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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

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

For the fiscal year ended: December 31, 2006

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

For the transition period from
 to

Commission
file number 0-19345

ESB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)



|                                                               |  |  |  |                                     
|-------------------------------------------------------------- |  |  |  | ------------------------------------
|Pennsylvania                                                   |  |  |  | 25-1659846                          
|(State or other jurisdiction of incorporation or organization) |  |  |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|600 Lawrence Avenue, Ellwood City, PA    |  | 16117     
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code: (724) 758-5584

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



|                                       |  |  |  |                                            
|-------------------------------------- |  |  |  | -------------------------------------------
|Common Stock, par value $.01 per share |  |  |  | NASDAQ Global Select Market                
|(Title of each class)                  |  |  |  | (Name of each exchange on which registered)

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.  Yes No X  .

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes No X  .

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 report(s)), and (2) has been subject to such filing requirements for the past 90
days.  YesX 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  .

Indicate by check mark whether the
Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
.                               
 Accelerated filer
X  .                                Non-accelerated filer
.

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Act).  Yes NoX  .

As of
June 30, 2006, the aggregate value of the 11,309,292 shares of Common Stock of the Registrant outstanding on such date, which excludes 1,693,172 shares held by all directors and officers of the Registrant as a group, was approximately $130.7
million. This amount is based on the closing sales price of $11.56 per share of the Registrants Common Stock on June 30, 2006.

Number of shares of Common Stock outstanding as of March 2, 2007: 12,844,559

DOCUMENTS INCORPORATED BY REFERENCE



|                                                                                     |  |                   
|------------------------------------------------------------------------------------ |  | ------------------
|Documents                                                                            |  | Where Incorporated
|                                                                                     | 
|1. Portions of the 2006 Annual Report to Stockholders.                               |  | Part II           
|                                                                                     | 
|2. Portions of Proxy Statement for the April 18, 2007 Annual Meeting of Stockholders |  | Parts II and III  







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##### Table of Contents

ESB FINANCIAL CORPORATION

TABLE OF CONTENTS



|           |  |                                                                                                               |  |   
|---------- |  | ------------------------------------------------------------------------------------------------------------- |  | --
|PART I    
|           |  |                                                                                                              
|Item 1.    |  | Business                                                                                                      |  | 2 
|           |  |                                                                                                              
|Item 1A.   |  | Risk Factors                                                                                                  |  | 27
|           |  |                                                                                                              
|Item 1B.   |  | Unresolved Staff Comments                                                                                     |  | 28
|           |  |                                                                                                              
|Item 2.    |  | Properties                                                                                                    |  | 29
|           |  |                                                                                                              
|Item 3.    |  | Legal Proceedings                                                                                             |  | 30
|           |  |                                                                                                              
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                           |  | 30
|          
|PART II   
|           |  |                                                                                                              
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities |  | 31
|           |  |                                                                                                              
|Item 6.    |  | Selected Financial Data                                                                                       |  | 31
|           |  |                                                                                                              
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |  | 31
|           |  |                                                                                                              
|Item7A.    |  | Quantitative and Qualitative Disclosures about Market Risk                                                    |  | 31
|           |  |                                                                                                              
|Item 8.    |  | Financial Statements and Supplementary Data                                                                   |  | 31
|           |  |                                                                                                              
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                          |  | 32
|           |  |                                                                                                              
|Item 9A.   |  | Controls and Procedures                                                                                       |  | 32
|           |  |                                                                                                              
|Item 9B.   |  | Other Information                                                                                             |  | 33
|          
|PART III  
|           |  |                                                                                                              
|Item 10.   |  | Directors and Executive Officers of the Registrant                                                            |  | 33
|           |  |                                                                                                              
|Item 11.   |  | Executive Compensation                                                                                        |  | 33
|           |  |                                                                                                              
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                |  | 33
|           |  |                                                                                                              
|Item 13.   |  | Certain Relationships and Related Transactions                                                                |  | 34
|           |  |                                                                                                              
|Item 14.   |  | Principal Accountant Fees and Services                                                                        |  | 34
|           |  |                                                                                                              
|Item 15.   |  | Exhibits and Financial Statement Schedules                                                                    |  | 35
|           | 
|Signatures |  | 37                                                                                                           



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FORWARD-LOOKING STATEMENTS

In the normal course of business, we, in an effort to help keep our shareholders and the public informed about our operations, may from time to time issue or make certain statements, either in
writing or orally, that are or contain forward-looking statements, as that term is defined in the U.S. federal securities laws. Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions
made by or to be made by us, projections involving anticipated revenues, earnings, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business. Forward-looking
statements may be identified by reference to a future period or periods or by the use of forward-looking terminology such as anticipate, believe, expect, intend, plan, estimate
or similar expressions.

Although we believe that the anticipated results or other expectations reflected in our
forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained. Forward-looking statements involve risks, uncertainties and assumptions (some of which are beyond our
control), and as a result actual results may differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include, but are not limited to, the following, as
well as those discussed elsewhere herein:



| |  | our investments in our businesses and in related technology could require additional incremental spending, and might not produce expected deposit and loan growth
and anticipated contributions to our earnings;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for loan
and lease losses or a reduced demand for credit or fee-based products and services;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in the interest rate environment could reduce net interest income and could increase credit losses;
| | - | -----------------------------------------------------------------------------------------------------------



| |  | the conditions of the securities markets could change, which could adversely affect, among other things, the value or credit quality of our assets, the
availability and terms of funding necessary to meet our liquidity needs and our ability to originate loans and leases;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in the extensive laws, regulations and policies governing financial holding companies and their subsidiaries could alter our business environment or
affect our operations;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the potential need to adapt to industry changes in information technology systems, on which we are highly dependent, could present operational issues or require
significant capital spending;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | competitive pressures could intensify and affect our profitability, including as a result of continued industry consolidation, the increased availability of
financial services from non-banks, technological developments such as the internet or bank regulatory reform;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | acquisitions may result in one-time charges to income, may not produce revenue enhancements or cost savings at levels or within time frames originally
anticipated and may result in unforeseen integration difficulties; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | acts or threats of terrorism and actions taken by the United States or other governments as a result of such acts or threats, including possible military action,
could further adversely affect business and economic conditions in the United States generally and in our principal markets, which could have an adverse effect on our financial performance and that of our borrowers and on the financial markets and
the price of our common stock.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

You should not put undue reliance on any forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events except to the extent required by federal securities laws.



1



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##### Table of Contents

PART I

Item 1. Business

General

ESB Financial Corporation (the Company) is a Pennsylvania corporation and thrift holding company that provides a wide range of retail and commercial financial products and services to customers
in Western Pennsylvania through its wholly owned subsidiary bank, ESB Bank (ESB or the Bank). The Company is also the parent company of PennFirst Financial Services, Inc., a Delaware corporation engaged in the management of certain investment
activities on behalf of the Company, ESB Capital Trust II (the Trust II) , ESB Statutory Trust III (the Trust III) and ESB Capital Trust IV (the Trust IV) are Delaware statutory business trusts established to facilitate the issuance of trust
preferred securities to the public by the Company and THF, Inc., a Pennsylvania corporation established as a title agency to provide residential and commercial loan closing services and title closing services.

As of December 31, 2006, the Company had consolidated total assets of $1.9 billion and stockholders equity of $128.5 million. For the year
ended December 31, 2006, the Company realized consolidated net income and diluted net income per share of $10.6 million and $0.83, respectively.

The Bank is a Pennsylvania chartered, Federal Deposit Insurance Corporation (FDIC) insured stock savings bank, which conducts business through 23 offices, as of December 31, 2006, in Allegheny, Beaver, Butler,
and Lawrence counties, Pennsylvania. ESB operates two wholly-owned subsidiaries: (i) AMSCO, Inc., which engages in the management of certain real estate development partnerships on behalf of the Company and (ii) ESB Financial Services,
Inc., a Delaware corporation which holds loans and other investments.

The Bank is a financial intermediary whose principal business
consists of attracting deposits from the general public and investing such deposits in real estate loans secured by liens on residential and commercial properties, consumer loans, commercial business loans, securities and interest-earning deposits.
In addition, the Company utilizes borrowed funds, primarily advances from the Federal Home Loan Bank (FHLB) of Pittsburgh and repurchase agreements, to fund the Companys investing activities. The Company invests in securities issued by the
U.S. government and agencies and other investments permitted by federal law and regulations.

The Company is subject to examination and
regulation by the Office of Thrift Supervision (OTS) as a savings and loan holding company. The Bank is subject to examination and comprehensive regulation by the FDIC and the Pennsylvania Department of Banking (Department). Additionally, the
Company is subject to the various reporting and filing requirements of the Securities and Exchange Commission (SEC). Customer deposits with the Bank are insured to the maximum extent provided by law through the Deposit Insurance Fund. The Bank is a
member of the FHLB of Pittsburgh, which is one of the twelve regional banks comprising the FHLB system. The Bank is further subject to regulations of the Board of Governors of the Federal Reserve System (Federal Reserve Board), which governs the
reserves required to be maintained against deposits and certain other matters.

Competition

The Company and its subsidiaries face substantial competition for both loans and deposits. Numerous financial institutions, some larger and several of
which are similar in size and resources to the Company, are competitors of the Company to varying degrees. Competition for loans comes principally from commercial banks, credit unions, mortgage-banking companies and savings banks. The Company
competes for loans principally through the interest rates and loan fees that are charged and the efficiency and quality of services provided to borrowers, sellers, real estate brokers and attorneys. The most direct competition for deposits has
historically come from commercial banks, credit unions and other depository institutions. The Company faces additional competition for deposits from securities brokers, mutual funds and insurance companies. The Company competes for deposits through
pricing, service, the branch network and by offering a wide variety of products and services. Internet banking, offered by both established financial institutions and internet only banks, constitutes another form of competition for the Company.
Competition may increase as a result of reduced restrictions on the interstate operations of financial institutions and legislation authorizing the acquisition of savings institutions by bank holding companies. Finally, in addition to the
competition for loans and deposits, the Company is affected by the actions of the Federal Reserve Board as it affects interest rates in order to improve the economy.



2



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Market Area

The Companys primary market area includes Allegheny, Beaver, Butler, and Lawrence counties in Western Pennsylvania. The Companys business is conducted through its corporate office located in Ellwood City,
PA, and the Banks 23 offices. Substantially all of the Banks deposits are received from residents of its principal market area and most loans are secured by properties in Western Pennsylvania.

Lending Activities

General.  As of December 31, 2006, the Companys net loans receivable amounted to $589.6 million or 30.7% of the Companys total assets. Loans secured by real estate amounted to $455.9 million or 74.9% of
total loans receivable. Consumer loans and commercial business loans amounted to $132.4 million or 21.7% and $20.6 million or 3.4%, respectively, of the Companys total loan portfolio.

The Companys lending activities are conducted through the Bank. The Companys loan origination activities have primarily involved the origination of single-family residential loans
and, to a lesser extent, multi-family residential mortgage loans, primarily secured by properties in the Companys market area. In addition, the Company has in recent years increased its involvement in the origination of other types of loans
within its primary market area. These loans include construction loans, commercial real estate loans and a variety of consumer loans. In 2005, via the acquisition of PHSB, the Company began originating indirect automobile loans and credit card
loans. During 2006, the Company sold the retail credit card portfolio and ceased originating these loans for its own portfolio. The Company continues to originate and hold credit card loans for its commercial customers. Loans originated in the
Companys market area, both fixed and adjustable rate, are made primarily for retention in the Companys own portfolio. The Company estimates that approximately 95% of its mortgage loans are secured by properties located in Western
Pennsylvania. Moreover, substantially all of the Companys non-mortgage loan portfolio consists of loans made to residents and businesses located in the Companys primary market area.

The following table sets forth the composition of the Companys portfolio of loans receivable in dollar amounts and in percentages as of
December 31 for the years indicated:



|                             |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|---------------------------- |  | ------------ | - | ---- | ------ | ---- | ------------ | ---- |  | ------ |  | ------------ |  | ------ |  | ------------ |  | ------ |  | ------------ |  | ------
|(Dollar amounts inthousands) |  | 2006         |   | 2005 |        | 2004 |              | 2003 |  | 2002  
|                             |  | Dollar       |   |      |        |      | Dollar       |      |  |        |  | Dollar       |  |        |  | Dollar       |  |        |  | Dollar       |  |       
|                             |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|                             |  | Amount       |   |      | %      |      | Amount       |      |  | %      |  | Amount       |  | %      |  | Amount       |  | %      |  | Amount       |  | %     
|                             |  |              |   |      |        |      |              |      |  |       
|Real estate loans:           |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|                             |  |              |   |      |        |      |              |      |  |       
|Residential - single family  |  | $    281,017 |   |      | 46.1%  |      | $    230,805 |      |  | 40.6%  |  | $    155,971 |  | 41.8%  |  | $    142,244 |  | 41.0%  |  | $    154,438 |  | 43.4% 
|                             |  |              |   |      |        |      |              |      |  |       
|Residential - multi family   |  | 34,382       |   |      | 5.7%   |      | 36,401       |      |  | 6.4%   |  | 35,565       |  | 9.6%   |  | 42,057       |  | 12.2%  |  | 31,661       |  | 8.9%  
|                             |  |              |   |      |        |      |              |      |  |       
|Commercial                   |  | 82,019       |   |      | 13.5%  |      | 69,453       |      |  | 12.2%  |  | 53,446       |  | 14.4%  |  | 46,502       |  | 13.4%  |  | 51,495       |  | 14.5% 
|                             |  |              |   |      |        |      |              |      |  |       
|Construction                 |  | 58,504       |   |      | 9.6%   |      | 71,848       |      |  | 12.7%  |  | 61,061       |  | 16.4%  |  | 46,072       |  | 13.3%  |  | 40,778       |  | 11.5% 
|Total real estate
loans      |  | 455,922      |   |      | 74.9%  |      | 408,507      |      |  | 71.9%  |  | 306,043      |  | 82.2%  |  | 276,875      |  | 79.8%  |  | 278,372      |  | 78.3% 
|                             |  |              |   |      |        |      |              |      |  |       
|Other loans:                 |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|                             |  |              |   |      |        |      |              |      |  |       
|Consumer loans               |  | 132,413      |   |      | 21.7%  |      | 136,296      |      |  | 24.0%  |  | 58,066       |  | 15.6%  |  | 59,222       |  | 17.1%  |  | 61,087       |  | 17.2% 
|                             |  |              |   |      |        |      |              |      |  |       
|Commercial business loans    |  | 20,620       |   |      | 3.4%   |      | 23,527       |      |  | 4.1%   |  | 8,271        |  | 2.2%   |  | 10,802       |  | 3.1%   |  | 16,080       |  | 4.5%  
|                             |  |              |   |      |        |      |              |      |  |       
|Total other loans            |  | 153,033      |   |      | 25.1%  |      | 159,823      |      |  | 28.1%  |  | 66,337       |  | 17.8%  |  | 70,024       |  | 20.2%  |  | 77,167       |  | 21.7% 
|Total loans
receivable       |  | 608,955      |   |      | 100.0% |      | 568,330      |      |  | 100.0% |  | 372,380      |  | 100.0% |  | 346,899      |  | 100.0% |  | 355,539      |  | 100.0%
|                             |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|Less:                        |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|                             |  |              |   |      |        |      |              |      |  |       
|Allowance for loan losses    |  | 5,113        |   |      |        |      | 4,864        |      |  |        |  | 3,940        |  |        |  | 4,062        |  |        |  | 4,237        |  |       
|                             |  |              |   |      |        |      |              |      |  |       
|Net deferred (costs) fees    |  | (2,709       | ) |      |        |      | (2,715       | )    |  |        |  | 248          |  |        |  | 150          |  |        |  | 88           |  |       
|                             |  |              |   |      |        |      |              |      |  |       
|Loans in process             |  | 16,909       |   |      |        |      | 25,904       |      |  |        |  | 24,668       |  |        |  | 20,233       |  |        |  | 11,890       |  |       
|                             |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|                             |  |              |   |      |        |      |              |      |  |       
|Net loans receivable         |  | $    589,642 |   |      |        |      | $    540,277 |      |  |        |  | $    343,524 |  |        |  | $    322,454 |  |        |  | $    339,324 |  |       
|                             |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       
|                             |  |              |   |      |        |      |              |      |  |        |  |              |  |        |  |              |  |        |  |              |  |       



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The following table sets forth the scheduled contractual principal repayments of loans in the
Companys portfolio at December 31, 2006. Demand loans having no stated schedule of repayment and no stated maturity are reported as due within one year:



|                              |  |                          |  |                             |  |                             |  |                    |  |             
|----------------------------- |  | ------------------------ |  | --------------------------- |  | --------------------------- |  | ------------------ |  | ------------
|(Dollar amounts in thousands) |  | Due in one  year or less |  | Due from one  to five years |  | Due from five  to ten years |  | Due afterten
years |  | Total       
|Real estate loans             |  | $    36,440              |  | $      75,677               |  | $      79,659               |  | $    264,146       |  | $    455,922
|Consumer loans                |  | 26,461                   |  | 65,005                      |  | 28,298                      |  | 12,649             |  | 132,413     
|Commercial business loans     |  | 13,338                   |  | 5,500                       |  | 1,352                       |  | 430                |  | 20,620      
|                              |  |                          |  |                             |  |                             |  |                    |  |             
|                              |  | $    76,239              |  | $    146,182                |  | $    109,309                |  | $    277,225       |  | $    608,955
|                              |  |                          |  |                             |  |                             |  |                    |  |             
|                             

The following table sets forth the dollar amount of the Companys fixed and adjustable rate
loans due after one year as of December 31, 2006:



|                              |  |              |  |                
|----------------------------- |  | ------------ |  | ---------------
|(Dollar amounts in thousands) |  | Fixedrates   |  | Adjustablerates
|Real estate loans             |  | $    315,443 |  | $    104,039   
|Consumer loans                |  | 93,457       |  | 12,495         
|Commercial business loans     |  | 5,277        |  | 2,005          
|                              |  |              |  |                
|                              |  | $    414,177 |  | $    118,539   
|                              |  |              |  |                
|                             

Fixed and adjustable rate loans represented $460.6 million or 75.6% and $148.4 million or 24.4%,
respectively, of the Companys total loan portfolio as of December 31, 2006.

Contractual maturities of loans do not reflect the
actual term of the Companys loan portfolio. The average life of mortgage loans is substantially less than their contractual terms because of loan prepayments and enforcement of due-on-sale clauses which give the Company the right to declare a
loan immediately payable in the event, among other things, that the borrower sells the real property subject to the mortgage. The average life of mortgage loans tends to increase when current market mortgage rates substantially exceed rates on
existing mortgages and conversely, decrease when rates on existing mortgages substantially exceed current market interest rates.

Origination, Purchase and Sale of Loans.  The Company originates loans secured by residential and commercial real estate as well as consumer and commercial business loans in its primary lending area, which includes Western
Pennsylvania, through loan officers of the Company who evaluate applications received at all of the Companys locations. Such applications are primarily received through referrals by real estate agents, attorneys and builders, as well as
customer walk-ins. The Company also, to a lesser extent, originates loans secured by residential and commercial real estate in its market area through a network of correspondent lenders who offer the Banks loan products to a variety of
customers throughout Western Pennsylvania. Loans originated through correspondents are underwritten according to the same strict guidelines as loans originated directly by the Company.

Applications are obtained by loan officers who are full-time, salaried employees of the Company as well as through the Companys mortgage banking correspondent relationships. The processing,
underwriting and approval of all loans is performed at the Companys Ellwood City and Wexford offices. The Company believes this centralized approach to evaluating such loan applications allows it to review, process and approve such
applications more efficiently and effectively than would be afforded by a decentralized approach. The Company also believes that this approach enhances its ability to service and monitor these types of loans. The Companys mortgage banking
correspondents originate and process one-to-four family residential mortgage loans for a fee generally equal to 1% of the loan amount. Underwriting of these loans is performed by the Company.

As of December 31, 2006, $3.6 million or 0.6% of the Companys total loans receivable consisted of whole loans and participation interests in loans purchased from other financial
institutions. These loans are secured by real estate properties located within the U.S. and most were acquired by the Company in conjunction with the Companys five acquisitions of financial institutions. There were no loan participations
purchased by the Company during year ended December 31, 2006.



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##### Table of Contents

The Company requires that all purchased loans be underwritten in accordance with its underwriting
guidelines and standards. The Company reviews the loans, particularly scrutinizing the borrowers ability to repay the obligation, the appraisal and the loan-to-value ratio. Servicing of loans or loan participations purchased by the Company
generally is performed by the seller, with a portion of the interest being paid by the borrower retained by the seller to cover servicing costs. As of December 31, 2006, all of the Companys purchased loans were serviced by sellers.

The Companys residential non-construction real estate loans are generally originated under terms, conditions and documentation
requirements which permit their sale in the secondary market. The Company in the past has not been an active seller of loans in the secondary market and has chosen, instead, to hold the loans it originates in its own portfolio until maturity.
However, from time to time over the past several years, the Company has originated and sold 15 to 30-year fixed rate residential loans, servicing released, as a means of satisfying the demand for such loans within the Companys primary market
area when market interest rates on such loans did not meet the Companys prevailing asset/liability gap and investment objectives. Any loan held in the available for sale portfolio is subject to a takedown commitment from an investor.

The following table sets forth the Companys loan activity including originations, purchases, principal repayments, sales, transfers
to real estate acquired through foreclosure and other changes for the years ended December 31:



|                                                      |  |              |  |              |  |             
|----------------------------------------------------- |  | ------------ |  | ------------ |  | ------------
|(Dollar amounts in thousands)                         |  | 2006         |  | 2005         |  | 2004        
|                                                      |  |              | 
|Net loans receivable at beginning of period           |  | $    540,277 |  | $    343,524 |  | $    322,454
|                                                      |  |              | 
|Loans associated with acquisition of PHSB             |  | -            |  | 147,957      |  | -           
|                                                      |  |              | 
|Originations:                                         |  |              |  |              |  |             
|Single-family residential real estate                 |  | 73,582       |  | 63,166       |  | 66,664      
|Multi-familiy residential and commercial real estate  |  | 13,466       |  | 28,049       |  | 21,608      
|Construction                                          |  | 26,309       |  | 27,315       |  | 35,935      
|Consumer                                              |  | 53,648       |  | 69,748       |  | 26,780      
|Commercial business                                   |  | 17,159       |  | 19,477       |  | 7,103       
|                                                      |  |              |  |              |  |             
|                                                      |  | 184,164      |  | 207,755      |  | 158,090     
|Repayments on loans                                   |  | (129,270)    |  | (157,144)    |  | (136,307)   
|Transfers to real estate acquired through foreclosure |  | (1,222)      |  | (118)        |  | (598)       
|Sale of Visa loans                                    |  | (2,051)      |  | -            |  | -           
|Other changes                                         |  | (2,256)      |  | (1,697)      |  | (115)       
|                                                      |  |              |  |              |  |             
|Net loans receivable at end of period                 |  | $    589,642 |  | $    540,277 |  | $    343,524
|                                                      |  |              |  |              |  |             
|                                                     

Loan Underwriting Policies.  The Companys lending activities are subject to
written non-discriminatory underwriting standards and loan procedures prescribed by the Board of Directors and management. Detailed loan applications are obtained to determine the borrowers ability to repay, and the more significant items on
these applications are verified through the use of credit reports, financial statements and confirmations. Property valuations are performed primarily by independent outside appraisers approved by the Board of Directors. The Company has established
three levels of lending authority. Loans must be approved by loan officers, the internal loan committee and/or, depending on the amount and characteristics of the loan, the Board of Directors.

Loans may be approved by certain loan officers within designated characteristics and dollar limits, which are established and modified from time to time to reflect expertise and experience. All
loans in excess of an individuals designated limits are referred to the officer with the requisite authority or the Officers Loan Committee of the Bank. The President and Chief Executive Officer of the Company has approval authority
equal to the Freddie Mac (FHLMC) maximum conforming loan amount as revised from time to time for loans secured by residential real estate and up to $150,000 for all other loan types. Other members of the Officers Loan Committee have individual
lending authorities that range from $10,000 to the FHLMC maximum conforming loan amount. The Officers Loan Committee, which consists of the President and Chief Executive Officer, Group Senior Vice President of Lending and any loan officer
designated by the President and approved by the Board of Directors, is authorized to act on individual loan applications up to $2.0 million so long as all of the loans and commitments to the individual applicant do not aggregate above $2.0 million.



5



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##### Table of Contents

The third level of lending authority is reserved for the Board of Directors or the Boards Executive
Committee, which serve as the approval bodies for all individual loans above $2.0 million and loans to individual borrowers with aggregate loans and commitments above $2.0 million.

For residential real estate loans, it is the Companys policy to have a mortgage creating a valid lien on real estate and to obtain a title insurance policy, which ensures that the property
is free of prior encumbrances. Borrowers must also obtain hazard insurance policies prior to closing and, when the property is in a flood plain as designated by the Department of Housing and Urban Development, flood insurance policies. Many
borrowers are also required to advance funds on a monthly basis together with each payment of principal and interest to a mortgage escrow account from which disbursements for real estate taxes are made.

The Company is permitted by applicable regulations to lend up to 100% of the appraised value of the real property securing a mortgage loan. For loans
secured by real property, the Company generally lends up to 80% of the appraised value of such property (the loan-to-value or LTV ratio). The Company also offers several other programs where loans are granted in excess of that limit. The primary
program is available on all residential mortgage products, including new construction, and permits LTV ratios of up to 95% provided that private mortgage insurance is obtained. Depending on the term and LTV ratio, the Company requires such insurance
coverage in amounts equal to 6% to 30% of the principal balance of the loan. On a more limited basis, the Company also offers another program where loans can be granted in excess of the 80% LTV ratio. This program is limited since it does not
require private mortgage insurance. Total exposure limits have been established by the Board of Directors. The program is a 100% LTV ratio home equity product. The Company has also offered products for low- and moderate-income borrowers which can
exceed the 80% LTV ratio. These low- and moderate-income borrower programs were designed to help the Company fulfill its responsibilities under the Community Reinvestment Act. With respect to loans for multi-family and commercial real estate
mortgages, the Company generally limits the LTV ratio to 80%.

Under applicable regulations, loans-to-one borrower may not exceed 15% of
unimpaired capital and surplus. As of December 31, 2006, ESB was permitted to lend approximately $20.6 million to any one borrower under this standard. Higher limits may be available in certain circumstances. The Company generally will limit
its maximum exposure to any one borrower to $13.0 million. As of December 31, 2006, the Company did not have any lending relationships that exceeded the Banks regulatory lending limit to one borrower at the time made or committed.

Residential Mortgage and Construction Lending. The Company offers single-family residential mortgage loans with fixed and
adjustable rates of interest. As of December 31, 2006, $281.0 million or 46.1% of the total loan portfolio consisted of single-family residential mortgage loans.

Fixed rate residential loans are generally originated by the Company with 10 to 30-year terms. Substantially all of the Companys long-term, fixed rate residential mortgage loans originated include due-on-sale
clauses, which are provisions giving the Company the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells or otherwise disposes of the real property subject to the mortgage. The Company
enforces due-on-sale clauses.

In addition to standard fixed rate mortgage loans, the Company offers adjustable rate mortgage loans (ARMs)
with 30-year terms, on which the interest rate adjusts based upon changes in various indices which generally reflect market rates of interest. The Company at times has offered one-year ARMs that have an interest rate which adjusts annually according
to changes in an index that is based upon the weekly average yield on U.S. Treasury securities adjusted to a constant maturity of one year, as made available by the Federal Reserve Board, plus a margin. The amount of any increase or decrease in the
interest rate is limited to 2.0% per year, with a limit of 6.0% over the life of the loan. The Company also offers three, five and seven-year ARM loan products with margins and caps similar to the one-year ARM product whose interest rates are
fixed for the first three, five or seven years after the origination date and then reprice periodically based upon an appropriate index. The first rate change on the Companys five and seven-year products is capped at a 6.0% increase. The ARMs
offered by the Company, as well as many other financial institutions, provide for initial rates of interest below the rates which would prevail if the index used for repricing were applied initially. ARM loans decrease the risks associated with
changing market interest rates, but involve certain risks because as interest rates increase, the underlying payments required of the borrower increase, and this could increase the potential for default. At the same time, the marketability of the
underlying collateral may be adversely affected by higher interest rates. However, these risks have not had an adverse effect on the Company to date. When one-year ARMs are originated, the customers are qualified at the second year cap rate or 2.0%
higher than the initial note rate, whichever is higher.



6



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The Company also grants loans to borrowers, including developers and construction contractors, for the
construction of speculative homes and owner-occupied single-family dwellings in the Companys primary market area. As of December 31, 2006, the Company had $58.5 million or 9.6% of the total loan portfolio outstanding in construction
loans. Generally, the loan-to-value ratio for construction loans does not exceed 80%, provided that with respect to construction/permanent loans to individual borrowers for their primary residences, the Company will lend up to 95% subject to private
mortgage insurance requirements or under the aforementioned 100% LTV home equity product. The interest rate on the permanent portion of the financing is set upon conversion to the permanent loan, based upon terms agreed to in the loan commitment,
including the index to be used, the interest rate margin and the frequency of the adjustment.

The Company finances the purchase of
developed lots and pre-sold residential dwellings and speculative homes with various contractors in the Companys primary market area. These loans do not have a permanent portion as they are short-term loans repaid via the proceeds from the
sale of the lots or speculative homes constructed with the loan proceeds. These projects are typically financed under acquisition and development loans or builder lines-of-credit. As of December 31, 2006, acquisition and development loans were
extended on 14 projects with $12.0 million outstanding under commitments approved in the aggregate amount of $22.7 million and builder lines-of-credit were extended to 21 builders with $15.8 million outstanding under lines approved in the aggregate
amount of $35.9 million.

Commercial Real Estate and Multi-family Residential Mortgage Lending.  The Company originates
commercial real estate and multi-family residential mortgage loans and has in its portfolio both whole loans and participation interests. As of December 31, 2006, the Company had $116.4 million, or 19.2% of the total loan portfolio, invested in
mortgages secured by commercial real estate and multi-family residential properties.

Commercial real estate and multi-family mortgage
loans are generally priced at prevailing market interest rates at the time of origination. The commercial real estate loans in the Companys portfolio are generally secured by apartment buildings, office buildings, small retail shopping centers
and other income-producing properties in the Companys primary market area.

The Company generally will not originate a commercial
real estate or multi-family mortgage loan with a loan balance of greater than 80% of the appraised value of the property. The Company generally requires a positive cash flow at least sufficient to cover the debt service by 1.2 times on all
commercial real estate loans.

Commercial real estate and multi-family residential mortgage lending entails significant additional risks as
compared with single-family residential mortgage lending. These loans typically involve large loan balances concentrated in single borrowers or groups of related borrowers. In addition, the repayment experience on loans secured by income producing
properties is typically dependent on the successful operation of the related real estate project and thus may be subject to a greater extent to adverse conditions in the real estate market or in the economy in general.

Consumer Lending.  As of December 31, 2006, the Companys consumer loan portfolio totaled $132.4 million or 21.7% of its total
loan portfolio. Under applicable regulations, the Company, through the Bank, may make secured and unsecured consumer loans in an aggregate amount up to 30% of the respective institutions total assets. The 30% limitation does not include home
equity loans (loans secured by the equity in the borrowers residence but not necessarily for the purpose of improvement), home improvement loans or loans secured by deposit accounts. The Company offers consumer loans in order to provide a
broader range of financial services to its customers and because the shorter terms and normally higher interest rates on such loans help the Company maintain a profitable spread between its average loan yield and its cost of funds. The Company has
increased its emphasis on the origination of consumer loans within its primary market area during the past several years. Consumer lending originations were augmented through marketing techniques, including the targeting of specific customer
profiles through the Companys branch office locations. The Company has adopted underwriting standards for such lending designed to maintain asset quality. The Company offers a variety of consumer loans, including loans secured by deposit
accounts, student education loans, automobile loans, home equity loans and secured and unsecured personal loans. Additionally, through the acquisition of PHSB, the company acquired a significant portfolio of indirect automobile loans in 2005 and
continues to originate these types of loans. On all consumer loans originated, the Companys underwriting standards include a determination of the applicants payment history on other debts and an assessment of the borrowers ability
to meet existing obligations and payment on the proposed loan.

As of December 31, 2006, the Companys largest group of consumer
loans were home equity loans. The Company originates both adjustable rate home equity lines-of-credit and fixed rate home equity loans with terms of up to 30 years. As of December 31, 2006, $67.0 million or 50.6% of the Companys consumer
loan portfolio was made up of home equity loans. The Companys second largest group of consumer loans were indirect automobile and recreational vehicle loans. These loans are made on terms up to six years on both new and used automobiles and
are made on terms up to fifteen years



7



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on both new and used recreational vehicles. These loans are originated through a network of dealers and are underwritten in accordance with Bank guidelines
intended to access the applicants ability to repay and the adequacy of the financed vehicles collateral. As of December 31, 2006, $52.4 million or 39.6% of the Companys consumer loan portfolio was made up of indirect automobile and
RV loans.

Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit risk
than mortgage loans because of the type and nature of the collateral and, in certain cases, the absence of collateral. The Company believes that the generally higher yields earned on consumer loans compensate for the increased credit risk associated
with such loans and that consumer loans are important in its efforts to maintain diversity as well as to shorten the average maturity of its loan portfolio.

Commercial Business Lending.  Commercial business loans and lines-of-credit of both a secured and unsecured nature are made by the Company for business purposes to municipalities as well as
incorporated and unincorporated businesses. Typically, these loans are made for the purchase of equipment, to finance accounts receivable and/or inventory, as well as other business purposes. As of December 31, 2006, commercial business loans
amounted to $20.6 million or 3.4% of the Companys total loan portfolio.

Loan Servicing.  The Company services all
loans it has originated for its portfolio. In addition, fees are received for servicing loans which were originated by the Company and sold to third-party investors. As of December 31, 2006, the Company had $25.2 million in loans serviced for
third-party investors. Loans purchased are generally serviced by the company which originated the loans. Those companies collect a fee for servicing the loans.

Loan Origination Fees and Other Fees.  The Company receives income in the form of loan origination and other fees on both loans originated and on loans purchased in the secondary market. Such loan
origination fees and certain related direct loan origination costs are offset and the resulting net amount is deferred and amortized over the life of the related loan as an adjustment to the yield on the loan.

Delinquencies and Classified Assets

Delinquent Loans and Real Estate Acquired Through Foreclosure (REO).  Typically, a loan is considered delinquent and a late charge is assessed when the borrower has not made a payment within fifteen days from the payment
due date. When a borrower fails to make a required payment on a loan, the Company attempts to cure the deficiency by contacting the borrower. The initial contact with the borrower is made shortly after the seventeenth day following the due date for
which a payment was not received. In most cases, delinquencies are cured promptly.

If the delinquency exceeds 60 days, the Company works
with the borrower to set up a satisfactory repayment schedule. Loans are considered non-accruing upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans.
When a loan is placed in non-accrual status, previously accrued but unpaid interest is deducted from interest income. The Company institutes foreclosure action on real estate secured loans only if all other remedies have been exhausted. If an action
to foreclose is instituted and the loan is not reinstated or paid in full, the property is sold at a judicial or trustees sale at which the Company may be the buyer.

Real estate properties acquired through, or in lieu of, mortgage foreclosure are to be sold and are initially recorded at fair value at the date of foreclosure establishing a new cost basis.
After foreclosure, management periodically performs valuations and the real estate is carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included
in loss on foreclosed real estate. The Company generally attempts to sell its REO properties as soon as practical upon receipt of clear title. The original lender typically handles disposition of those REO properties resulting from loans purchased
in the secondary market.

As of December 31, 2006, the Companys non-performing assets, which include non-accrual loans, loans
delinquent due to maturity, troubled debt restructuring, REO and repossessed vehicles, amounted to $4.2 million or 0.22% of the Companys total assets.

Classified Assets.    Regulations applicable to insured institutions require the classification of problem assets as substandard, doubtful or loss
depending upon the existence of certain characteristics as discussed below. A category designated special mention must also be maintained for assets currently not requiring the above classifications but having potential weakness or risk
characteristics that could result in future problems. An asset is classified as substandard if not adequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. A substandard asset is
characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are



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not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, these weaknesses make
collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets classified as loss are considered uncollectible and of such little value that their continuance as assets
is not warranted.

The Companys classification of assets policy requires the establishment of valuation allowances for loan losses in
an amount deemed prudent by management. Valuation allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities.

The Company regularly reviews the problem loans and other assets in its portfolio to determine whether any require classification in accordance with the Companys policy and applicable
regulations. As of December 31, 2006, the Companys classified and criticized assets amounted to $8.7 million with $5.3 million classified as substandard, $1,000 classified as doubtful, $162,000 classified as loss and $3.2 million
identified as special mention.

The following table sets forth information regarding the Companys non-performing assets as of
December 31, for the years indicated:



|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|---------------------------------------------------------------- |  | - | ----- |  | - | ----- |  | - | ----- |  | - | ----- |  | - | -----
|(Dollar amounts in thousands)                                    |  |   | 2006  |  |   | 2005  |  |   | 2004  |  |   | 2003  |  |   | 2002 
|                                                                 |  |   |       |  |  
|Non-accrual loans:                                               |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Real estate loans                                                |  | $ | 1,759 |  | $ | 1,547 |  | $ | 1,283 |  | $ | 1,471 |  | $ | 2,137
|Commercial business loans                                        |  |   | 315   |  |   | 1,042 |  |   | -     |  |   | -     |  |   | 10   
|Consumer loans                                                   |  |   | 635   |  |   | 1,058 |  |   | 187   |  |   | 309   |  |   | 395  
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Total non-accrual loans                                          |  |   | 2,709 |  |   | 3,647 |  |   | 1,470 |  |   | 1,780 |  |   | 2,542
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Total as a percentage of total assets                            |  |   | 0.14% |  |   | 0.19% |  |   | 0.11% |  |   | 0.13% |  |   | 0.19%
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|                                                                 |  |   |       |  |  
|Real estate acquired through foreclosure andRepossessed Vehicles |  |   | 1,272 |  |   | 1,356 |  |   | 1,303 |  |   | 1,164 |  |   | 1,092
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Total as a percentage of total assets                            |  |   | 0.07% |  |   | 0.07% |  |   | 0.09% |  |   | 0.09% |  |   | 0.08%
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Troubled debt restructuring                                      |  |   | 268   |  |   | 175   |  |   | 915   |  |   | -     |  |   | -    
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Total as a percentage of total assets                            |  |   | 0.01% |  |   | 0.01% |  |   | 0.07% |  |   | -     |  |   | -    
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|Total non-performing assets                                      |  | $ | 4,249 |  | $ | 5,178 |  | $ | 3,688 |  | $ | 2,944 |  | $ | 3,634
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|                                                                 |  |   |       |  |  
|Total non-performing assets as a percentage of total assets      |  |   | 0.22% |  |   | 0.28% |  |   | 0.26% |  |   | 0.22% |  |   | 0.28%
|                                                                 |  |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|                                                                

As of December 31, 2005, REO included a medical office building valued at $1.1 million. The
property was acquired through a bankruptcy sale in 1998 and was sold in February 2006 for approximately $1.1 million. In July 2006, the Company acquired three unfinished spec homes and a residential building lot via judicial sale. These properties
were acquired as a result of the failure of a customer involved in residential home construction. The Company has contracted to have the unfinished spec homes completed and these homes are being marketed through a local real estate agency. As of
December 31, 2006, these properties are being carried at a value of $935,000.

Allowance for Loan Losses. Management
establishes reserves for estimated losses on loans based upon its evaluation of the pertinent factors underlying the types and quality of loans; historical loss experience based on volume and types of loans; trend in portfolio volume and
composition; level and trend in non-performing assets; detailed analysis of individual loans for which full collectibility may not be assured; determination of the existence and realizable value of the collateral and guarantees securing such loans;
and the current economic conditions affecting the collectibility of loans in the portfolio. Loans that are delinquent 90 days and are placed on nonaccrual status are classified on an individual basis. Residential loans 60 days past due, which are
still accruing interest are classified as substandard as per the Companys asset classification policy. The remaining loans are evaluated and classified as a group. The Company allocates allowances based on the factors described above, which
conform to the Companys asset classification policy. The Company analyzes its loan portfolio each quarter to determine the appropriateness of its allowance for loan losses. Management believes that the Companys allowance for losses as of
December 31, 2006 of $5.1 million is appropriate to cover inherent losses in the portfolio.



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The following table sets forth an analysis of the allowance for losses on loans receivable for the years
ended December 31:



|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|----------------------------------------------------- |  | - | ------- |  | - | ------- |  | - | ----- |  | - | ----- |  | - | -----
|(Dollar amounts in thousands)                         |  |   | 2006    |  |   | 2005    |  |   | 2004  |  |   | 2003  |  |   | 2002 
|                                                      |  |   |         |  |  
|Balance at beginning of period                        |  | $ | 4,864   |  | $ | 3,940   |  | $ | 4,062 |  | $ | 4,237 |  | $ | 5,147
|                                                      |  |   |         |  |  
|Allowance for loan losses of acquired companies       |  |   | -       |  |   | 1,406   |  |   | -     |  |   | -     |  |   | -    
|                                                      |  |   |         |  |  
|Provision for (recovery of) loan losses               |  |   | 1,113   |  |   | 568     |  |   | 206   |  |   | (106) |  |   | (410)
|                                                      |  |   |         |  |  
|Charge-offs                                           |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|Real estate loans                                     |  |   | (146)   |  |   | (401)   |  |   | (223) |  |   | -     |  |   | (15) 
|Commercial business loans                             |  |   | (146)   |  |   | (78)    |  |   | (8)   |  |   | (10)  |  |   | (482)
|Consumer loans                                        |  |   | (730)   |  |   | (672)   |  |   | (153) |  |   | (77)  |  |   | (45) 
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                      |  |   | (1,022) |  |   | (1,151) |  |   | (384) |  |   | (87)  |  |   | (542)
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|Recoveries                                            |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|Real estate loans                                     |  |   | 4       |  |   | 8       |  |   | 32    |  |   | 3     |  |   | 4    
|Commercial business loans                             |  |   | 1       |  |   | -       |  |   | -     |  |   | -     |  |   | 27   
|Consumer loans                                        |  |   | 153     |  |   | 93      |  |   | 24    |  |   | 15    |  |   | 11   
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                      |  |   | 158     |  |   | 101     |  |   | 56    |  |   | 18    |  |   | 42   
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                      |  |   |         |  |  
|Balance at end of period                              |  | $ | 5,113   |  | $ | 4,864   |  | $ | 3,940 |  | $ | 4,062 |  | $ | 4,237
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                      |  |   |         |  |  
|Ratio of net charge-offs to average loans outstanding |  |   | 0.15%   |  |   | 0.21%   |  |   | 0.11% |  |   | 0.02% |  |   | 0.13%
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                      |  |   |         |  |  
|Ratio of allowance to total loans at end of period    |  |   | 0.84%   |  |   | 0.86%   |  |   | 1.06% |  |   | 1.17% |  |   | 1.19%
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                      |  |   |         |  |  
|Balance at end of period applicable to:               |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|Real estate loans                                     |  | $ | 3,331   |  | $ | 2,622   |  | $ | 3,003 |  | $ | 2,886 |  | $ | 3,031
|Commercial business loans                             |  | $ | 211     |  | $ | 283     |  | $ | 180   |  | $ | 367   |  | $ | 340  
|Consumer loans                                        |  |   | 1,571   |  |   | 1,959   |  |   | 757   |  |   | 809   |  |   | 866  
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|Balance at end of period                              |  | $ | 5,113   |  | $ | 4,864   |  | $ | 3,940 |  | $ | 4,062 |  | $ | 4,237
|                                                      |  |   |         |  |   |         |  |   |       |  |   |       |  |   |      
|                                                     

Interest-Earning Deposits

The Company maintains daily interest-earning cash accounts at the FHLB of Pittsburgh. The accounts consist generally of excess funds, which are available to meet loan funding requirements,
investment and mortgage-backed securities purchases and withdrawal of deposit accounts. The accounts earn interest daily at a rate which approximates the rate on federal funds. Such funds are withdrawable upon demand and are not federally insured.
Interest-earning deposits at the FHLB of Pittsburgh totaled $17.5 million as of December 31, 2006.

Investment Activities

General.  The Companys investment activities involve investment in numerous types of investment securities,
including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured banks and savings institutions, commercial paper, corporate debt securities, tax-exempt obligations (including primarily municipal
obligations of state and local governments), mutual funds and federal funds.

The Company also maintains a portfolio of mortgage-backed
securities which are insured or guaranteed by FHLMC, the Federal National Mortgage Association (FNMA) and the Government National Mortgage Association (GNMA). Mortgage-backed securities increase the quality of the Companys assets by virtue of
the guarantees that back them, are more liquid than individual mortgage loans and may be used to collateralize borrowings or other obligations of the Company.



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The following table summarizes the Companys investment securities as of the dates indicated:



|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|----------------------------- |  | - | --------------- |  | - | ----------------- |  | - | ------------------ |  | - | ---------
|                              |  |   |                 | 
|(Dollar amounts in thousands) |  |   | Amortized  cost |  |   | Unrealized  gains |  |   | Unrealized  losses |  |   | Fairvalue
|Available for
sale:           |  |   |                 |  |   |                   |  |   |                    |  |   |          
|December 31, 2006:            |  |   |                 |  |   |                   |  |   |                    |  |   |          
|Trust Preferred securities    |  | $ | 500             |  | $ | -                 |  | $ | (3)                |  | $ | 497      
|Municipal securities          |  |   | 109,817         |  |   | 4,094             |  |   | (13)               |  |   | 113,898  
|Equity securities             |  |   | 1,555           |  |   | 542               |  |   | (8)                |  |   | 2,089    
|Corporate Bonds               |  |   | 65,097          |  |   | 131               |  |   | (1,294)            |  |   | 63,934   
|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                              |  | $ | 176,969         |  | $ | 4,767             |  | $ | (1,318)            |  | $ | 180,418  
|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|December 31, 2005:            |  |   |                 |  |   |                   |  |   |                    |  |   |          
|Trust Preferred securities    |  | $ | 500             |  | $ | -                 |  | $ | (57)               |  | $ | 443      
|Municipal securities          |  |   | 113,403         |  |   | 5,273             |  |   | (11)               |  |   | 118,665  
|Equity securities             |  |   | 1,554           |  |   | 362               |  |   | (6)                |  |   | 1,910    
|Corporate Bonds               |  |   | 85,168          |  |   | 372               |  |   | (1,575)            |  |   | 83,965   
|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                              |  | $ | 200,625         |  | $ | 6,007             |  | $ | (1,649)            |  | $ | 204,983  
|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|December 31, 2004:            |  |   |                 |  |   |                   |  |   |                    |  |   |          
|Trust Preferred securities    |  | $ | 500             |  | $ | -                 |  | $ | (18)               |  | $ | 482      
|U.S. Government securities    |  |   | 5,986           |  |   | 487               |  |   | -                  |  |   | 6,473    
|Municipal securities          |  |   | 106,622         |  |   | 6,012             |  |   | (193)              |  |   | 112,441  
|Equity securities             |  |   | 973             |  |   | 352               |  |   | -                  |  |   | 1,325    
|Corporate Bonds               |  |   | 99,290          |  |   | 1,948             |  |   | (1,770)            |  |   | 99,468   
|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                              |  | $ | 213,371         |  | $ | 8,799             |  | $ | (1,981)            |  | $ | 220,189  
|                              |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                             



11



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##### Table of Contents

The following table summarizes the Companys mortgage-backed securities as of the dates indicated:



|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|----------------------------------- |  | - | --------------- |  | - | ----------------- |  | - | ------------------ |  | - | ---------
|(Dollar amounts in thousands)       |  |   | Amortized  cost |  |   | Unrealized  gains |  |   | Unrealized  losses |  |   | Fairvalue
|                                    |  |   |                 | 
|Available for sale:                 |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                                    |  |   |                 | 
|December 31, 2006                   |  |   |                 |  |   |                   |  |   |                    |  |   |          
|GNMA                                |  | $ | 10,720          |  | $ | 166               |  | $ | (26)               |  | $ | 10,860   
|FNMA                                |  |   | 513,563         |  |   | 1,645             |  |   | (6,351)            |  |   | 508,857  
|FHLMC                               |  |   | 411,327         |  |   | 669               |  |   | (5,524)            |  |   | 406,472  
|Collateralized mortgage obligations |  |   | 37,976          |  |   | 23                |  |   | (682)              |  |   | 37,317   
|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                                    |  | $ | 973,586         |  | $ | 2,503             |  | $ | (12,583)           |  | $ | 963,506  
|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|December 31, 2005                   |  |   |                 |  |   |                   |  |   |                    |  |   |          
|GNMA                                |  | $ | 29,041          |  | $ | 656               |  | $ | (23)               |  | $ | 29,674   
|FNMA                                |  |   | 461,027         |  |   | 747               |  |   | (7,794)            |  |   | 453,980  
|FHLMC                               |  |   | 402,937         |  |   | 987               |  |   | (5,127)            |  |   | 398,797  
|Collateralized mortgage obligations |  |   | 30,467          |  |   | 9                 |  |   | (847)              |  |   | 29,629   
|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                                    |  | $ | 923,472         |  | $ | 2,399             |  | $ | (13,791)           |  | $ | 912,080  
|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|December 31, 2004                   |  |   |                 |  |   |                   |  |   |                    |  |   |          
|GNMA                                |  | $ | 40,881          |  | $ | 1,319             |  | $ | (4)                |  | $ | 42,196   
|FNMA                                |  |   | 392,698         |  |   | 1,938             |  |   | (2,965)            |  |   | 391,671  
|FHLMC                               |  |   | 235,749         |  |   | 2,928             |  |   | (569)              |  |   | 238,108  
|Collateralized mortgage obligations |  |   | 37,744          |  |   | 102               |  |   | (216)              |  |   | 37,630   
|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                                    |  | $ | 707,072         |  | $ | 6,287             |  | $ | (3,754)            |  | $ | 709,605  
|                                    |  |   |                 |  |   |                   |  |   |                    |  |   |          
|                                   

The following table sets forth the activity in the Companys mortgage-backed securities for
the years ended December 31:



|                                                                               |  |   |           |  |   |           |  |   |          
|------------------------------------------------------------------------------ |  | - | --------- |  | - | --------- |  | - | ---------
|(Dollar amounts in thousands)                                                  |  |   | 2006      |  |   | 2005      |  |   | 2004     
|Mortgage-backed securities at the beginning of period                          |  | $ | 912,080   |  | $ | 709,605   |  | $ | 708,162  
|                                                                               |  |   |          
|Mortgage-backed securities acquired in connection with the acquisition of PHSB |  |   | -         |  |   | 140,371   |  |   | -        
|Purchases                                                                      |  |   | 262,671   |  |   | 470,401   |  |   | 214,330  
|Sales                                                                          |  |   | (50,046)  |  |   | (189,644) |  |   | -        
|Repayments                                                                     |  |   | (161,224) |  |   | (202,184) |  |   | (205,166)
|Net (amortization) of premium and accretion of discount                        |  |   | (1,286)   |  |   | (2,545)   |  |   | (3,133)  
|Change in unrealized gain on mortgage-backed securities available for sale     |  |   | 1,311     |  |   | (13,924)  |  |   | (4,588)  
|                                                                               |  |   |           |  |   |           |  |   |          
|                                                                               |  |   |          
|Mortgage-backed securities at the end of period                                |  | $ | 963,506   |  | $ | 912,080   |  | $ | 709,605  
|                                                                               |  |   |           |  |   |           |  |   |          
|Weighted average yield
at the end of the period                                |  |   | 5.11%     |  |   | 4.82%     |  |   | 4.04%    
|                                                                               |  |   |           |  |   |           |  |   |          
|                                                                              

Due to prepayments of the underlying loans collateralizing mortgage-backed securities, the actual
maturities of the securities are expected to be substantially less than the scheduled maturities.

As a member of the FHLB system, the Bank
is required to meet certain minimum levels of liquid assets, which are subject to change from time to time. The Companys liquidity fluctuates with deposit flows, funding requirements for loans and other assets and the relative returns between
liquid investments and various loan products.



12



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##### Table of Contents

The Board of Directors has established an investment policy, which provides for priorities for the
Companys investments with respect to the safety of the principal amount, liquidity, generation of income, management of interest rate risk and capital appreciation. The policy permits investment in various types of liquid assets including,
among others, U.S. Treasury and federal agency securities, municipal obligations, investment grade corporate bonds, and federal funds.

Sources of Funds

General.  The Companys primary sources of funds for its lending and
investment activities are deposits, principal and interest payments on loans and mortgage-backed securities, interest on securities and interest-bearing deposits, advances from the FHLB of Pittsburgh and repurchase agreement borrowings.

Deposits.  The Company offers a wide variety of deposit accounts with a range of interest rates and terms. The primary types of
deposit accounts are regular savings, checking and money market accounts and certificate accounts. The primary source of these deposits is the market area in which the Banks offices are located. The Company typically relies on customer
service, advertising and existing relationships with customers to attract and retain deposits. Deposit flows are significantly influenced by the general state of the economy, general market interest rates and the effects of competition. The Company
typically pays competitive interest rates within the market area but does not seek to match the highest rates paid by competing institutions in its primary market area.

The following table sets forth the distribution of the Companys deposits by type as of December 31, for the years indicated:



|                              |  |      |         |      |        |      |   |         |  |        |  |   |         |  |       
|----------------------------- |  | ---- | ------- | ---- | ------ | ---- | - | ------- |  | ------ |  | - | ------- |  | ------
|(Dollar
amounts in thousands) |  | 2006 |         | 2005 |        | 2004
|                              |  |      |         |      |        |     
|Type of Account               |  |      | Amount  |      | %      |      |   | Amount  |  | %      |  |   | Amount  |  | %     
|Noninterest-bearing deposits  |  | $    | 54,906  |      | 6.7%   |      | $ | 52,745  |  | 6.3%   |  | $ | 23,563  |  | 4.1%  
|NOW account deposits          |  |      | 82,204  |      | 10.0%  |      |   | 84,134  |  | 10.1%  |  |   | 58,553  |  | 10.1% 
|Money Market deposits         |  |      | 33,007  |      | 4.0%   |      |   | 52,277  |  | 6.3%   |  |   | 49,332  |  | 8.5%  
|Passbook account deposits     |  |      | 105,009 |      | 12.7%  |      |   | 115,399 |  | 13.8%  |  |   | 94,439  |  | 16.3% 
|Time deposits                 |  |      | 548,518 |      | 66.6%  |      |   | 529,975 |  | 63.5%  |  |   | 354,459 |  | 61.0% 
|                              |  |      |         |      |        |      |   |         |  |        |  |   |         |  |       
|                              |  | $    | 823,644 |      | 100.0% |      | $ | 834,530 |  | 100.0% |  | $ | 580,346 |  | 100.0%
|                              |  |      |         |      |        |      |   |         |  |        |  |   |         |  |       
|                             

The Company had a total of $138.8 million, $132.0 million and $70.5 million in time deposits of
$100,000 or more as of December 31, 2006, 2005 and 2004, respectively.

The following table sets forth, by various rate categories,
the amount of time deposits outstanding as of December 31, 2006, which mature in the periods presented:



|                              |  |   |         |  |   |             |  |   |             |  |   |             |  |   |             |  |   |               |  |   |        
|----------------------------- |  | - | ------- |  | - | ----------- |  | - | ----------- |  | - | ----------- |  | - | ----------- |  | - | ------------- |  | - | -------
|(Dollar amounts in thousands) |  |   | 1 to 12 |  |   | More than 1 |  |   | More than 2 |  |   | More than 3 |  |   | More than 4 |  |   |               |  |   |        
|                              |  |   |         |  |   |             | 
|Range of
Rates                |  |   | months  |  |   | to 2 years  |  |   | to 3 years  |  |   | to 4 years  |  |   | to 5 years  |  |   | After 5 years |  |   | Total  
|0.00%    
to         2.49%    |  | $ | 29,325  |  | $ | 733         |  | $ | 16          |  | $ | -           |  | $ | -           |  | $ | -             |  | $ | 30,074 
|2.50%    
to         4.49%    |  |   | 115,312 |  |   | 28,724      |  |   | 7,406       |  |   | 3,009       |  |   | 1,492       |  |   | 1,300         |  |   | 157,243
|4.50%    
to         6.49%    |  |   | 285,768 |  |   | 46,262      |  |   | 23,627      |  |   | 2,686       |  |   | 2,672       |  |   | 186           |  |   | 361,201
|                              |  |   |         |  |   |             |  |   |             |  |   |             |  |   |             |  |   |               |  |   |        
|                              |  | $ | 430,405 |  | $ | 75,719      |  | $ | 31,049      |  | $ | 5,695       |  | $ | 4,164       |  | $ | 1,486         |  | $ | 548,518
|                              |  |   |         |  |   |             |  |   |             |  |   |             |  |   |             |  |   |               |  |   |        
|                             



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##### Table of Contents

The following table sets forth, by various rate categories, the amount of time deposit accounts
outstanding as of December 31, for the years indicated:



|                                             |  |   |         |  |   |         |  |   |        
|-------------------------------------------- |  | - | ------- |  | - | ------- |  | - | -------
|(Dollar amounts in thousands) Range of
Rates |  |   | 2006    |  |   | 2005    |  |   | 2004   
|                                             |  |   |        
|0.00%    to        2.49%                     |  | $ | 30,074  |  | $ | 52,541  |  | $ | 136,758
|2.50%    to        4.49%                     |  |   | 157,243 |  |   | 412,876 |  |   | 181,127
|4.50%    to        6.49%                     |  |   | 361,201 |  |   | 64,132  |  |   | 33,145 
|6.50%    to        8.49%                     |  |   | -       |  |   | 426     |  |   | 3,429  
|                                             |  |   |         |  |   |         |  |   |        
|                                             |  |   |         |  |   |         |  |   |        
|                                             |  | $ | 548,518 |  | $ | 529,975 |  | $ | 354,459
|                                             |  |   |         |  |   |         |  |   |        
|                                            

As of December 31, 2006, the Company had certificates in amounts of $100,000 or more maturing
as follows:



|                                    |  |   |        
|----------------------------------- |  | - | -------
|(Dollar amounts in thousands)       |  |   | Amount 
|                                    | 
|Three months or less                |  | $ | 69,911 
|More than three through six months  |  |   | 30,447 
|More than six through twelve months |  |   | 16,341 
|More than twelve months             |  |   | 22,138 
|                                    |  |   |        
|                                    |  | $ | 138,837
|                                    |  |   |        
|                                   

The following table sets forth the net deposit flows during the year ended December 31:



|                                                             |  |   |          |  |   |         |  |   |         
|------------------------------------------------------------ |  | - | -------- |  | - | ------- |  | - | --------
|(Dollar amounts in thousands)                                |  |   | 2006     |  |   | 2005    |  |   | 2004    
|                                                             |  |   |         
|Increase (decrease) before interest credited and acquisition |  | $ | (34,379) |  | $ | (6,922) |  | $ | (33,616)
|Deposits assumed in connection with acquisition of PHSB      |  |   | -        |  |   | 243,560 |  |   | -       
|Interest credited                                            |  |   | 23,493   |  |   | 17,546  |  |   | 10,916  
|                                                             |  |   |          |  |   |         |  |   |         
|Net deposit increase (decrease)                              |  | $ | (10,886) |  | $ | 254,184 |  | $ | (22,700)
|                                                             |  |   |          |  |   |         |  |   |         
|                                                            

Borrowings. While deposits are the preferred source of funds for the Companys lending
and investment activities and general business purposes, the Company also borrows funds from the FHLB of Pittsburgh and through repurchase agreements with third parties. In addition, the Company participates as an authorized depository for treasury,
tax and loan accounts on behalf of the Federal Reserve Bank of Cleveland (FRB of Cleveland). Advances from the FHLB of Pittsburgh are secured by the Companys stock in the FHLB, a portion of its first mortgage loans and certain investment
securities. The FHLB has a variety of different advance programs, each with different interest rates, provisions, maximum sizes and maturities. As of December 31, 2006, the Company had outstanding advances with the FHLB of $698.2 million. The
Company has entered into sales of securities under agreements to repurchase (repurchase agreements). Fixed coupon repurchase agreements are treated as financings and the obligations to repurchase securities sold are reflected as a liability of the
Company. The dollar amount of securities underlying the agreements remains as an asset of the Company. The securities underlying the agreements are delivered to independent third party brokerage firms who arrange the transaction.



14



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##### Table of Contents

The following table sets forth the Companys borrowings as of December 31, for the years
indicated:



|                                   |  |   |         |  |   |         |  |   |        
|---------------------------------- |  | - | ------- |  | - | ------- |  | - | -------
|(Dollar amounts in thousands)      |  |   | 2006    |  |   | 2005    |  |   | 2004   
|                                   |  |   |        
|FHLB advances                      |  | $ | 698,232 |  | $ | 693,927 |  | $ | 601,242
|                                   |  |   |        
|Repurchase agreements              |  |   | 187,000 |  |   | 107,000 |  |   | 67,000 
|                                   |  |   |        
|ESOP borrowings                    |  |   | 3,780   |  |   | 4,725   |  |   | 5,670  
|                                   |  |   |        
|Corporate borrowings               |  |   | 10,500  |  |   | 12,000  |  |   | 13,500 
|                                   |  |   |        
|Treasury tax and loan note payable |  |   | 197     |  |   | 221     |  |   | 150    
|                                   |  |   |         |  |   |         |  |   |        
|                                   |  | $ | 899,709 |  | $ | 817,873 |  | $ | 687,562
|                                   |  |   |         |  |   |         |  |   |        
|                                   |  |   |         |  |   |         |  |   |        

Included in the $698.2 million of FHLB advances at December 31, 2006, is approximately $45.0
million of convertible select advances. These advances reset to the 3-month London Interbank Offer Rate (LIBOR) Index and have various spreads and call dates. At the reset date, if the 3-month LIBOR plus the spread is lower than the contract rate on
the advance, the advance will remain at the contracted rate. The FHLB has the right to call any convertible select advance on its call date or quarterly thereafter. Should the advance be called, the Company has the right to pay off the advance
without penalty. It has historically been the Companys position to pay off the advance and replace it with fixed-rate funding.



15



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##### Table of Contents

The following table presents certain information regarding aggregate short-term (maturities within one
year) borrowings of the Company as of and for the years ended December 31:



|                                                            |  |   |         |  |   |         |  |   |        
|----------------------------------------------------------- |  | - | ------- |  | - | ------- |  | - | -------
|(Dollar amounts in thousands)                               |  |   | 2006    |  |   | 2005    |  |   | 2004   
|FHLB advances:                                              |  |   |         |  |   |         |  |   |        
|Average balance outstanding for the year                    |  | $ | 284,366 |  | $ | 259,288 |  | $ | 209,250
|Maximum amount outstanding at any month end during the year |  |   | 350,004 |  |   | 305,680 |  |   | 234,512
|Balance outstanding at year end                             |  |   | 269,361 |  |   | 276,814 |  |   | 201,218
|Weighted average interest rate during the year              |  |   | 4.02%   |  |   | 3.63%   |  |   | 3.01%  
|Weighted average interest rate at year end                  |  |   | 4.04%   |  |   | 3.81%   |  |   | 3.15%  
|                                                            |  |   |        
|Repurchase agreements:                                      |  |   |         |  |   |         |  |   |        
|Average balance outstanding for the year                    |  | $ | 61,833  |  | $ | 48,667  |  | $ | 41,083 
|Maximum amount outstanding at any month end during the year |  |   | 108,000 |  |   | 67,000  |  |   | 57,000 
|Balance outstanding at year end                             |  |   | 67,000  |  |   | 37,000  |  |   | 57,000 
|Weighted average interest rate during the year              |  |   | 4.85%   |  |   | 3.22%   |  |   | 1.81%  
|Weighted average interest rate at year end                  |  |   | 4.98%   |  |   | 4.11%   |  |   | 2.14%  
|                                                            |  |   |        
|Treasury tax and loan note:                                 |  |   |         |  |   |         |  |   |        
|Average balance outstanding for the year                    |  | $ | 152     |  | $ | 177     |  | $ | 100    
|Maximum amount outstanding at any month end during the year |  |   | 222     |  |   | 226     |  |   | 181    
|Balance outstanding at year end                             |  |   | 197     |  |   | 221     |  |   | 150    
|Weighted average interest rate during the year              |  |   | 5.02%   |  |   | 3.11%   |  |   | 1.11%  
|Weighted average interest rate at year end                  |  |   | 5.04%   |  |   | 4.25%   |  |   | 2.03%  
|                                                            |  |   |        
|Total short term borrowings:                                |  |   |         |  |   |         |  |   |        
|Average balance outstanding for the year                    |  | $ | 346,351 |  | $ | 308,132 |  | $ | 250,433
|Maximum amount outstanding at any month end during the year |  |   | 387,068 |  |   | 372,906 |  |   | 291,693
|Balance outstanding at year end                             |  |   | 336,558 |  |   | 314,035 |  |   | 258,368
|Weighted average interest rate during the year              |  |   | 4.17%   |  |   | 3.57%   |  |   | 2.82%  
|Weighted average interest rate at year end                  |  |   | 4.23%   |  |   | 3.85%   |  |   | 2.93%  
|                                                           

Junior Subordinated Notes.On April 10, 2003, ESB Capital Trust II (Trust
II), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $10.0 million variable rate preferred securities with a stated value and liquidation preference of $1,000 per share. The Company purchased
$310,000 of common securities of Trust II. The preferred securities reset quarterly to equal the LIBOR Index plus 3.25%. Trust IIs obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The
proceeds from the sale of the preferred securities and the common securities were utilized by the Trust II to invest in $10.3 million of variable rate Subordinated Debt of the Company. The subordinated debt is unsecured and ranks subordinate and
junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of the Trust II. Interest on the preferred securities is cumulative and payable quarterly in
arrears. The Company has the right to optionally redeem the Subordinated Debt prior to the maturity date of April 24, 2033, on or after April 24, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the
redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated April 10, 2003, the Company may redeem in whole, but not in
part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an
aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. Unamortized deferred debt issuance costs associated with the preferred securities amounted to $75,000 and $135,000 at December 31, 2006 and 2005,
respectively, and are amortized on a level yield basis.

On December 17, 2003, ESB Statutory Trust III (Trust III), a statutory
business trust established under Delaware law that is a subsidiary of the Company, issued $5.0 million variable rate preferred securities with a stated value and liquidation



16



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##### Table of Contents

preference of $1,000 per share. The Company purchased $155,000 of common securities of Trust III. The
preferred securities reset quarterly to equal the LIBOR Index plus 2.95%. Trust IIIs obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred
securities and the common securities were utilized by Trust III to invest in $5.2 million of variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness,
liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust III. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem
the subordinated debt prior to the maturity date of December 17, 2033, on or after December 17, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events,
specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated December 17, 2003, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days
following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal
amount of the subordinated debt redeemed. Unamortized deferred debt issuance costs associated with the preferred securities amounted to $29,000 and $44,000 at December 31, 2006 and 2005, respectively, and are amortized on a level yield basis.

On February 10, 2005, ESB Capital Trust IV (Trust IV), a statutory business trust established under Delaware law that is a subsidiary
of the Company, issued $35.0 million fixed rate preferred securities. The Company purchased $1.1 million of common securities of Trust IV. The preferred securities are fixed at a rate of 6.03% for six years and then are variable at three month LIBOR
Index plus 1.82%. The preferred securities have a stated maturity of thirty years. Trust IVs obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred
securities and the common securities were utilized by Trust IV to invest in $36.1 million of fixed/variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all
indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust IV. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to
optionally redeem the subordinated debt prior to the maturity date of February 10, 2035, on or after February 10, 2011, at the redemption price, which is equal to the liquidation amount, plus accrued and unpaid distributions, if any, at
the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated February 10, 2005, the Company may redeem in whole, but not
in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having
an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. The Company did not have any deferred debt issuance costs associated with the preferred securities.

Subsidiaries

As of
December 31, 2006, the Company had investments in PennFirst Financial Services, Inc. (PFSI), ESB Capital Trust II (the Trust II), ESB Statutory Trust III (the Trust III), ESB Capital Trust IV (the Trust IV) and THF, Inc., totaling approximately
$32.2 million. PFSI, a Delaware corporation, is engaged in the management of certain investment activities on behalf of the Company. The Trust II, Trust III and Trust IV are Delaware statutory business trusts established to facilitate the issuance
of trust preferred securities to the public by the Company. THF, Inc. is a Pennsylvania corporation established as a title agency to provide residential and commercial loan closing services.

At December 31, 2006, as a Pennsylvania chartered, FDIC insured stock savings bank ESB was authorized under applicable regulations to have a maximum investment of $13.2 million in service
corporations. On that date, ESB had a $8.4 million investment in AMSCO, Inc. (AMSCO), one of its two wholly owned subsidiaries.

AMSCO was
incorporated in 1974 as a wholly owned subsidiary of ESB and is engaged in real estate development and construction of 1-4 family residential units independently or in conjunction with its joint ventures. Seven of the existing joint ventures are 51%
owned by AMSCO and the Bank has provided all development and construction financing. The seven joint ventures have been included in the consolidated financial statements and their operations are reflected within other non-interest income or expense.
The Banks loans to AMSCO and related interest have been eliminated in consolidation. As of December 31, 2006, AMSCO had total assets, consisting primarily of investments in one wholly owned subsidiary and eight joint ventures, of $24.4
million.

AMSCOs wholly owned subsidiary, ESB Bank Building Associates, owns a commercial office building partially utilized as a
branch office and loan production office for ESB. ESB provided financing for the project. In 1999, the Company opened its newly constructed full service branch office located in Wexford, Allegheny County, PA a quarter mile north of the



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former branch location. The Company also houses its settlement company THF, Inc. and its financial
advisory segment in the Wexford office building. The office space is leased from ESB Bank Building Associates. As of December 31, 2006, AMSCO had a $373,000 investment in ESB Bank Building Associates.

AMSCOs first joint venture, Madison Woods, consists of a 40% interest in a partnership with two local developers. Madison Woods purchased
approximately 57 acres of undeveloped land in Moon Township, Allegheny County, PA in October 1998 and developed the land into a 56-lot subdivision for the purpose of selling the lots for single-family residential construction. ESB provided Madison
Woods the capital and financing for the project and Madison Woods has since repaid its loan to ESB. As of December 31, 2006, 5 of the 56 lots remain unsold. On that date, AMSCO had a $138,000 investment in Madison Woods. The Company accounts
for the operating results in Madison Woods using the equity method.

The second joint venture, The Links at Deer Run, consists of a 51%
interest in a limited liability corporation (LLC) with a local developer/builder. The Links at Deer Run purchased approximately 39 acres of undeveloped land adjacent to a golf course in West Deer Township, Allegheny County, PA in April 2001. The LLC
has developed the land and began construction on a total of 80 quadplex, 28 duplex and 6 single-family homes. ESB is providing both development and construction financing for the project. As of December 31, 2006, The Links at Deer Run had
outstanding lines of credit with ESB in the amount of $6.1 million with outstanding balances of $1.6 million and development costs of $3.3 million. As of December 31, 2006, 75 units were closed and 11 units remained in various stages of
construction. On that date, AMSCO had a $1.5 million investment in The Links at Deer Run.

The third joint venture, McCormick Farms,
consists of a 51% interest in a LLC with one of the local developers involved in Madison Woods. McCormick Farms purchased approximately 147 acres in Moon Township, Allegheny County, PA, in May 2001 and developed the land into a 76-lot subdivision
for the purpose of selling the lots for single-family residential construction. ESB is providing the financing for the project. As of December 31, 2006, McCormick Farms had an outstanding loan balance with ESB in the amount of $15,000. As of
December 31, 2006, 40 lots were closed and 36 developed lots are remaining. On that date, AMSCO had a $1.7 million investment in McCormick Farms.

The fourth joint venture, Brandy One, consists of a 51% interest in a LLC with a local developer/builder. Brandy One purchased approximately 35 acres of undeveloped land in Connoquenessing Township, Butler County, PA
in October 2001. The LLC has begun development work for the purpose of constructing 112 quadplex homes. ESB is providing financing for the project. As of December 31, 2006, Brandy One had outstanding loans with ESB in the amount of $2.7 million
with an outstanding balance of $135,000. As of December 31, 2006, all 112 units were sold and closed. After completing the development and construction of the 112 units, two parcels of land remained. One of these parcels was listed for sale and
the second parcel consisting of 2.2 acres was developed for 15 townhouses known as Napa Ridge. At December 31, 2006, eight of the townhouse unites were under construction and there was no sales activity. On that date, AMSCO had a $33,000
investment in Brandy One.

The fifth joint venture, The Vineyards at Brandywine, consists of a 51% interest in a limited partnership (LP)
with a local developer/builder. The Vineyards at Brandywine purchased a 100-acre site of undeveloped land adjacent to the Brandy One joint venture project in Connoquenessing Township, Butler County, PA in December 2004. The LP has begun development
work for the purpose of developing 75 single-family home lots in two phases, 48 in Phase I and 27 in Phase II, and constructing single-family detached homes thereon. As of December 31, 2006, The Vineyards at Brandywine had outstanding lines of
credit with ESB in the amount of $2.8 million with outstanding balances of $1.7 million. As of December 31, 2006, 5 of the 48 lots in Phase I were sold. On that date, AMSCO had a $122,000 investment in The Vineyards at Brandywine.

The sixth joint venture, Springfield Partners, consists of a 51% interest in a limited partnership (LP) with a local developer. Springfield Partners
purchased a 27 acre site in Cranberry Township, Butler County, in August 2005. The LP began to develop Springfield Manor into a 25 lot single family subdivision. Financing was provided by ESB Bank in the form of a development loan in the amount of
$1.5 million. There was an outstanding loan balance of $608,000 on December 31, 2006. At December 31, 2006, 9 of the 25 lots were sold, and AMSCO had an investment of $439,000 in the partnership.

The seventh joint venture, The Meadows at Hampton, consists of a 51% interest in a limited partnership (LP) with a local developer/contractor. The
partnership purchased a 42 acre site in June 2005 in Hampton Township, Allegheny County. The partnership will develop the site into 32 duplex building lots and construct 64 duplex units. ESB Bank is providing the financing for the project in the
form of two loans, a development loan in the amount of $2.9 million and a line of credit in the amount of $2.5 million for the construction of the units. As of December 31, 2006 there had been no sales activity. The outstanding loan balances at
year-end totaled $3.1 million and AMSCO had an investment of $1.5 million.



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The eighth joint venture, Cobblestone Village, consists of a 51% interest in a limited partnership (LP)
with a local developer/builder. The partnership purchased a 33 acre site in June 2005 in Adams Township, Butler County. The partnership will develop the site into 25 quadplex building lots and construct 25 buildings containing a total of 100 units.
ESB Bank is providing financing in the form of two loans, a development loan in the amount of $4.6 million and a line of credit in the amount of $2.5 million for the construction of the buildings. December 31, 2006, 22 units were closed and 22
units remained in various stages of construction. The outstanding loan balances at year-end were $2.9 million and AMSCO had an investment of $916,000.

The Banks second wholly owned subsidiary, ESB Financial Services, Inc. (EFS), a Delaware corporation, was founded in July of 2000. EFS is engaged in the management of single-family real estate loans through a
participation agreement with the Bank.

An insured state-chartered bank is required to deduct the amount of investment in, and extensions
of credit to, a subsidiary engaged in activities not permissible for national banks. Because the acquisition and development of real estate is not a permissible activity for national banks, the investments in and loans to any subsidiary of the Bank
which are engaged in such activities are subject to exclusion from their respective regulatory capital calculation. See Regulation  Regulation of the Bank  Regulatory Capital Requirements.

REGULATION

Set forth below is a
brief description of certain laws and regulations, which relate to the regulation of the Company and the Bank. The description of these laws and regulations, as well as descriptions of laws and regulations contained elsewhere herein 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 is a registered savings and loan holding company pursuant to the Home Owners Loan
Act, as amended (HOLA). As such, the Company is subject to OTS regulations, examinations, supervision and reporting requirements. As a subsidiary of a savings and loan holding company, ESB is subject to certain restrictions in its dealings with the
Company and affiliates thereof.

Activities Restrictions.  There are generally no restrictions on the activities of a
savings and loan holding company, which controlled only one subsidiary savings association on or before May 4, 1999 (a grandfathered holding company). However, if the Director of the OTS determines that there is reasonable cause to
believe that the continuation by a savings and loan holding company of an activity constitutes a serious risk to the financial safety, soundness or stability of its subsidiary savings association, the Director may impose such restrictions as it
deems necessary to address such risk, including limiting (i) payment of dividends by the savings association; (ii) transactions between the savings association and its affiliates; and (iii) any activities of the savings association
that might create a serious risk that the liabilities of the holding company and its affiliates may be imposed on the savings association. Notwithstanding the above rules as to permissible business activities of unitary savings and loan holding
companies, if the savings association subsidiary of such a holding company fails to meet the qualified thrift lender (QTL) test, then such unitary holding company also shall become subject to the activities restrictions applicable to multiple
savings and loan holding companies and, unless the savings association requalifies as a QTL within one year thereafter, shall register as, and become subject to the restrictions applicable to, a bank holding company. As of December 31, 2006,
the Company was a grandfathered holding company.

If a savings and loan holding company acquires control of a second savings association
and holds it as a separate institution, the holding company becomes a multiple savings and loan holding company. As a general rule, multiple savings and loan holding companies are subject to restrictions on their activities that are not imposed on a
grandfathered holding company. They could not commence or continue any business activity other than: (i) those permitted for a bank holding company under section 4(c) of the Bank Holding Company Act (unless the Director of the OTS by regulation
prohibits or limits such 4(c) activities); (ii) furnishing or performing management services for a subsidiary savings association; (iii) conducting an insurance agency or escrow business; (iv) holding, managing, or liquidating assets
owned by or acquired from a subsidiary savings association; (v) holding or managing properties used or occupied by a subsidiary savings association; (vi) acting as trustee under deeds of trust; or (vii) those activities authorized by
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The HOLA requires every savings association subsidiary of a savings and loan holding company to give the
OTS at least 30 days advance notice of any proposed dividends to be made on its guarantee, permanent or other non-withdrawable stock, or else such dividend will be invalid.

Limitations on Transactions with Affiliates. Transactions between savings associations and any affiliate are governed by Section 11 of the HOLA and Sections 23A and 23B of the Federal
Reserve Act. An affiliate of a savings association is any company or entity which controls, is controlled by or is under common control with the savings association. In a holding company context, the parent holding company of a savings association
(such as the Company) and any companies which are controlled by such parent holding company are affiliates of the savings association. Generally, Section 23A (i) limits the extent to which the savings association or its subsidiaries may
engage in covered transactions with any one affiliate to an amount equal to 10% of such associations capital stock and surplus, and contain an aggregate limit on all such transactions with all affiliates to an amount equal to 20%
of such capital stock and surplus. Section 23B applies to covered transactions as well as certain other transactions and requires that all transactions be on terms substantially the same, or at least favorable, to the association or
subsidiary as those provided to a non-affiliate. The term covered transaction includes the making of loans to, purchase of assets from, issuance of a guarantee to an affiliate and similar transactions. Section 23B transactions also
apply to the provision of services and the sale of assets by a savings association to an affiliate. In addition to the restrictions imposed by Sections 23A and 23B, Section 11 of the HOLA prohibits a savings association from (i) making a
loan or other extension of credit to an affiliate, except for any affiliate which engages only in certain activities which are permissible for bank holding companies, or (ii) purchasing or investing in any stocks, bonds, debentures, notes or
similar obligations of any affiliate, except for affiliates which are subsidiaries of the savings association.

In addition, Sections 22(g)
and (h) of the Federal Reserve Act place restrictions on loans to executive officers, directors and principal stockholders. Under Section 22(h), loans to a director, an executive officer and to a greater than 10% stockholder of a savings
institution (a principal stockholder), and certain affiliated interests of either, may not exceed, together with all other outstanding loans to such person and affiliated interests, the savings institutions loans to one borrower
limit (generally equal to 15% of the institutions unimpaired capital and surplus). Section 22(h) also requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in
comparable transactions to other persons unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees of the institution and (ii) does not give preference to any director, executive
officer or principal stockholder, or certain affiliated interests of either, over other employees of the savings institution. Section 22(h) also requires prior board approval for certain loans. In addition, the aggregate amount of extensions of
credit by a savings institution to all insiders cannot exceed the institutions unimpaired capital and surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers. At December 31, 2006, the Bank
was in compliance with the above restrictions.

Restrictions on Acquisitions. Except under limited circumstances, savings and loan
holding companies are prohibited from acquiring, without prior approval of the Director of the OTS, (i) control of any other savings association or savings and loan holding company or substantially all the assets thereof or (ii) more than
5% of the voting shares of a savings association or holding company thereof which is not a subsidiary. Except with the prior approval of the Director of the OTS, no director or officer of a savings and loan holding company or person owning or
controlling by proxy or otherwise more than 25% of such companys stock, may acquire control of any savings association, other than a subsidiary savings association, or of any other savings and loan holding company.

The Director of the OTS may only approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings
associations in more than one state if (i) the multiple savings and loan holding company involved controls a savings association which operated a home or branch office located in the state of the association to be acquired as of March 5,
1987; (ii) the acquirer is authorized to acquire control of the savings association pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act (FDIA); or (iii) the statutes of the state in which the association
to be acquired is located specifically permit institutions to be acquired by the state-chartered banks or savings and loan holding companies located in the state where the acquiring entity is located (or by a holding company that controls such
state-chartered savings associations).

The Federal Reserve Board may approve an application by a bank holding company to acquire control
of a savings association. A bank holding company that controls a savings association may merge or consolidate the assets and liabilities of the savings association with, or transfer assets and liabilities to, any subsidiary bank, which is a member
of the Deposit Insurance Fund (DIF) with the approval of the appropriate federal banking agency and the Federal Reserve Board. As a result of these provisions, there have been a number of acquisitions of savings associations by bank holding
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No company may acquire control of a savings and loan holding company after May 4, 1999, unless the
company is engaged only in activities traditionally permitted to a multiple savings and loan holding company or permitted to a financial holding company under section 4(k) of the Bank Holding Company Act. Existing savings and loan holding companies
and those formed pursuant to an application filed with the OTS before May 4, 1999 (see Activities Restrictions and grandfathered holding companies above) may engage in any activity including non-financial or commercial
activities provided such companies control only one savings and loan association that meets the QTL test. Corporate reorganizations are permitted, but the transfer of grandfathered unitary thrift holding company status through acquisition is not
permitted.

Sarbanes-Oxley Act of 2002.On July 30, 2002, President George W. Bush signed into law the
Sarbanes-Oxley Act of 2002, which generally establishes a comprehensive framework to modernize and reform the oversight of public company auditing, improve the quality and transparency of financial reporting by those companies and strengthen the
independence of auditors. Among other things, the new legislation (i) created a public company accounting oversight board which is empowered to set auditing, quality control and ethics standards, to inspect registered public accounting firms,
to conduct investigations and to take disciplinary actions, subject to SEC oversight and review; (ii) strengthened auditor independence from corporate management by, among other things, limiting the scope of consulting services that auditors
can offer their public company audit clients; (iii) heightened the responsibility of public company directors and senior managers for the quality of the financial reporting and disclosure made by their companies; (iv) adopted a number of
provisions to deter wrongdoing by corporate management; (v) imposed a number of new corporate disclosure requirements; (vi) adopted provisions which generally seek to limit and expose to public view possible conflicts of interest affecting
securities analysts; and (vii) imposed a range of new criminal penalties for fraud and other wrongful acts, as well as extended the period during which certain types of lawsuits can be brought against a company or its insiders.

Regulation of the Bank

General.  In January 2004, the Bank converted from a federal chartered savings bank to a Pennsylvania chartered savings bank. As a Pennsylvania chartered savings 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 which are applicable to banks regulate, among other things, the scope of their business,
their investments, their reserves against deposits, the timing of the availability of deposited funds and the nature and amount of and collateral for certain loans. There are periodic examinations by the Department and the FDIC to test the
Banks compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the insurance fund
and depositors. The regulatory structure also gives the regulatory authorities 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 Congress could have a material adverse impact on the Bank and its operations. The Bank is
also a member of the FHLB of Pittsburgh and is subject to certain limited regulation by the Federal Reserve Board.

Pennsylvania Savings
Bank Law.  The Pennsylvania Banking Code of 1965, as amended (Banking Code) contains detailed provisions governing the organization, location of offices, rights and responsibilities of directors, officers, employees and members, as
well as corporate powers, savings and investment operations and other aspects of the Bank and its affairs. The Banking Code delegates extensive rulemaking power and administrative discretion to the Department so that the supervision and regulation
of state-chartered savings banks may be flexible and readily responsive to changes in economic conditions and in savings and lending practices.

One of the purposes of the Banking Code is to provide savings banks with the opportunity to be competitive with each other and with other financial institutions existing under other Pennsylvania laws and other state, federal and foreign
laws. A Pennsylvania savings bank may locate or change the location of its principal place of business and establish an office anywhere in Pennsylvania, with the prior approval of the Department.

The Department generally examines each savings bank no less frequently than once every two years. Although the Department may accept the examinations and
reports of the FDIC in lieu of the Departments examination, the present practice is for the Department to conduct individual examinations. The Department may order any savings bank to discontinue any violation of law or unsafe or unsound
business practice and may direct any director, trustee, officer, attorney or employee of a savings bank engaged in an objectionable activity, after the Department has ordered the activity to be terminated, to show cause at a hearing before the
Department why such person should not be removed.



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Interstate Acquisitions.  The Interstate Banking Act allows federal regulators to
approve mergers between adequately capitalized banks from different states regardless of whether the transaction is prohibited under any state law, unless one of the banks home states has enacted a law expressly prohibiting out-of-state
mergers before June 1997. The Commonwealth of Pennsylvania has not opted out of this interstate merger provision. Therefore, the federal provision permitting interstate acquisitions applies to banks chartered in Pennsylvania.
Pennsylvania law, however, retained the requirement that an acquisition of a Pennsylvania institution by a Pennsylvania or a non-Pennsylvania-based holding company must be approved by the Banking Department. The Interstate Act also allows a state to
permit out-of-state banks to establish and operate new branches in this state. Pennsylvania law permits an out of state banking institution to establish a branch office in Pennsylvania only if the laws of the state where that institution is located
would permit an institution chartered under the laws of Pennsylvania to establish and maintain a branch in such other state on substantially the same terms and conditions.

Insurance of Accounts.  The deposits of the Bank are insured to the maximum extent permitted by the DIF, which is administered by the FDIC and is backed by the full faith and
credit of the U.S. Government. As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines
by regulation or order to pose a serious threat to the FDIC.

The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law,
regulation, order or any condition imposed by an agreement with the FDIC. It also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if the institution has no tangible capital. If
insurance of accounts is terminated, the accounts at the institution at the time of the termination, less subsequent withdrawals, shall continue to be insured for a period of six months to two years, as determined by the FDIC. Management is aware of
no existing circumstances, which could result in termination of the Banks deposit insurance.

Under regulations effective
January 1, 2007, the FDIC adopted a new risk-based premium system that provides for quarterly assessments based on an insured institutions ranking in one of four risk categories based upon supervisory and capital evaluations.
Well-capitalized institutions (generally those with CAMELS composite ratings of 1 or 2) are grouped in Risk Category I and assessed for deposit insurance at an annual rate of between five and seven basis points. The assessment rate for an individual
institution is determined according to a formula based on a weighted average of the institutions individual CAMEL component ratings plus either five financial ratios or, in the case of an institution with assets of $10.0 billion or more, the
average ratings of its long-term debt. Institutions in Risk Categories II, III and IV assessed at annual rates of 10, 28 and 43 basis points, respectively.

In addition, all institutions with deposits insured by the FDIC are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation, a mixed-ownership government corporation
established to recapitalize a predecessor to the DIF. The assessment rate for the first quarter of 2007 was 1.22 basis points of insured deposits and it is adjusted quarterly. These assessments will continue until the Financing Corporation bonds
mature in 2019.

Capital Requirements.The FDIC has promulgated regulations and adopted a statement of policy regarding
the capital adequacy of state-chartered banks which, like the Bank, are not members of the Federal Reserve System. The FDICs capital regulations establish a minimum 3.0% Tier I 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 will increase the minimum Tier I leverage ratio for such other banks to 4.0% to 5.0%
or more. Under the FDICs regulation, 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. Leverage 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 qualifying supervisory
goodwill, and certain purchased mortgage servicing rights and purchased credit and relationships.

The FDIC also requires that savings
banks meet a risk-based capital standard. The risk-based capital standard for savings banks requires the maintenance of total capital which is defined as Tier I 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.



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The components of Tier I capital are equivalent to those discussed above under the 3% leverage standard.
The components of supplementary (Tier 2) capital include certain perpetual preferred stock, certain mandatory convertible securities, certain subordinated debt and intermediate preferred stock and general allowances for loan losses. Allowance for
loan losses includable in supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted toward supplementary capital cannot exceed 100% of core capital. At December 31, 2006, the Bank met
each of its capital requirements.

A bank which has less than the minimum leverage capital requirement shall, within 60 days of the date as
of which it fails to comply with such requirement, submit to its FDIC regional director for review and approval a reasonable plan describing the means and timing by which the bank shall achieve its minimum leverage capital requirement. A bank which
fails to file such plan with the FDIC is deemed to be operating in an unsafe and unsound manner, and could subject the bank to a cease-and-desist order from the FDIC. The FDICs regulation also provides that any insured depository institution
with a ratio of Tier I capital to total assets that is less than 2.0% is deemed to be operating in an unsafe or unsound condition pursuant to Section 8(a) of the FDIA and is subject to potential termination of deposit insurance. However, such
an institution will not be subject to an enforcement proceeding thereunder solely on account of its capital ratios if it has entered into and is in compliance with a written agreement with the FDIC to increase its Tier I leverage capital ratio to
such level as the FDIC deems appropriate and to take such other action as may be necessary for the institution to be operated in a safe and sound manner. The FDIC capital regulation also provides, among other things, for the issuance by the FDIC or
its designee(s) of a capital directive, which is a final order issued to a bank that fails to maintain minimum capital to restore its capital to the minimum leverage capital requirement within a specified time period. Such directive is enforceable
in the same manner as a final cease-and-desist order.

The Bank is also subject to more stringent Department capital guidelines. Although
not adopted in regulation form, the Department utilizes capital standards requiring a minimum of 6% leverage capital and 10% risk-based capital. The components of leverage and risk-based capital are substantially the same as those defined by the
FDIC.

Prompt Corrective Action.  Under Section 38 of the FDIA, each federal banking agency is required to implement
a system of prompt corrective action for institutions which it regulates. The federal banking agencies (including the FDIC) have adopted substantially similar regulations to implement Section 38 of the FDIA. Under the regulations, a savings
bank shall be deemed to be (i) well capitalized if it has total risk-based capital of 10.0% or more, has a Tier 1 risk-based ratio of 6.0% or more, has a Tier 1 leverage capital ratio of 5.0% or more and is not subject to any order
or final capital directive to meet and maintain a specific capital level for any capital measure, (ii) adequately capitalized if it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 4.0% or
more and a Tier 1 leverage capital ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of well capitalized, (iii) undercapitalized if it has a total risk-based capital ratio that is
less than 8.0%, a Tier 1 risk-based capital ratio that is less than 4.0% or a Tier 1 leverage capital ratio that is less than 4.0% (3.0% under certain circumstances), (iv) significantly undercapitalized if it has a total risk-based
ratio that is less than 6.0%, a Tier 1 risk-based capital ratio that is less than 3.0% or a Tier 1 leverage capital ratio that is less than 3.0%, and (v) critically undercapitalized if it has a ratio of tangible equity to total
assets that is equal to or less than 2.0%. Section 38 of the FDIA and the regulations promulgated thereunder also specify circumstances under which the FDIC may reclassify a well capitalized savings bank as adequately capitalized and may
require an adequately capitalized savings bank or an undercapitalized savings bank to comply with supervisory actions as if it were in the next lower category (except that the FDIC may not reclassify a significantly undercapitalized savings bank as
critically undercapitalized). At December 31, 2006, the Bank was in the well capitalized category.

Loans-to-One
Borrower Limitation.  With certain limited exceptions, a Pennsylvania-chartered savings bank may lend to a single or related group of borrowers on an unsecured basis an amount equal to no greater than 15% of its capital
accounts.

Activities and Investments of Insured State-Chartered Banks.  Section 24 of the FDIA generally limits the
activities and equity investments of FDIC-insured, state-chartered banks to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or
retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank is not prohibited from, among other things, (i) acquiring or retaining a majority interest in a subsidiary,
(ii) investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership
investments may not exceed 2% of the banks total assets, (iii) acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors, trustees and officers liability insurance coverage or
bankers blanket bond group insurance coverage for insured depository institutions, and (iv) acquiring or retaining the voting shares of a depository institution if certain requirements are met.



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##### Table of Contents

The FDIC has adopted regulations pertaining to the other activity restrictions imposed upon insured
savings banks and their subsidiaries by Section 24. Pursuant to such regulations, insured savings banks engaging in impermissible activities may seek approval from the FDIC to continue such activities. Savings banks not engaging in such
activities but that desire to engage in otherwise impermissible activities either directly or through a subsidiary may apply for approval from the FDIC to do so; however, if such bank fails to meet the minimum capital requirements or the activities
present a significant risk to the FDIC insurance funds, such application will not be approved by the FDIC. Pursuant to this authority, the FDIC has determined that investments in certain majority-owned subsidiaries of insured state banks do not
represent a significant risk to the deposit insurance funds. Investments permitted under that authority include real estate investment activities and securities activities.

Safety and Soundness.  The federal banking agencies, including the FDIC, have implemented rules and guidelines concerning standards for safety and soundness required pursuant to
Section 39 of the FDIA. In general, the standards relate to (1) operational and managerial matters; (2) asset quality and earnings; and (3) compensation. The operational and managerial standards cover (a) internal controls
and information systems, (b) internal audit systems, (c) loan documentation, (d) credit underwriting, (e) interest rate exposure, (f) asset growth, and (g) compensation, fees and benefits. Under the asset quality and
earnings standards, the Bank is required to establish and maintain systems to (i) identify problem assets and prevent deterioration in those assets, and (ii) evaluate and monitor earnings and ensure that earnings are sufficient to maintain
adequate capital reserves. Finally, the compensation standard states that compensation will be considered excessive if it is unreasonable or disproportionate to the services actually performed by the individual being compensated. The federal banking
agencies have also adopted asset quality and earnings standards. If an insured state-chartered bank fails to meet any of the standards promulgated by regulation, then such institution will be required to submit a plan within 30 days to the FDIC
specifying the steps it will take to correct the deficiency. In the event that an insured state-chartered bank fails to submit or fails in any material respect to implement a compliance plan within the time allowed by the federal banking agency,
Section 39 of the FDIA provides that the FDIC must order the institution to correct the deficiency and may (1) restrict asset growth; (2) require the savings bank to increase its ratio of tangible equity to assets; (3) restrict
the rates of interest that the savings institution may pay; or (4) take any other action that would better carry out the purpose of prompt corrective action. The Bank believes that it has been and will continue to be in compliance with each of
the standards as they have been adopted by the FDIC.

Regulatory Enforcement Authority.  Federal banking regulators have
substantial enforcement authority over the financial institutions that they regulate including, 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. Except under certain circumstances, federal law requires public disclosure of final enforcement actions by the federal banking agencies.

Deposit Insurance Reform.On February 8, 2006, President Bush signed into law legislation that merged the
Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF)into the DIF, eliminated any disparities in bank and thrift risk-based premium assessments, reduced the administrative burden of maintaining and operating two separate funds
and establishes certain new insurance coverage limits and a mechanism for possible periodic increases. The legislation also gave the FDIC greater discretion to identify the relative risks all institutions present to the deposit insurance fund and
set risk-based premiums.

Major provisions in the legislation include: maintaining basic deposit and municipal account insurance coverage
at $100,000 but providing for a new basic insurance coverage for retirement accounts of $250,000. Insurance coverage for basic deposit and retirement accounts could be increased for inflation every five years in $10,000 increments beginning in 2011;
providing the FDIC with the ability to set the designated reserve ratio within a range of between 1.15 percent and 1.50 percent, rather than maintaining 1.25 percent at all times regardless of prevailing economic conditions; providing a one-time
assessment credit of $4.7 billion to banks and savings associations in existence on December 31, 1996. The institutions qualifying for the credit may use it to offset future premiums with certain limitations; requiring the payment of dividends
of 100% of the amount that the insurance fund exceeds 1.5% of the estimated insured deposits and the payment of 50% of the amount that the insurance fund exceeds 1.35% of the estimated insured deposits (when the reserve is greater than 1.35% but no
more than 1.5%).



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##### Table of Contents

FEDERAL AND STATE TAXATION

General.  The Company and the Bank are subject to federal income taxation in the same general manner as other corporations with some exceptions, including particularly the
reserve for bad debts discussed below. The following discussion of federal taxation is intended to only summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to the thrifts.

Method of Accounting.  For federal income tax purposes, the Company currently reports its income and expenses on the
accrual method of accounting and uses a tax year ending December 31 for filing its federal income tax returns.

Bad Debt
Reserves.  Prior to 1996, the Bank was permitted under the Code to deduct an annual addition to a reserve for bad debts in determining taxable income, subject to certain limitations. Subsequent to 1995, the Banks bad debt
deduction is based on actual net charge-offs. Bad debt deductions for income tax purposes are included in taxable income of later years only if the Banks base year bad debt reserve is used subsequently for purposes other than to absorb bad
debt losses. Because the Bank does not intend to use the reserve for purposes other than to absorb losses, no deferred income taxes have been provided prior to 1987. Retained earnings at December 31, 2005 (the most recent date for which a tax
return has been filed) include approximately $17.7 million representing such bad debt deductions for which no deferred income taxes have been provided.

Distributions.  If the Bank distributes cash or property to its sole stockholder, and the distribution is treated as being from its pre-1987 bad debt reserves, the distribution will cause the Bank to
have additional taxable income. A distribution to stockholders is deemed to have been made from pre1987 bad debt reserves to the extent that (a) the distribution exceeds the Banks accumulated earnings and profit subsequent to
December 31, 1951 or (b) the distribution is a non-dividend distribution. A distribution in respect of stock is a non-dividend distribution to the extent that, for federal income tax purposes, (i) it is in redemption of
shares, (ii) it is pursuant to a liquidation of the institution, or (iii) in the case of a current distribution, together with all other such distributions during the taxable year, exceeds the current and post-1951 accumulated earnings and
profits of the Bank. The amount of additional taxable income created by a non-dividend distribution is an amount that when reduced by the tax attributable to it is equal to the amount of the distribution.

Minimum Tax.  For taxable years beginning after December 31, 1986, the Code imposes an alternative minimum tax at a rate of 20%.
The alternative minimum tax generally will apply to a base of regular taxable income plus certain tax preferences (alternative minimum taxable income or AMTI) and will be payable to the extent such AMT tax is in excess of regular income tax. Items
of tax preference that constitute AMTI include (a) tax-exempt interest on newly issued (generally, issued on or after August 8, 1986) private activity bonds other than certain qualified bonds and (b) 75% of the excess (if any) of
(i) adjusted current earnings as defined in the Code, over (ii) AMTI (determined without regard to this preference and prior to reduction by net operating losses). Net operating losses can offset no more than 90% of AMTI. Certain payments
of alternative minimum tax may be used as credits against regular tax liabilities in future years. As of December 31, 2006, the Company has a minimum tax credit carry forward of $3.3 million.

Pennsylvania Taxation.  The Company is subject to the Pennsylvania Corporate Net Income Tax and Capital Stock and Franchise Tax. The
Corporate Net Income Tax rate is currently 9.99% and is imposed on the Companys unconsolidated taxable income for federal purposes with certain adjustments. In general, the Capital Stock Tax is a property tax imposed at a rate of 0.489% of a
corporations capital stock value, which is determined in accordance with a fixed formula based on average net income and net worth.

The Bank is subject to tax under the Pennsylvania Mutual Thrift Institutions Tax Act (MITA), which imposes a tax at a rate of 11.5% of a qualified thrift savings institutions net earnings, determined in accordance with generally
accepted accounting principles, as shown on its books. For fiscal years beginning in 1983, and thereafter, net operating losses may be carried forward and allowed as a deduction for three succeeding years. MITA exempts qualified savings institutions
from all other corporate taxes imposed by Pennsylvania for state tax purposes, and from all local taxes imposed by political subdivisions thereof, except taxes on real estate and real estate transfers. Interest earned on U.S. and Commonwealth of
Pennsylvania government obligations are exempt from MITA income tax.

Other Matters.  The Company and its subsidiaries
file a consolidated federal income tax return. Tax years 2003, 2004 and 2005 are open under the statute of limitations and subject to review by the Internal Revenue Service.



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Personnel

As of December 31, 2006, the Company had 217 full-time and 65 part-time employees, respectively. The employees are not represented by a collective bargaining unit, and the Company considers its relationship with
its employees to be good.

Availability of Information

The Company makes available on its website, which is located at www.esbbank.com, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K on the date which
these reports are filed electronically with the SEC and the Companys Code of Ethics. Investors are encouraged to access these reports and other information about the Companys business and operations on the website.



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##### Table of Contents

Item 1A. Risk Factors

In analyzing whether to make or to continue an investment in our
securities, investors should consider, among other factors, the following risk factors.

Our results of operations are significantly
dependent on economic conditions and related uncertainties.

Commercial banking is affected, directly and indirectly, by domestic and
international economic and political conditions and by governmental monetary and fiscal policies. Conditions such as inflation, recession, unemployment, volatile interest rates, real estate values, government monetary policy, international
conflicts, the actions of terrorists and other factors beyond our control may adversely affect our results of operations. Changes in interest rates, in particular, could adversely affect our net interest income and have a number of other adverse
effects on our operations, as discussed in the immediately succeeding risk factor. Adverse economic conditions also could result in an increase in loan delinquencies, foreclosures and nonperforming assets and a decrease in the value of the property
or other collateral which secures our loans, all of which could adversely affect our results of operations. We are particularly sensitive to changes in economic conditions and related uncertainties in Western Pennsylvania because we derive
substantially all of our loans, deposits and other business from this area. Accordingly, we remain subject to the risks associated with prolonged declines in national or local economies.

Changes in interest rates could have a material adverse effect on our operations.

The operations of financial institutions such as us are dependent to a large extent on net interest income, which is the difference between the interest income earned on interest-earning assets such as loans and investment securities and
the interest expense paid on interest-bearing liabilities such as deposits and borrowings. Changes in the general level of interest rates can affect our net interest income by affecting the difference between the weighted average yield earned on our
interest-earning assets and the weighted average rate paid on our interest-bearing liabilities, or interest rate spread, and the average life of our interest-earning assets and interest-bearing liabilities. Changes in interest rates also can affect
our ability to originate loans; the value of our interest-earning assets and our ability to realize gains from the sale of such assets; our ability to obtain and retain deposits in competition with other available investment alternatives; the
ability of our borrowers to repay adjustable or variable rate loans; and the fair value of the derivatives carried on our balance sheet, derivative hedge effectiveness testing and the amount of ineffectiveness recognized in our earnings. Interest
rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Although we believe that the estimated maturities of our
interest-earning assets currently are well balanced in relation to the estimated maturities of our interest-bearing liabilities (which involves various estimates as to how changes in the general level of interest rates will impact these assets and
liabilities), there can be no assurance that our profitability would not be adversely affected during any period of changes in interest rates.

There are increased risks involved with multi-family residential, commercial real estate, commercial business and consumer lending activities.

Our lending activities include loans secured by existing multi-family residential and commercial real estate. In addition, from time to time we originate loans for the construction of multi-family residential real
estate and land acquisition and development loans. Multi-family residential, commercial real estate and construction lending generally is considered to involve a higher degree of risk than single-family residential lending due to a variety of
factors, including generally larger loan balances, the dependency on successful completion or operation of the project for repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of
the loan over its term and, instead, provide for a balloon payment at stated maturity. Our lending activities also include commercial business loans to small to medium businesses, which generally are secured by various equipment, machinery and other
corporate assets, and a wide variety of consumer loans, including home improvement loans, home equity loans, education loans and loans secured by automobiles, boats, mobile homes, recreational vehicles and other personal property. Although
commercial business loans and leases and consumer loans generally have shorter terms and higher interests rates than mortgage loans, they generally involve more risk than mortgage loans because of the nature of, or in certain cases the absence of,
the collateral which secures such loans.

Our allowance for losses on loans and leases may not be adequate to cover probable losses.

We have established an allowance for loan losses which we believe is adequate to offset probable losses on our existing loans and
leases. There can be no assurance that any future declines in real estate market conditions, general economic conditions or changes in regulatory policies will not require us to increase our allowance for loan and lease losses, which would adversely
affect our results of operations.



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We are subject to extensive regulation which could adversely affect our business and operations.

We and our subsidiaries are subject to extensive federal and state governmental supervision and regulation, which are intended
primarily for the protection of depositors. In addition, we and our subsidiaries are subject to changes in federal and state laws, as well as changes in regulations, governmental policies and accounting principles. The effects of any such potential
changes cannot be predicted but could adversely affect the business and operations of us and our subsidiaries in the future.

We face
strong competition which may adversely affect our profitability.

We are subject to vigorous competition in all aspects and areas of
our business from banks and other financial institutions, including savings and loan associations, savings banks, finance companies, credit unions and other providers of financial services, such as money market mutual funds, brokerage firms,
consumer finance companies and insurance companies. We also compete with non-financial institutions, including retail stores that maintain their own credit programs and governmental agencies that make available low cost or guaranteed loans to
certain borrowers. Certain of our competitors are larger financial institutions with substantially greater resources, lending limits, larger branch systems and a wider array of commercial banking services. Competition from both bank and non-bank
organizations will continue.

Our ability to successfully compete may be reduced if we are unable to make technological advances.

The banking industry is experiencing rapid changes in technology. In addition to improving customer services, effective use of
technology increases efficiency and enables financial institutions to reduce costs. As a result, our future success will depend in part on our ability to address our customers needs by using technology. We cannot assure you that we will be
able to effectively develop new technology-driven products and services or be successful in marketing these products to our customers. Many of our competitors have far greater resources than we have to invest in technology.

We and our banking subsidiary are subject to capital and other requirements which restrict our ability to pay dividends.

Our ability to pay dividends to our shareholders depends to a large extent upon the dividends we receive from ESB Bank. Dividends paid by the Bank are
subject to restrictions under Pennsylvania and federal laws and regulations. In addition, ESB Bank must maintain certain capital levels, which may restrict the ability of the Bank to pay dividends to us and our ability to pay dividends to our
shareholders.

Holders of our common stock have no preemptive rights and are subject to potential dilution.

Our articles of incorporation do not provide any shareholder with a preemptive right to subscribe for additional shares of common stock upon any increase
thereof. Thus, upon the issuance of any additional shares of common stock or other voting securities of the Company or securities convertible into common stock or other voting securities, shareholders may be unable to maintain their pro rata voting
or ownership interest in us.

Item 1B. Unresolved Staff Comments

Not Applicable



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##### Table of Contents

Item 2. Properties

The following table sets forth certain information with respect to the offices
and real property of the Company as of December 31, 2006:



|                                             |  |               |  |                     |  |                             |           |                         |      |  
|-------------------------------------------- |  | ------------- |  | ------------------- |  | --------------------------- | --------- | ----------------------- | ---- | -
|Location                                     |  | OwnedorLeased |  | LeaseExpirationDate |  | Net BookValue orAnnual Rent |           | Percentof TotalDeposits |     
|                                             |  |               |  |                    
|Corporate Headquarters and ESB Main Office:  |  |               |  |                     |  |                             |           |                         |      |  
|Ellwood City Office                          |  | Owned         |  | --                  |  | $                           | 1,522,612 |                         | 15.0 | %
|600 Lawrence Avenue, Ellwood City, PA 16117  |  |               |  |                     |  |                             |           |                         |      |  
|ESB Branch Offices:                          |  |               |  |                     |  |                             |           |                         |      |  
|Aliquippa Office                             |  | Owned         |  | --                  |  | $                           | 51,117    |                         | 5.1  | %
|2301 Sheffield Road, Aliquippa, PA 15001     |  |               |  |                     |  |                             |           |                         |      |  
|Ambridge Office                              |  | Owned         |  | --                  |  | $                           | 74,822    |                         | 5.4  | %
|506 Merchant Street, Ambridge, PA 15003      |  |               |  |                     |  |                             |           |                         |      |  
|Baldwin Office                               |  | Owned         |  | --                  |  | $                           | 672,778   |                         | 4.2  | %
|5035 Curry Road, Pittsburgh, PA 15236        |  |               |  |                     |  |                             |           |                         |      |  
|Beaver Office                                |  | Owned         |  | --                  |  | $                           | 423,465   |                         | 4.5  | %
|701 Corporation Street, Beaver, PA 15009     |  |               |  |                     |  |                             |           |                         |      |  
|Beaver Falls Office                          |  | Owned         |  | --                  |  | $                           | 180,968   |                         | 3.0  | %
|1427 Seventh Avenue, Beaver Falls, PA 15010  |  |               |  |                     |  |                             |           |                         |      |  
|Beechview Office                             |  | Leased        |  | 10/31/10            |  | $                           | 30,000    |                         | 2.1  | %
|1550 Beechview Avenue, Pittsburgh, PA 15216  |  |               |  |                     |  |                             |           |                         |      |  
|Center Township Office                       |  | Owned         |  | --                  |  | $                           | 744,069   |                         | 4.3  | %
|3531 Brodhead Road, Monaca, PA 15061         |  |               |  |                     |  |                             |           |                         |      |  
|Chippewa Township Office                     |  | Owned         |  | --                  |  | $                           | 602,649   |                         | 5.4  | %
|2521 Darlington Road, Beaver Falls, PA 15010 |  |               |  |                     |  |                             |           |                         |      |  
|Coraopolis Office                            |  | Owned         |  | --                  |  | $                           | 69,063    |                         | 2.3  | %
|900 Fifth Avenue, Coraopolis, PA 15108       |  |               |  |                     |  |                             |           |                         |      |  
|Darlington Office                            |  | Owned         |  | --                  |  | $                           | 207,974   |                         | 1.3  | %
|233 Second Street, Darlington, PA 16115      |  |               |  |                     |  |                             |           |                         |      |  
|Fox Chapel Office                            |  | Owned         |  | --                  |  | $                           | 185,601   |                         | 5.6  | %
|1060 Freeport Road, Pittsburgh, PA 15238     |  |               |  |                     |  |                             |           |                         |      |  
|Franklin Township Office                     |  | Owned         |  | --                  |  | $                           | 494,195   |                         | 5.1  | %
|1793 Mercer Road, Ellwood City, PA 16117     |  |               |  |                     |  |                             |           |                         |      |  
|Hopewell Township Office                     |  | Owned         |  | --                  |  | $                           | 219,867   |                         | 3.2  | %
|2293 Broadhead Road, Aliquippa, PA 15001     |  |               |  |                     |  |                             |           |                         |      |  
|Neshannock Township Office                   |  | Owned         |  | --                  |  | $                           | 1,354,202 |                         | 2.2  | %
|3360 Wilmington Road, New Castle, PA 16105   |  |               |  |                     |  |                             |           |                         |      |  
|New Brighton Office                          |  | Owned         |  | --                  |  | $                           | 38,039    |                         | 2.5  | %
|800 Third Avenue, New Brighton, PA 15066     |  |               |  |                     |  |                             |           |                         |      |  
|North Shore Office                           |  | Owned         |  | --                  |  | $                           | 39,108    |                         | 2.5  | %
|807 Middle Street, Pittsburgh, PA 15212      |  |               |  |                     |  |                             |           |                         |      |  
|Northern Lights Office                       |  | Leased        |  | 04/30/08            |  | $                           | 30,000    |                         | 2.9  | %
|1555 Beaver Road, Baden, PA 15005            |  |               |  |                     |  |                             |           |                         |      |  
|Shenango Township Office                     |  | Leased        |  | 04/30/07            |  | $                           | 50,160    |                         | 6.8  | %
|2656 Ellwood Road, New Castle, PA 16101      |  |               |  |                     |  |                             |           |                         |      |  
|Spring Hill Office                           |  | Owned         |  | --                  |  | $                           | 378,519   |                         | 2.6  | %
|Itin & Rhine Streets, Pittsburgh, PA 15212   |  |               |  |                     |  |                             |           |                         |      |  
|Troy Hill Office                             |  | Owned         |  | --                  |  | $                           | 367,023   |                         | 4.6  | %
|1706 Lowrie Street, Pittsburgh, PA 15212     |  |               |  |                     |  |                             |           |                         |      |  
|Wexford Office                               |  | Owned         |  | --                  |  | $                           | 1,179,921 |                         | 5.8  | %
|101 Wexford Bayne Road, Wexford, PA 15090    |  |               |  |                     |  |                             |           |                         |      |  
|Zelienople Office                            |  | Leased        |  | 11/30/07            |  | $                           | 18,000    |                         | 3.6  | %
|17 Northgate Plaza, Harmony, PA 16037        |  |               |  |                     |  |                             |           |                         |      |  



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Item 2. Properties  Continued



|                                                |  |               |  |                     |  |                             |         |                             |   
|----------------------------------------------- |  | ------------- |  | ------------------- |  | --------------------------- | ------- | --------------------------- | --
|Location                                        |  | OwnedorLeased |  | LeaseExpirationDate |  | Net BookValue orAnnual Rent |         | Percent    of TotalDeposits
|Other Properties:                               |  |               |  |                     |  |                             |         |                             |   
|Drive-through Facility                          |  | Owned         |  | --                  |  | $                           | 23,518  |                             | NA
|618 Beaver Avenue, Ellwood City, PA 16117       |  |               |  |                     |  |                             |         |                             |   
|Parking Lot                                     |  | Owned         |  | --                  |  | $                           | 17,639  |                             | NA
|611 Lawrence Avenue, Ellwood City, PA 16117     |  |               |  |                     |  |                             |         |                             |   
|Training Center                                 |  | Owned         |  | --                  |  | $                           | 82,135  |                             | NA
|632 Lawrence Avenue, Ellwood City, PA 16117     |  |               |  |                     |  |                             |         |                             |   
|Findlay Township Property                       |  | Owned         |  | --                  |  | $                           | 54,000  |                             | NA
|Route 30, Clinton, PA 15026                     |  |               |  |                     |  |                             |         |                             |   
|North Shore Property                            |  | Leased        |  | 02/28/10            |  | $                           | 71,622  |                             | NA
|One North Shore, Suite 120, Pittsburgh PA 15212 |  |               |  |                     |  |                             |         |                             |   
|Shenango Township Property under Construction   |  | Owned         |  | --                  |  | $                           | 792,162 |                             | NA
|2731 Ellwood Road, New Castle, PA 16101         |  |               |  |                     |  |                             |         |                             |   
|Rental Property                                 |  | Owned         |  | --                  |  | $                           | 182,709 |                             | NA
|628 Lawrence Avenue, Ellwood City, PA 16117     |  |               |  |                     |  |                             |         |                             |   
|Rental Property                                 |  | Owned         |  | --                  |  | $                           | 51,706  |                             | NA
|914 5th Avenue, Coraopolis, PA 15108            |  |               |  |                     |  |                             |         |                             |   
|Rental Property                                 |  | Owned         |  | --                  |  | $                           | 62,088  |                             | NA
|926 5th Avenue, Coraopolis, PA 15108            |  |               |  |                     |  |                             |         |                             |   
|                                               

Item 3. Legal Proceedings

The Company is subject to a number of asserted and unasserted potential
legal claims encountered in the normal course of business. In the opinion of management, there is no present basis to conclude that the resolution of these claims will have a material adverse impact on the consolidated financial condition or results
of operations of the Company

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

Not Applicable



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##### Table of Contents

PART II

Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equities

The information required herein is incorporated by reference from the section captioned Stock and Dividend Information of the Companys 2006 Annual Report to Stockholders included as Exhibit 13 hereto
(2006 Annual Report).

The following table sets forth information with respect to purchases made by or on behalf of the Company of shares
of common stock of the Company during indicated periods.



|                    |  |                                 |  |                             |  |                                                                     |  |                                                                                
|------------------- |  | ------------------------------- |  | --------------------------- |  | ------------------------------------------------------------------- |  | -------------------------------------------------------------------------------
|Period              |  | Total Number ofShares Purchased |  | Average PricePaid per Share |  | Total Number ofShares as Part ofPublicly AnnouncedPlans or Programs |  | Maximum Number ofShares that May YetBe Purchased
Underthe Plans or Programs (1)
|                    |  |                                 |  |                            
|October 1-31, 2006  |  | 3,172                           |  | $    10.68                  |  | 3,172                                                               |  | 502,163                                                                        
|                    |  |                                 |  |                            
|November 1-30, 2006 |  | 3,471                           |  | 10.65                       |  | 3,471                                                               |  | 498,692                                                                        
|                    |  |                                 |  |                            
|December 1-31, 2006 |  | 141,434                         |  | 11.63                       |  | 141,434                                                             |  | 357,258                                                                        
|                    |  |                                
|                    |  |                                 |  |                            
|Totals              |  | 148,077                         |  | $    11.59                  |  | 148,077                                                             |  | 357,258                                                                        
|                    |  |                                
|                   

(1) On March 6, 2006, the Company announced its current program to repurchase up to 5% of the
outstanding shares of common stock of the Company, or 656,600 shares. The program does not have an expiration date and all shares are purchased in the open market or by privately negotiated transactions, as in the opinion of management, market
conditions warrant.

Item 6. Selected Financial Data

The information required herein is incorporated by reference from
the section captioned Selected Consolidated Financial Data of the Companys 2006 Annual Report.

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

The information required herein is incorporated by reference from the section captioned Managements Discussion and Analysis of Financial Condition and Results of Operations of the Companys 2006 Annual Report.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The information required herein
is incorporated by reference from the section captioned Managements Discussion and Analysis of Financial Condition and Results of Operations  Asset and Liability Management of the Companys 2006 Annual Report.

Item 8. Financial Statements and Supplementary Data

The information required herein is incorporated
by reference from the sections captioned Consolidated Financial Statements, Notes to Consolidated Financial Statements, Managements Responsibility for Financial Statements, Report on Managements
Assessment of Internal Controls Over Financial Reporting, Report of Independent Registered Public Accounting Firm (which report relates to managements assessment of internal controls), and the Report of S R Snodgrass,
A.C., Independent Registered Public Accounting Firm of the Companys 2006 Annual Report.

The following is the report of
Ernst & Young on the Companys 2004 financial statements. Ernst & Young were the Companys independent registered accounting firm during this period.



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Report of Independent Registered Public Accounting Firm





The Board of
Directors and Stockholders of

ESB Financial Corporation

We have audited the accompanying consolidated statements of operations, changes in stockholders equity, and cash flows of ESB Financial Corporation and subsidiaries for the year ended December 31, 2004.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash
flows of ESB Financial Corporation and subsidiaries for the year ended December 31, 2004, in conformity with U. S. generally accepted accounting principles.



/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania

March 8, 2005

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

Not
applicable

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and
Procedures.  As of December 31, 2006, an evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer and Chief Financial Officer, on the
effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Companys management,
including the Chief Executive Officer and Chief Financial Officer, concluded that the Companys disclosure controls and procedures were effective as of December 31, 2006.

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed by the Company in its reports filed and
submitted under the Securities Exchange Act of 1934, as amended (Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports filed under the Exchange Act is accumulated and communicated to the
Companys management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management Report on Internal Control over Financial Reporting.The Companys management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Managements assessment of internal control over financial reporting for the fiscal year ended December 31, 2006 is included in Item 8.



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Accountants Report.Managements assessment of the effectiveness of the
Companys internal control over financial reporting as of December 31, 2006 has been audited by S R Snodgrass, A.C., an independent registered public accounting firm, as stated in its report included in Item 8.

Changes in Internal Controls Over Financial Reporting.  No change in the Companys internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

Item 9B. Other Information

Not applicable

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required herein is
incorporated by reference from the section captioned Election of Directors of the Proxy Statement.

Item 11. Executive Compensation

The information required herein is incorporated by reference from
the section captioned Compensation of Directors and Executive Officers of the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required herein is incorporated by reference from the sections captioned Beneficial Ownership of the Proxy Statement.

The following information sets forth certain information for all equity compensation plans and individual compensation agreements (whether with employees or non-employees, such as directors) in effect as of
December 31, 2006.



|                                                           |  |                                                                                                 |  |                                                                                 |  |                                                                                                                                               
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|Equity Compensation Plan Information                      
|Plan Category                                              |  | Number of securities to beissued upon exercise ofoutstanding options,warrants and rights (1)(2) |  | Weighted-average exerciseprice of outstandingoptions, warrants andrights (1)(2) |  | Number of securitiesremaining availablefor future issuanceunder equitycompensations plans(excluding securitiesreflected in the
firstcolumn)(2)
|                                                           |  |                                                                                                 |  |                                                                                 |  |                                                                                                                                               
|Equity compensation plans approved by security holders     |  | 903,001                                                                                         |  | $10.16                                                                          |  | 557,592                                                                                                                                       
|Equity compensation plans not approved by security holders |  | --                                                                                              |  | --                                                                              |  | --                                                                                                                                            
|                                                           |  |                                                                                                 |  |                                                                                 |  |                                                                                                                                               
|Total                                                      |  | 903,001                                                                                         |  | $10.16                                                                          |  | 557,592                                                                                                                                       
|                                                           |  |                                                                                                 |  |                                                                                 |  |                                                                                                                                               

---



|(1) | Includes outstanding options granted under the 1990 Stock Option Plan and the 1992 Stock Incentive Plan, which were approved by security holders and have
expired. No additional options may be granted under these plans.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The table does not include information for equity compensation plans assumed by the Company in connection with acquisitions of the companies which originally
established those plans. As of December 31, 2006, a total of 42,103 shares of common stock were issuable with a weighted-average exercise price of $4.05 upon exercise of outstanding options and 16,725 shares of restricted stock were outstanding
which had not yet vested under those assumed plans. No additional options and 11,220 shares of restricted stock may be granted under the assumed plans.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Item 13. Certain Relationships and Related Transactions

The information required herein is
incorporated by reference from the subsection captioned Certain Relationships and Related Transactions of the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required herein is incorporated by
reference from the sections captioned Ratification of Selection of Independent Registered Public Accounting Firm  Auditor Fees and -Pre-Approval Policy and Procedures of the Proxy Statement.



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PART IV

Item 15. Exhibits and Financial Statement Schedules



|(a) | DOCUMENTS FILED AS PART OF THIS REPORT
|--- | --------------------------------------



|    |  |     |  |                                                                                                                                                                                                                                                                                                 
|--- |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  |     |  | The following financial statements are incorporated by reference from Item 8 hereof (See Exhibit 13):                                                                                                                                                                                           
|    |  |    
|    |  |     |  | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                         
|    |  |    
|    |  |     |  | Consolidated Statements of Financial Condition as of December 31, 2006 and 2005                                                                                                                                                                                                                 
|    |  |    
|    |  |     |  | Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004                                                                                                                                                                                                      
|    |  |    
|    |  |     |  | Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2006, 2005 and 2004                                                                                                                                                                                 
|    |  |    
|    |  |     |  | Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004                                                                                                                                                                                                      
|    |  |    
|    |  |     |  | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                      
|    |  |    
|(2) |  |     |  | All schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because of the absence of conditions under which they are
required or because the required information is included in the Consolidated Financial Statements and related notes thereto.
|    |  |    
|(3) |  | (a) |  | The following exhibits are filed as part of this Form 10-K, and this list includes the Exhibit Index.                                                                                                                                                                                           



No.





Exhibits3  (a)





Amended and Restated Articles of Incorporation (1)3  (b)





Bylaws(1)4





Specimen Common Stock Certificate (2)10(a)





Employee Stock Ownership Plan (2)(5)10(b)





Ellwood Federal Savings Bank 1990 Stock Option Plan (2)(5)10(c)





PennFirst Bancorp, Inc. 1992 Stock Incentive Plan (3)(5)10(d)





PennFirst Bancorp, Inc. Amended and Restated 1997 Stock Option Plan(4)(5)10(e)





ESB Financial Corporation Amended and Restated 2001 Stock Option Plan(4)(5)10(f)





ESB Financial Corporation Amended and Restated 2005 Stock Incentive Plan(4)(5)10(g)





Amended and Restated Workingmens Bank Restricted Stock Plan and Trust Agreement (4)(5)10(h)





Amended and Restated Troy Hill Bancorp, Inc. Recognition and Retention Plan for Officers and Trust Agreement (4)(5)10(i)





Amended and Restated Troy Hill Bancorp, Inc. Recognition and Retention Plan for Directors and Trust Agreement(4)(5)10(j)





Amended and Restated Employment Agreement between ESB Financial Corporation and Charlotte A. Zuschlag, dated as of November 21, 2006(4)(5)10(k)





Amended and Restated Employment Agreement between ESB Bank and Charlotte A. Zuschlag, dated as of November 21, 2006(4)(5)10(l)





Form of Amended and Restated Change in Control Agreement among ESB Financial Corporation, ESB Bank and each of the following Group Senior Vice Presidents of ESB Financial
Corporation: Charles P. Evanoski, Frank D. Martz, Todd F. Palkovich and Thomas F. Angotti(4)(5)10(m)





Form of Amended and Restated Change in Control Agreement among ESB Financial Corporation, ESB Bank and certain Senior Vice Presidents of ESB Financial Corporation and ESB
Bank(4)(5)10(n)





Amended and Restated Supplemental Executive Retirement Plan of ESB Financial Corporation and ESB Bank(4)(5)10(o)





ESB Financial Corporation Excess Benefit Plan(5)(6)10(p)





Amendment to the ESB Financial Corporation Excess Benefit Plan(5)(7)10(q)





Form of Amended and Restated Director Retirement Agreement entered into between ESB Financial Corporation, ESB Bank and each director of ESB Financial
Corporation(4)(5)10(r)





Form of Amended and Restated Director Retirement Agreement entered into between ESB Bank and each director of ESB Bank(4)(5)13





2006 Annual Report to Shareholders (7)




35



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##### Table of Contents

21





Subsidiaries of the Registrant - Reference is made to Item 1. Business - Subsidiaries for the required information.23.1





Consent of S R Snodgrass, A.C. (7)23.2





Consent of Ernst & Young LLP (7)31.1





Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002
(7)31.2





Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002
(7)32.1





Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (7)32.2





Certification of the Chief Financial Officer Pursuant Section 906 of the Sarbanes-Oxley Act of 2002 (7)(1)

Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on March 27, 1991.(2)

Incorporated by reference from the Registration Statement on Form S-4 (Registration No. 33-39219) filed by the Company with the SEC on March 1,
1991.(3)

Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on November 22, 2006.(4)

Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on March 30, 1998.(5)

Management contract or compensatory plan or arrangement.(6)

Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on March 27, 2003.(7)

Filed herewith


The Company has no instruments defining the rights of holders of its long-term debt where
the amount of securities authorized under any such instrument exceeds 10% of the total assets of the Company and its subsidiaries on a consolidated basis. The Company hereby agrees to furnish a copy of any such instrument, where the amount of
securities is less than 10% of total assets of the Company, to the SEC upon request.



| | (b) | See (a)(3) above for all exhibits filed herewith and the exhibit index.
| | --- | -----------------------------------------------------------------------

| | (c) | There are no other financial statements and financial statement schedules which were excluded from the 2006 Annual Report, which are required to be included
herein.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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.



|                     |  |     |  |                                      
|-------------------- |  | --- |  | -------------------------------------
|                     |  |     |  | ESB FINANCIAL CORPORATION            
|                     |  |    
|Date: March 12, 2007 |  | By: |  | /s/  Charlotte A. Zuschlag           
|                     |  |     |  | Charlotte A. Zuschlag                
|                     |  |     |  | President and Chief Executive Officer
|                     |  |     |  | (Duly Authorized Representative)     

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



|    |  |                                                         |  |  |  |                     
|--- |  | ------------------------------------------------------- |  |  |  | --------------------
|By: |  | /s/  Charlotte A. Zuschlag                              |  |  |  | Date: March 12, 2007
|    |  | Charlotte A. Zuschlag                                   |  |  |  |                     
|    |  | President and Chief Executive Officer, Director         |  |  |  |                     
|    |  | (Principal Executive Officer)                           |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  Charles P. Evanoski                                |  |  |  | Date: March 12, 2007
|    |  | Charles P. Evanoski                                     |  |  |  |                     
|    |  | Group Senior Vice President and Chief Financial Officer |  |  |  |                     
|    |  | (Principal Financial and Accounting Officer)            |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  William B. Salsgiver                               |  |  |  | Date: March 12, 2007
|    |  | William B. Salsgiver                                    |  |  |  |                     
|    |  | Chairman of the Board of Directors                      |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  Herbert S. Skuba                                   |  |  |  | Date: March 12, 2007
|    |  | Herbert S. Skuba                                        |  |  |  |                     
|    |  | Vice Chairman of the Board of Directors                 |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  Charles Delman                                     |  |  |  | Date: March 12, 2007
|    |  | Charles Delman- Director                                |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  Lloyd L. Kildoo                                    |  |  |  | Date: March 12, 2007
|    |  | Lloyd L. Kildoo  Director                              |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  Mario J. Manna                                     |  |  |  | Date: March 12, 2007
|    |  | Mario J. Manna  Director                               |  |  |  |                     
|    |  |                                                         | 
|By: |  | /s/  James P. Wetzel, Jr.                               |  |  |  | Date: March 12, 2007
|    |  | James P. Wetzel, Jr.  Director                         |  |  |  |                     



37