6	)		13.4

As indicated in the table, the maximum negative variability of Three Rivers Bancorp's net interest income and net income over the next twelve month period was (7.1%) and (15.6%) respectively, under a downward rate shock forecast reflecting a 200 basis point decrease in interest rates. The variability of market value of portfolio equity was 13.4% under this interest rate scenario. The off-balance sheet borrowed funds hedge transactions also helped reduce the variability of forecasted net interest income, net income, and market value of portfolio equity in a rising interest rate environment. Finally, this sensitivity analysis is limited by the fact that it does not include any balance sheet repositioning actions the Company may take should severe movements in interest rates occur such as lengthening or shortening the duration of the securities portfolio or entering into additional off-balance sheet hedging transactions. These actions would likely reduce the variability of each of the factors identified in the above table in the more extreme interest rate shock forecasts.

LIQUIDITY

Liquidity can be analyzed by utilizing the Consolidated Statement of Cash Flows. Cash equivalents increased by $62.1 million from December 31, 2000 to September 30, 2001. During the first nine months of 2001 there was $107.0 million of net cash provided by investing activities and $4.4 million of net cash provided by operating activities. This was partially offset by $49.2 million of net cash used by financing activities. Within investing activities, sales of investment securities exceeded cash proceeds needed for security purchases by $14.2 million. Cash received from loan principal payments totaled $132.8 million and exceeded the cash advanced for new loan fundings by $1.0 million. Additionally, the Company received $40.0 million in connection with the acquisition of PA Capital Bank. Within financing activities, net deposits decreased by $8.3 million due primarily to the run-off of certificates of deposits. Management believes that the Company maintains overall liquidity sufficient to satisfy its deposit requirements and meet its customers' credit needs.

CAPITAL RESOURCES

As presented in Note# 13 the Company exceeds all regulatory capital ratios at September 30, 2001. Furthermore, the Company is considered "well capitalized" under all applicable FDIC regulations. It is the Company's intent to maintain the FDIC "well capitalized" classification to ensure the lowest deposit insurance premium.

The Company's Board of Directors believes that dividends are a key component of total shareholder return, particularly for retail shareholders. During the first nine months of 2001, the Company declared a $0.36 per share dividend. The second quarter dividend was paid during the third quarter.

FORWARD LOOKING STATEMENT

This Form 10-Q contains various forward-looking statements and includes assumptions concerning the Company's beliefs, plans, objectives, goals, expectations, estimates, intentions, operations, future results, and prospects, including statements that include the words "may," "could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "plan" or similar expressions. These forward-looking statements are based upon current expectations and are subject to risk and uncertainties. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statement identifying important factors (some of which are beyond the Company's control) that could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions.

Such factors include the following: (i) risk resulting from the spin-off and the operation of Three Rivers Bancorp as a separate independent company, (ii) the effect of changing regional and national economic conditions; (iii) the effects of trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (iv) significant changes in interest rates and prepayment speeds; (v) inflation, stock and bond market, and monetary fluctuations; (vi) credit risks of commercial, real estate, consumer, and other lending activities; (vii) changes in federal and state banking and financial services laws and regulations; (viii) the presence in the Company's market area of competitors with greater financial resources than the Company; (ix) the timely development of competitive new products and services by the Company and the acceptance of those products and services by customers and regulators (when required); (x) the willingness of customers to substitute competitors' products and services for those of the Company and vice versa; (xi) changes in consumer spending and savings habits; (xii) unanticipated regulatory or judicial proceedings; and (xiii) other external developments which could materially impact the Company's operational and financial performance.

The foregoing list of important factors is not exclusive, and neither such list nor any forward-looking statement takes into account the impact that any future acquisition may have on the Company and on any such forward-looking statement.

Item 3. Quantitative and Qualitative Discussion About Market Risk

Refer to Management's Discussion and Analysis, pages 23 thru 26, 29 thru 31 and Interest Rate Sensitivity section on page 33 for discussion about Quantitative and Qualitative Market Risk.

Part II Other Information

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits. The following exhibits are being filed as a part of this Quarterly Report on Form 10-Q:

15.1 Independent Accountants Review Report

(b) Reports on Form 8-K: The following reports on Form 8-K were filed during the quarter ended September 30, 2001:

None

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Three Rivers Bancorp, Inc. Registrant

Dated: November 13, 2001		/s/ Terry K. Dunkle Terry K. Dunkle Chairman, President and Chief Executive Officer

Dated: November 13, 2001		/s/ Anthony M.V. Eramo Anthony M.V. Eramo Vice President and Chief Financial Officer

STATEMENT OF MANAGEMENT RESPONSIBILITY

November 9, 2001

To the Stockholders and
Board of Directors of
Three Rivers Bancorp, Inc.

Management of Three Rivers Bancorp, Inc. and its subsidiaries have prepared the consolidated financial statements and other information in the Form 10-Q in accordance with accounting principles generally accepted in the United States and are responsible for its accuracy.

In meeting its responsibilities, management relies on internal accounting and related control and monitoring systems, which include selection and training of qualified personnel, establishment and communication of accounting and administrative policies and procedures, appropriate segregation of responsibilities, and programs of internal audit. These systems are designed to provide reasonable assurance that financial records are reliable for preparing financial statements and maintaining accountability for assets, and that assets are safeguarded against unauthorized use or disposition. Such assurance cannot be absolute because of inherent limitations in any internal control system.

Management also recognizes its responsibility to foster a climate in which Company affairs are conducted with the highest ethical standards. The Company's Code of Conduct, furnished to each employee and director, addresses the importance of open internal communications, potential conflicts of interest, compliance with applicable laws, including those related to financial disclosure, the confidentiality of propriety information, and other items. There is an ongoing program to assess compliance with these policies.

The Audit Committee of the Company's Board of Directors consists solely of outside directors. The Audit Committee meets periodically with management and the independent accountants to discuss audit, financial reporting, and related matters. The Company's external and internal auditors have direct access to the Audit Committee.


/s/ Terry K. Dunkle Terry K. Dunkle Chairman, President & Chief Executive Officer		/s/ Anthony M.V. Eramo Anthony M.V. Eramo Vice President & Chief Financial Officer