##### Table of Contents

Exhibit 13

LOGO

2010 Annual Report

LOGO

Award Winning,

Growth Oriented,

And Community Focused

LOGO



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##### Table of Contents

VALUES WE SHARE



|                    |  |   |                                                                     |                                                                                                                                                                                                                                         
|------------------- |  | - | ------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |  |  
|Our Purpose:        |  | C |                                                                     | USTOMER SATISFACTION                                                                                                                                                                                                                    
|                    |  |   | Strive to exceed customer
expectations                            
|                    |  |   |                                                                     | Listen, understand
and respond to customer needs
Serve in a friendly,
professional, caring way, adding that personal touch
Earn confidence and
loyalty of customers through exceptional service                                      
|                    |  |  
|Our Foundation:     |  | I |                                                                     | NTEGRITY                                                                                                                                                                                                                                
|                    |  |   | Uncompromising, adhere to highest
professional and personal ethics
|                    |  |   |                                                                     | Accept
responsibility, fulfill commitments and maintain credibility Actions founded on honesty, fairness and trust Do whats right                                                                                                   
|                    |  |  
|Our Goal:           |  | E |                                                                     | XCELLENCE                                                                                                                                                                                                                               
|                    |  |   | Approach responsibilities with
passion and commitment             
|                    |  |   |                                                                     | Consistently endeavor
to do the best job possible
Committed to the
concept of rising expectations and continual improvement Set challenging goals, learn from mistakes, demonstrate innovation and creativity and attention to detail
|                    |  |  
|Our Style:          |  | T |                                                                     | EAMWORK                                                                                                                                                                                                                                 
|                    |  |   | Value diversity and the contributions
of others                   
|                    |  |   |                                                                     | Share information and
expertise
Build trust and
relationships through open candid communication
Enthusiastically work
together to achieve common goals                                                                               
|                    |  |  
|Our Responsibility: |  | C |                                                                     | OMMUNITY INVOLVEMENT                                                                                                                                                                                                                    
|                    |  |   | Give time, skills and resources to
improve our communities        
|                    |  |   |                                                                     | Be a positive role model; strive to
make a difference                                                                                                                                                                                  
|                    |  |  
|Our Strength:       |  | L |                                                                     | EADERSHIP                                                                                                                                                                                                                               
|                    |  |   | Lead by example in both words and
actions                         
|                    |  |   |                                                                     | Stimulate and relish
opportunities for positive change
Recognize
performance, effectively plan and communicate, demand quality Respect others and encourage a balanced life approach                                                 



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##### Table of Contents

|                  |  |                                                                                      |  |  |   | 
|----------------- |  | ------------------------------------------------------------------------------------ |  |  | - | 
|Table of Contents |  |                                                                                      |  |  |   | 
|                  |  |                                                                                     
|                  |  | Consolidated Financial Highlights                                                    |  |  | 2 | 
|                  |  | Letter to Shareholders                                                               |  |  | 4 | 
|                  |  | Selected Consolidated Financial Data                                                 |  |  | 7 | 
|                  |  | Managements Discussion and Analysis ofFinancial Condition and Results of Operations |  |  | 8 | 

| |  |                                                                |  |  |    | 
| |  | -------------------------------------------------------------- |  |  | -- | 
| |  | Consolidated Financial Statements                              |  |  | 29 | 
| |  | Notes to Consolidated Financial Statements                     |  |  | 34 | 
| |  | Report of Independent Registered Public Accounting Firm        |  |  | 81 | 
| |  | Managements Reports to ESB Financial Corporation Shareholders |  |  | 83 | 
| |  | Stock and Dividend Information                                 |  |  | 84 | 
| |  | Corporate Information                                          |  |  | 87 | 
| |  | Board of Directors                                             |  |  | 88 | 
| |  | Corporate Officers, Advisory Board and Bank Officers           |  |  | 91 | 

| |  |                  |  |  |            | 
| |  | ---------------- |  |  | ---------- | 
| |  | Office Locations |  |  | back cover | 

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | 
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|     | 
|     |  | Company Profile                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | 
|     |  | ESB Financial Corporation (NASDAQ: ESBF), a publicly traded financial services company, provides a wide range of retail and
commercial financial products and services to customers in Western Pennsylvania through its wholly owned subsidiary, ESB Bank.                                                                                                                                                                                                                                                                                                                                                
|     | 
|LOGO |  | ESB Bank is a Pennsylvania chartered, FDIC insured stock savings bank which, as of December 31, 2010, conducted business through 24
offices in Allegheny, Beaver, Butler and Lawrence counties, Pennsylvania. To compliment retail and commercial operations conducted through its bank offices, the Company invests in U.S. Government, municipal and mortgage-backed securities through ESB
Bank and through its investment subsidiary, PennFirst Financial Services, Inc., a Delaware corporation.                                                                                                     
|     | 
|     |  | Mission Statement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | 
|     |  | The mission of ESB Financial Corporation and its subsidiaries is to effectively provide for the financial service needs of our customers and
community while creating value for our shareholders. Our mission will be accomplished by growing in a profitable and controlled manner; by identifying and meeting the financial needs of our customers; by offering quality products and services that
are competitively priced and serviced by a knowledgeable, attentive and friendly staff; and by creating a positive work environment that maximizes the alignment of customer and employee objectives.



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##### Table of Contents

Consolidated Financial Highlights



(Dollar amounts in thousands, except share data)

|                                                    |      |                                         |            |      |  |  |            |  |  |  |       | 
|--------------------------------------------------- | ---- | --------------------------------------- | ---------- | ---- |  |  | ---------- |  |  |  | ----- | 
|                                                    |      | As of or for theyear ended December 31, |           
|                                                    | 2010 |                                         |            | 2009 |  |  | Change     | 
|                                                    |      |                                         |           
|Total assets                                        |      |                                         | $1,913,867 |      |  |  | $1,960,677 |  |  |  | (2%)  | 
|                                                    |      |                                         |           
|Securities available for sale                       |      |                                         | 1,077,672  |      |  |  | 1,106,910  |  |  |  | (3%)  | 
|                                                    |      |                                         |           
|Loans receivable, net                               |      |                                         | 640,887    |      |  |  | 671,387    |  |  |  | (5%)  | 
|                                                    |      |                                         |           
|Total deposits                                      |      |                                         | 1,012,645  |      |  |  | 944,347    |  |  |  | 7%    | 
|                                                    |      |                                         |           
|Borrowed funds, including junior subordinated notes |      |                                         | 715,456    |      |  |  | 829,641    |  |  |  | (14%) | 
|                                                    |      |                                         |           
|Stockholders equity                                |      |                                         | 167,353    |      |  |  | 164,752    |  |  |  | 2%    | 
|                                                    |      |                                         |           
|Net interest income                                 |      |                                         | 42,967     |      |  |  | 38,148     |  |  |  | 13%   | 
|                                                    |      |                                         |           
|Net income                                          |      |                                         | 14,231     |      |  |  | 12,012     |  |  |  | 18%   | 
|                                                    |      |                                         |           
|Net income per share (diluted)                      |      |                                         | $1.18      |      |  |  | $1.00      |  |  |  | 18%   | 
|                                                    |      |                                         |           
|Cash dividends declared per share                   |      |                                         | $0.40      |      |  |  | $0.40      |  |  |  | -     | 
|                                                    |      |                                         |           
|Return on average assets                            |      |                                         | 0.73%      |      |  |  | 0.61%      |  |  |  | 20%   | 
|                                                    |      |                                         |           
|Return on average stockholders equity              |      |                                         | 8.26%      |      |  |  | 7.66%      |  |  |  | 8%    | 









|                          |  |   |  |                   
|------------------------- |  | - |  | ------------------
|ESB Financial Corporation |  | 2 |  | 2010 Annual Report



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##### Table of Contents

Consolidated Financial Highlights(continued)





LOGO LOGO


LOGO LOGO








|                          |  |   |  |                   
|------------------------- |  | - |  | ------------------
|ESB Financial Corporation |  | 3 |  | 2010 Annual Report



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##### Table of Contents

Letter to Shareholders



Dear Fellow Shareholders:

I am pleased to present ESB Financial Corporations Annual Report for the year 2010 and to report that the
Company posted record earnings per diluted share of $1.18 on net income of $14.2 million for the year ended December 31, 2010, compared to earnings of $1.00 per diluted share on net income of $12.0 million for the year ended December 31,
2009. This represents our second consecutive year of record earnings.

The Company achieved record financial results in
what was clearly another demanding year for the banking industry. Our performance in this difficult and uncertain operating environment reflects the quality of our organization, the dedication of our employees, the guidance by our Board of Directors
and the focused commitment to our fundamental strategies that have delivered consistent results to our shareholders since 1990.

Throughout our 95-year history, ESB has continually and successfully responded to change. However, we believe that sticking to basics and maintaining our commitment to the strategies that have made us
a leading financial service provider remains a solid roadmap for continued growth and success. In this regard our priorities have not changed and remain:



| |  |  | Focusing on per share results and working diligently to maintain our reputation as a company that creates superior shareholder value;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Being financially conservative and managing our Company to the highest ethical standards;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | Growing the Company in a controlled and safe manner;
| | - |  | ----------------------------------------------------



| |  |  | Maintaining strong credit quality;
| | - |  | ----------------------------------



| |  |  | Continuing to strive to exceed our customer expectations for quality products and services;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | Continuing to make investments in human capital, technology and physical infrastructure to ensure our long-term success;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Continuing to provide a productive work environment that maximizes the alignment of customer and employee objectives and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Seeking and consummating acquisition opportunities when practical.
| | - |  | ------------------------------------------------------------------

Deposit Growth

This last year marked the first year in which our total deposits grew to in excess of one billion dollars. During the last few years we have challenged our employees to actively pursue new customers
through commercial, public and personal checking account relationships. The results have been outstanding, resulting in an increase in core deposits of $51.2 million during 2010. The increase in these lower rate core deposits has fueled the
improvement to our net interest margin.

Dividends

I am also pleased to report that during 2010, the Company maintained its current quarterly cash dividend of $0.10 per share, which
extends our record of paying cash dividends to 82 consecutive quarters. As in previous years, the Board of Directors approved a common stock repurchase program and, for the year, the Company repurchased approximately 80,000 shares with a market
value of $1.1 million.





|                          |  |   |  |                   
|------------------------- |  | - |  | ------------------
|ESB Financial Corporation |  | 4 |  | 2010 Annual Report



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##### Table of Contents

Letter to Shareholders (continued)





Branch Office Expansion

In October 2010, the
Company relocated its Zelienople Office approximately 1.4 miles south of the previous location. This full service facility now affords our customers a large lobby, safe deposit boxes, six teller windows, three drives thru lanes, a full service
24-hour ATM machine and a night drop box.

The Company currently plans to open its 25thoffice at the corner of Rochester Road and Graham Park Drive in
Cranberry Township, Pennsylvania during the fourth quarter of 2011.

More than the Money

At ESB, we define success more broadly than just financial results. We also define it by our community involvement, both financially
and through volunteerism and our commitment and adherence to our Mission Statement, Values We Share Statement and Code of Ethics Policy, which sets forth guidance on the way we do business. We are committed to our customers, to the highest ethical
behavior, to our communities and to continued improvement in every aspect of our business. We invite you to review these essential documents which are easily accessible through our website at www.esbbank.com. Through our Casual for Charity
Day program, nearly $20,000 was donated in 2010 to organizations, including The American Diabetes Association, The American Heart Association, The American Cancer Society and Project Bundle Up.

Recognition

I am very proud to report that in June 2010, SNL Financial rated ESB Financial Corporation 7thout of the nations 100 largest public thrifts, by asset size, based upon financial performance for the 12 months
ended March 31, 2010. This marks the second consecutive year that ESB Financial has ranked 7thon this list. I am also very pleased to report that in September 2010 ESB Financial Corporation was named one of Sandler ONeills Sm-All Stars for the first time. The objective of the Sm-All
Stars list is to identify the top performing small cap banks and thrifts in the nation. I am also very proud to report that in October 2010, ESB Bank was named one of the Best Places to Work in Western Pennsylvania in a competition
sponsored by the Pittsburgh Business Times. ESB Bank received this recognition which is based solely on employee survey results for the fifth time in the past several years.

Remembrance

In June 2010, we lost a dear friend
and board member in Lloyd Kildoo. We remember Lloyd for over 20 years of service, contributions, guidance and accomplishments to the Company. His leadership, keen insights and his magnetic personality will be missed, along with his marvelous sense
of humor. He provided exemplary service to our bank, our community and our shareholders and we will dearly miss Lloyd.

The Year Ahead

With a sound corporate strategy, the hard work and dedication of our employees and the guidance provided by our Board of Directors, I am confident that we have a sound foundation to sustain our
performance, to seize new business opportunities and to initiate new programs that will enhance service to our customers and continue to provide value to our shareholders. As always, we would like to thank all of our customers and our shareholders
for their consistent support and we look forward to opportunities for further growth and profitability in 2011.

I
would like to express my appreciation to the directors, officers and employees of ESB who have all contributed to our success over the past year. We are very fortunate to have such a talented and dedicated group of individuals who are committed to
serving the needs of our customers.





|                          |  |   |  |                   
|------------------------- |  | - |  | ------------------
|ESB Financial Corporation |  | 5 |  | 2010 Annual Report



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##### Table of Contents

Letter to Shareholders (continued)





We invite our shareholders to join us at our annual shareholders meeting to be held Wednesday, April 20th, 2011 at 4:00 p.m. at the Connoquenessing Country Club, 1512 Mercer
Road, Ellwood City, PA. Your attendance will be very much appreciated.

Sincerely,

LOGO

Charlotte A. Zuschlag

President and Chief Executive Officer





|                          |  |   |  |                   
|------------------------- |  | - |  | ------------------
|ESB Financial Corporation |  | 6 |  | 2010 Annual Report



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##### Table of Contents

LOGO

2010 Validations

Record Earnings for the Second Consecutive year!





|     |  |                                                                           
|---- |  | --------------------------------------------------------------------------
|     | 
|LOGO |  | LOGO 
  ESB Bank was voted Best
Places to work in Western PA again
in 2010



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | 
| |  | Sandler ONeill announces their 2010 Sm-All Stars.                                                                                                                                                                                                                                                                                                                                                                       |  | 
| |  | The objective of the Sm-All Stars list is to identify the top performing small cap banks and thrifts in the nation. For the first time, ESBF has been named to this list. Using
various screening methodology, Sandler ONeill eliminated 471 institutions, or 94% of the institutions being evaluated. This means that ESBF performs in the top 6% of all small cap publically traded banks and thrifts in the country. |  | 



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##### Table of Contents

Selected Consolidated Financial Data



(Dollar amounts in thousands, except share data)



|                                                                    |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|------------------------------------------------------------------- |  | ------------------------------- | ---------------------------------------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  |  | - | --------- | 
|                                                                    |  | As of December 31,              |                                         
|Financial Condition Data                                            |  | 2010                            |                                          |  | 2009 |   |           | 2008 |  |   | 2007      |  |  | 2006 |          
|                                                                    |  |                                 |                                          |  |     
|Total assets                                                        |  | $                               | 1,913,867                                |  |      | $ | 1,960,677 |      |  | $ | 1,974,839 |  |  | $    | 1,880,235 |  |  | $ | 1,922,722 | 
|Securities                                                          |  |                                 | 1,077,672                                |  |      |   | 1,106,910 |      |  |   | 1,096,806 |  |  |      | 1,059,972 |  |  |   | 1,143,924 | 
|Loans receivable, net                                               |  |                                 | 640,887                                  |  |      |   | 671,387   |      |  |   | 691,315   |  |  |      | 624,251   |  |  |   | 589,642   | 
|Deposits                                                            |  |                                 | 1,012,645                                |  |      |   | 944,347   |      |  |   | 877,329   |  |  |      | 842,854   |  |  |   | 823,644   | 
|Borrowed funds, including subordinated debt                         |  |                                 | 715,456                                  |  |      |   | 829,641   |      |  |   | 932,901   |  |  |      | 876,727   |  |  |   | 951,153   | 
|Stockholders equity                                                |  |                                 | 167,353                                  |  |      |   | 164,752   |      |  |   | 143,065   |  |  |      | 133,657   |  |  |   | 129,231   | 
|Stockholders equity per common share                               |  |                                 | $13.95                                   |  |      |   | $13.70    |      |  |   | $11.74    |  |  |      | $10.71    |  |  |   | $10.00    | 
|                                                                    | 
|                                                                    |  | For the year ended December 31, |                                         
|Operations Data                                                     |  | 2010                            |                                          |  | 2009 |   |           | 2008 |  |   | 2007      |  |  | 2006 |          
|Net interest income                                                 |  | $                               | 42,967                                   |  |      | $ | 38,148    |      |  | $ | 31,143    |  |  | $    | 24,983    |  |  | $ | 28,667    | 
|Provision for loan losses                                           |  |                                 | 1,404                                    |  |      |   | 912       |      |  |   | 1,406     |  |  |      | 865       |  |  |   | 1,113     | 
|                                                                    |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Net interest income after provision for loan losses                 |  |                                 | 41,563                                   |  |      |   | 37,236    |      |  |   | 29,737    |  |  |      | 24,118    |  |  |   | 27,554    | 
|Noninterest income                                                  |  |                                 | 4,467                                    |  |      |   | 3,595     |      |  |   | 5,277     |  |  |      | 7,216     |  |  |   | 7,786     | 
|Noninterest expense                                                 |  |                                 | 27,813                                   |  |      |   | 26,784    |      |  |   | 23,042    |  |  |      | 22,667    |  |  |   | 22,770    | 
|                                                                    |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Income before income taxes                                          |  |                                 | 18,217                                   |  |      |   | 14,047    |      |  |   | 11,972    |  |  |      | 8,667     |  |  |   | 12,570    | 
|Provision for income taxes                                          |  |                                 | 3,553                                    |  |      |   | 2,382     |      |  |   | 1,548     |  |  |      | 400       |  |  |   | 1,317     | 
|                                                                    |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Net income                                                          |  |                                 | 14,664                                   |  |      |   | 11,665    |      |  |   | 10,424    |  |  |      | 8,267     |  |  |   | 11,253    | 
|Less: net income (loss) attributable to the noncontrolling interest |  |                                 | 433                                      |  |      |   | (347)     |      |  |   | 209       |  |  |      | 606       |  |  |   | 637       | 
|                                                                    |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Net income                                                          |  | $                               | 14,231                                   |  |      | $ | 12,012    |      |  | $ | 10,215    |  |  | $    | 7,661     |  |  | $ | 10,616    | 
|                                                                    |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Net income per common share:                                        |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Basic                                                               |  |                                 | $1.19                                    |  |      |   | $1.01     |      |  |   | $0.85     |  |  |      | $0.62     |  |  |   | $0.84     | 
|Diluted                                                             |  |                                 | $1.18                                    |  |      |   | $1.00     |      |  |   | $0.84     |  |  |      | $0.61     |  |  |   | $0.83     | 
|                                                                    |  |                                 | As of or for the year ended December 31, | 
|Other Data                                                          |  | 2010                            |                                          |  | 2009 |   |           | 2008 |  |   | 2007      |  |  | 2006 |          
|Performance Ratios (for the year ended)                             |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Return on average assets                                            |  |                                 | 0.73%                                    |  |      |   | 0.61%     |      |  |   | 0.53%     |  |  |      | 0.40%     |  |  |   | 0.56%     | 
|Return on average equity                                            |  |                                 | 8.26%                                    |  |      |   | 7.66%     |      |  |   | 7.88%     |  |  |      | 5.98%     |  |  |   | 8.55%     | 
|Average equity to average assets                                    |  |                                 | 8.87%                                    |  |      |   | 7.95%     |      |  |   | 6.72%     |  |  |      | 6.74%     |  |  |   | 6.57%     | 
|Interest rate spread (1)                                            |  |                                 | 2.48%                                    |  |      |   | 2.14%     |      |  |   | 1.73%     |  |  |      | 1.38%     |  |  |   | 1.63%     | 
|Net interest margin (1)                                             |  |                                 | 2.62%                                    |  |      |   | 2.29%     |      |  |   | 1.90%     |  |  |      | 1.57%     |  |  |   | 1.79%     | 
|Efficiency ratio                                                    |  |                                 | 51.58%                                   |  |      |   | 57.84%    |      |  |   | 55.21%    |  |  |      | 63.88%    |  |  |   | 57.27%    | 
|Noninterest expense to average assets                               |  |                                 | 1.43%                                    |  |      |   | 1.36%     |      |  |   | 1.20%     |  |  |      | 1.22%     |  |  |   | 1.24%     | 
|Dividend payout ratio (2)                                           |  |                                 | 33.90%                                   |  |      |   | 40.00%    |      |  |   | 47.62%    |  |  |      | 65.57%    |  |  |   | 48.19%    | 
|Asset Quality Ratios (as of year end)                               |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Non-performing loans to total loans                                 |  |                                 | 2.00%                                    |  |      |   | 0.59%     |      |  |   | 0.35%     |  |  |      | 0.36%     |  |  |   | 0.49%     | 
|Non-performing assets to total assets                               |  |                                 | 0.75%                                    |  |      |   | 0.25%     |      |  |   | 0.17%     |  |  |      | 0.23%     |  |  |   | 0.22%     | 
|Allowance for loan losses to total loans                            |  |                                 | 1.00%                                    |  |      |   | 0.88%     |      |  |   | 0.85%     |  |  |      | 0.85%     |  |  |   | 0.84%     | 
|Allowance for loan losses to non-performing loans                   |  |                                 | 49.78%                                   |  |      |   | 147.58%   |      |  |   | 239.95%   |  |  |      | 236.21%   |  |  |   | 171.75%   | 
|Capital Ratios (as of year end)                                     |  |                                 |                                          |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Stockholders equity to assets                                      |  |                                 | 8.74%                                    |  |      |   | 8.40%     |      |  |   | 7.24%     |  |  |      | 7.07%     |  |  |   | 6.69%     | 
|Tangible stockholders equity to tangible assets                    |  |                                 | 5.76%                                    |  |      |   | 5.19%     |      |  |   | 4.77%     |  |  |      | 4.78%     |  |  |   | 4.71%     | 



|(1) | Interest income utilized in calculation is on a fully tax equivalent basis, which is deemed to be the most prevalent industry standard for measuring
interest rate spread and net interest margin.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Dividend payout ratio calculation utilizes diluted net income per share for all periods.
|--- | ----------------------------------------------------------------------------------------





|                          |  |   |  |                   
|------------------------- |  | - |  | ------------------
|ESB Financial Corporation |  | 7 |  | 2010 Annual Report



---

##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations



Overview

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, ESB Bank (ESB or the Bank). The Company is also the parent company of ESB Capital Trust II (Trust II), ESB Statutory Trust III
(Trust III) and ESB Capital Trust IV (Trust IV), Delaware statutory business trusts established to facilitate the issuance of trust preferred securities to the public, and THF, Inc., a Pennsylvania corporation established as a title agency to
provide residential and commercial loan closing services and title closing services.

ESB is a Pennsylvania chartered Federal
Deposit Insurance Corporation (FDIC) insured stock savings bank. At December 31, 2010, the bank conducted business through 24 offices 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.

ESB 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.

The Company is subject to examination and regulation by the Office of Thrift Supervision 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. ESB is a member of the Federal Home Loan Bank (FHLB) of Pittsburgh, which is one of the twelve regional banks comprising the FHLB System. ESB is further subject to regulations of the Board of Governors of
the Federal Reserve System (Federal Reserve) which governs the reserves required to be maintained against deposits and certain other matters.

During the year ended December 31, 2010, the Company reported net income of $14.2 million, an increase of $2.2 million, or 18.5%, compared to the year ended December 31, 2009. The income for the
year reflects the Companys sustained effort to manage the net interest margin during this challenging time for the banking industry without compromising asset quality or future earnings potential. The result of this effort is reflected in our
earnings, which increased substantially over the prior year, our strong net interest margin, which increased 33 basis points over 2009 and the growth to our deposit base. The increase in the net interest margin was driven by a decrease to interest
expense of $12.5 million, or 22.9%, partially offset by a decrease in interest income of $7.6 million, or 8.3%. The Company has an ongoing campaign to increase commercial, public and personal checking accounts. The results of which were an increase
in low cost core deposits. The Company was able to replace higher priced borrowings with these lower rate deposits therefore contributing to the decline in the cost of funds for the year of 64 basis points to 2.39% at December 31, 2010 from
3.03% at December 31, 2009 which led to a decrease in overall interest expense.

The Company is continuing efforts to
improve the net interest margin by employing strategies to decrease the cost of funds, while attempting to increase the yield from the investment portfolio. The Company employs a strategy of purchasing cash-flowing fixed and variable rate
mortgage-backed securities funded by wholesale borrowings, which are comprised of FHLB advances and repurchase agreements.

The Company has utilized a wholesale strategy since its initial public offering in 1990. The Company manages this strategy through its
interest rate risk management on a macro level. The wholesale strategy operates with a lower cost of operations, although with lower interest rate spreads and, therefore, at a lower margin than the retail operations of the Company. This strategy
historically produces wider margins during periods of lower short-term interest rates, reflected in a steep yield curve and can be susceptible to net interest margin strain in rapidly rising





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|ESB Financial Corporation |  | 8 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





rates and rapidly declining rates as well as a sustained inverted yield curve. During 2010, this wholesale leverage strategy accounted for
$7.5 million, on a tax equivalent basis, of the Companys tax equivalent net interest income of $46.4 million.

Management continues to pursue methods of insulating this wholesale strategy from significant fluctuations in interest rates by:
(1) incorporating a laddered maturity schedule of up to five years on the wholesale borrowings; (2) purchasing interest rate caps; (3) providing structure in the investment portfolio in the form of corporate bonds and municipals
securities; (4) utilizing cash flows from fixed and adjustable rate mortgage-backed securities; and (5) including the Companys securities in the available for sale portfolio thereby creating the flexibility to change the composition
of the portfolio through restructuring as management deems it necessary due to interest rate fluctuations. Management believes that this insulation affords them the ability to react to measured changes in interest rates and restructure the
Companys balance sheet accordingly. This strategy is continually evaluated by management on an ongoing basis.

This
Management Discussion and Analysis section of the Annual Report contains certain forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). 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 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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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|ESB Financial Corporation |  | 9 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)







| |  |  | 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.

Critical Accounting Policies and Estimates

The Companys consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles and follow general practices within the industry in which it operates.
Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information
available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions and judgments. Certain policies inherently have a greater reliance on the use of
estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required
to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded
contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are
based either on quoted market prices or are provided by other third-party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management primarily through the use of internal
cash flow modeling techniques.

The Companys most significant accounting policies are presented in Note 1 to the
consolidated financial statements and are discussed below. These policies along with the disclosures presented in the other financial statement notes and in this financial review, provide information on how significant assets and liabilities are
valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions and estimates underlying those amounts, management has
identified the determination of the fair value of securities, the allowance for loan losses and the valuation of goodwill and intangible assets to be the accounting areas that require the most subjective or complex judgments.





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|ESB Financial Corporation |  | 10 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Securities

Securities are reported at fair value
adjusted for premiums and discounts which are recognized in interest income using the interest method over the period to maturity. Declines in the fair value of individual securities below their amortized cost and that are deemed to be other than
temporary, will be written down to current market value and included in earnings as realized losses. For a discussion on the determination of an other than temporary decline, please refer to Note 1 of the consolidated financial statements.
Management systematically evaluates securities for other than temporary declines in fair value on a quarterly basis. The Company had impairment charges of approximately $217,000 on five of its equity investments in various banks that had experienced
a decline in their market value for the last several quarters and impairment charges of approximately $212,000 on a private label mortgage backed security. Additionally, in 2010 the Company took an impairment charge of approximately $810,000 on a
$2.5 million collateralized debt obligation that is comprised of sixteen financial institutions. This charge was in addition to impairment charges of $1.1 million taken on the same security in the prior two years. At December 31, 2010, the
Company utilized an independent third party to analyze this bond. Management determined that no additional impairment on the bond existed at December 31, 2010. During this analysis, the value of this security was derived using a discounted cash
flow method which is a level three pricing method.

Allowance for loan losses

The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). The Companys
periodic evaluation of the adequacy of the allowance for loan losses is determined by management through evaluation of the loss exposure on individual non-performing, delinquent and high-dollar loans; review of economic conditions and business
trends; historical loss experience and growth and composition of the loan portfolio, as well as other relevant factors.

A
quantitative analysis is utilized to support the adequacy of the allowance for loan losses. This analysis includes review of historical charge-off rates for loan categories, fluctuations and trends in the amount of classified loans and economic
factors. Significant to this analysis are any changes in observable trends that may be occurring relative to loans to assess potential weaknesses within the credit. Current economic factors and trends in risk ratings are considered in the
determination and allocation of the allowance for loan losses.

The allowance for loan losses at December 31, 2010 and
2009 was $6.5 million and $6.0 million, respectively allocated as follows for 2010: residential loans $2.6 million, or 39.3%; commercial real estate $1.8 million, or 28.0%; commercial business loans $784,000, or 12.0%, consumer loans $1.1 million,
or 17.2% and an unallocated portion of $234,000, or 3.5%.

Goodwill and other intangible assets

The guidance in U.S. generally accepted accounting principles (GAAP) regarding goodwill and other intangible assets establishes standards
for the amortization of acquired intangible assets and the non-amortization and impairment assessment of goodwill. At December 31, 2010, the Company had $895,000 of core deposit intangible assets subject to amortization and $41.6 million in
goodwill, which was not subject to periodic amortization.

Goodwill arising from business combinations represents the value
attributable to unidentifiable intangible elements in the business acquired. The Companys goodwill relates to value inherent in the banking business and the value is dependent upon the Companys ability to provide quality, cost effective
services in a competitive market place. As such, goodwill value is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective
services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.





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|ESB Financial Corporation |  | 11 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





GAAP requires an annual evaluation of goodwill for impairment. The fair value of the Company and the implied fair value of goodwill at the
respective reporting unit level are estimated using the market value approach utilizing industry comparable information. The Companies implied fair value of goodwill is based on a four step approach utilizing the last twelve months earnings per
share, stated book value, tangible book value and total deposits to the most recent transaction values supplied by a third party. At December 31, 2010, the Company concluded that the recorded value of goodwill was not impaired as a result of
the evaluation.

Changes in Financial Condition

General.The Companys total assets decreased $46.8 million, or 2.4%, to $1.91 billion at December 31, 2010 from $1.96 billion at December 31, 2009. This decrease was
primarily composed of net decreases in securities available for sale, loans receivable, loans held for sale, accrued interest receivable, Federal Home Loan Bank (FHLB) stock, real estate held for investment, intangible assets and securities
receivable of $29.2 million, $30.5 million, $121,000, $705,000, $1.4 million, $5.2 million, $418,000 and $774,000, respectively, partially offset by increases to cash and cash equivalents, premises and equipment, real estate acquired through
foreclosure, bank owned life insurance and prepaid expenses and other assets of $19.4 million, $839,000, $358,000, $717,000 and $184,000, respectively.

The decrease in the Companys total assets reflects a corresponding decrease in total liabilities of $49.4 million, or 2.8%, to $1.75 billion at December 31, 2010 compared to $1.80 billion at
December 31, 2009 and an increase in total stockholders equity of $2.6 million, or 1.6%, to $167.4 million at December 31, 2010 from $164.8 million at December 31, 2009. The decrease in total liabilities was primarily due to
decreases in FHLB advances, other borrowings, advance payments by borrowers for taxes and insurance, accounts payable for land development and accrued expenses and other liabilities of $130.0 million, $4.2 million, $220,000, $1.2 million and $2.1
million, respectively, partially offset by increases to deposits and repurchase agreements of $68.3 million and $20.0 million, respectively. The net increase in total stockholders equity can be attributed primarily to increases in additional
paid in capital and retained earnings of $658,000 and $8.9 million, respectively as well as decreases in unearned employee stock ownership plan (ESOP) of $814,000. These items were partially offset by an increase in treasury stock of $110,000 and a
decrease in accumulated other comprehensive income (OCI) of $7.3 million.

Cash on hand, Interest-earning deposits and Federal funds sold.Cash on hand,
interest-earning deposits and federal funds sold represent cash equivalents which increased a combined $19.4 million, or 119.1%, to $35.7 million at December 31, 2010 from $16.3 million at December 31, 2009. Deposits from customers into
savings and checking accounts, loan and security repayments and proceeds from borrowed funds typically increase these accounts. Decreases result from customer withdrawals, new loan originations, security purchases and repayments of borrowed funds.

Securities.The Companys securities and loan portfolios represent its two largest asset classifications. The Companys securities portfolio decreased by $29.2 million, or 2.6%, to
$1.1 billion at December 31, 2010. During 2010, the Company recorded purchases of available for sale securities of $249.8 million consisting of purchases of fixed-rate mortgage backed securities of $172.5 million, adjustable-rate mortgage
backed securities of $17.5 million, municipal bonds of $19.9 million, corporate bonds of $39.0 million and $865,000 of equity securities. Offsetting this increase were repayments and maturities of securities of $268.3 million, premium amortizations
of $1.3 million, realized losses of $1.2 million and an $8.2 million decrease in the market value of the portfolio. These fair value adjustments represent temporary fluctuations resulting from changes in market rates in relation to average yields in
the available for sale portfolio. If securities are held to their respective maturity dates, no fair value gain or loss is realized.





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|ESB Financial Corporation |  | 12 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Loans receivable.The loans receivable category consists primarily of single family mortgage loans used to purchase or refinance personal residences located within the Companys market
area and commercial real estate loans used to finance properties that are used in the borrowers businesses or to finance investor-owned rental properties and to a lesser extent commercial and consumer loans. Net loans receivable decreased
$30.5 million, or 4.5%, to $640.9 million at December 31, 2010 from $671.4 million at December 31, 2009. Included in this decrease were decreases in mortgage loans and other loans of $18.3 million, or 3.6% and $11.1 million, or 6.0%,
respectively, as well as increases in the allowance for loan losses, deferred fees and loans in process of approximately $1.2 million, or 7.4% combined. The decrease in net loans receivable is due to several factors, including an increase of
approximately $23.2 million in repayments to $216.9 million in 2010 as compared to $193.7 million in 2009. These repayments were only partially offset by originations of approximately $185.1 million, which increased approximately $11.1 million when
compared to 2009. The yield on the loan portfolio decreased to 5.64% at December 31, 2010 from 5.82% at December 31, 2009.

Loans held for sale.Loans
held for sale decreased to $80,000 at December 31, 2010 from $201,000 at December 31, 2009. During the period the Company originated loans held for sale of approximately $3.3 million and sold approximately $3.4 million, with a resulting
gain of approximately $40,000.

Non-performing
assets.Non-performing assets include non-accrual loans, repossessed vehicles, real estate acquired through foreclosure (REO) and loans modified in
troubled debt restructuring (TDR). Non-performing assets increased to $14.4 million, or 0.75%, of total assets at December 31, 2010 from $5.0 million, or 0.25%, of total assets at December 31, 2009. Non-performing assets consisted of
non-performing loans, REO, repossessed vehicles and TDR of $5.7 million, $1.1 million, $193,000 and $7.5 million respectively, at December 31, 2010 and $3.8 million, $725,000, $166,000 and $254,000, respectively, at December 31, 2009. The
increase to non-performing assets was primarily due to a commercial real estate loan that became a TDR during the period as well as an increase in non-performing loans.

Accrued interest
receivable.Accrued interest receivable decreased by $705,000, or 6.8%, to $9.6 million at December 31, 2010 as compared to $10.3 million at
December 31, 2009. This decrease was a result of decreases in the yields and balances on both the loan and securities portfolios.

FHLB stock.FHLB stock decreased
$1.4 million to $26.1 million at December 31, 2010 compared to $27.5 million at December 31, 2009. The Bank is required to maintain an investment in capital stock of the FHLB of Pittsburgh in an amount not less than 5.0% of its outstanding
notes payable to the FHLB of Pittsburgh. In 2008 the FHLB suspended both the payment of dividends and the repurchase of excess capital stock. During the fourth quarter of 2010 the FHLB partially lifted the suspension with a limited repurchase of
excess stock. The dividend suspension remains in effect and no dividends were paid in 2010. This repurchase restriction could result in the Banks investment in FHLB stock being greater than 5.0% of its outstanding notes payable to the FHLB.

Premises and equipment.Premises and equipment increased $839,000, or 6.4%, to $13.9 million at December 31, 2010 from $13.0 million at December 31, 2009. This increase was primarily due to
relocation of the Companys Zelienople branch office from a strip mall to a free standing full service office. The office was opened in the fourth quarter of 2010.

Real estate held for
investment.The Companys real estate held for investment decreased $5.2 million, or 18.9%, to $22.3 million at December 31, 2010 from $27.5 million
at December 31, 2009. This decrease is the result of sales activity in the joint ventures in which the Company has a 51% ownership as well as write-downs of land acquisition and development costs and unit construction costs of approximately
$1.6 million at five of the Companys joint ventures. For a complete description of the Companys existing projects see Item 1. BusinessSubsidiaries in the Companys Annual Report on Form 10-K for the year ended
December 31, 2010.





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|ESB Financial Corporation |  | 13 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Intangible assets.Intangible assets decreased $418,000, or 31.8%, to $895,000 at December 31, 2010 from $1.3 million at December 31, 2009. The decrease primarily resulted from amortization
of the core deposit intangible created through acquisitions of approximately $413,000. Additionally, the mortgage servicing asset resulting from the loan sale and securitization in 2002 experienced amortization of approximately $14,000 in 2010,
partially offset by a $9,000 recovery of the valuation against the servicing asset.

Bank owned life insurance.Bank owned life insurance (BOLI) is universal life insurance,
purchased by the Bank, on the lives of the Banks employees. The beneficial aspects of these universal life insurance policies are tax-free earnings and a tax-free death benefit, which are realized by ESB as the owner of the policies. The cash
surrender value of the BOLI as of December 31, 2010 was $30.1 million.

Deposits.The Company considers various sources when evaluating funding needs, including but
not limited to deposits, which are a significant source of funds totaling $1.0 billion, or 58.6%, of the Companys total funding sources at December 31, 2010. Total deposits increased $68.3 million, or 7.2%, to $1.0 billion at
December 31, 2010 from $944.3 million at December 31, 2009. For the year, the Companys interest-bearing demand and savings deposits increased $35.3 million, or 13.5%, time deposits increased $17.1 million, or 2.8% and
noninterest-bearing deposits increased $15.9 million, or 23.2%. The increase to core deposits of approximately $51.2 million is primarily due to the Companys ongoing campaign to increase these types of accounts. The Company continues to be
diligent in monitoring the rates being offered by regional banks in the Companys market area and offering special time deposit rates to remain competitive.

Advance payments by borrowers for taxes and
insurance.Advance payments by borrowers for taxes and insurance decreased $220,000, or 8.3%, to $2.4 million at December 31, 2010 from $2.7 million at
December 31, 2009 due to the decrease in the net loans receivable.

Borrowed funds.The Company utilizes short and long-term borrowings as another source of
funding used for asset growth and liquidity needs. These borrowings primarily include FHLB advances and repurchase agreement borrowings. Borrowed funds decreased $114.2 million, or 13.8%, to $715.5 million at December 31, 2010 from $829.6
million at December 31, 2009. FHLB advances decreased $130.0 million, or 30.9%, repurchase agreements increased $20.0 million, or 5.8%, other borrowings decreased $4.2 million, or 21.2%, while junior subordinated notes remained the same at
$46.4 million. The Company is reviewing its continued utilization of advances from the FHLB as a source of funding based upon recent decisions by the FHLB to suspend the dividend on and restrict the repurchase of, FHLB stock.

Accounts payable for land development.Accounts payable for land development decreased by $1.2 million to $3.4 million at December 31, 2010 from $4.6 million at December 31, 2009. This account represents the
unpaid portion of the development costs for the Companys joint ventures. The decrease is primarily due to ongoing construction activity at the Companys existing joint venture projects and that the Company did not begin any new projects
in 2010.

Stockholders
equity.Stockholders equity increased by $2.6 million, or 1.6%, to $167.4 million at December 31, 2010 from $164.8 million at December 31, 2009.
The net increase in total stockholders equity can be attributed primarily to increases in additional paid in capital and retained earnings of $658,000 and $8.9 million, respectively, as well as decreases in unearned employee stock ownership
plan (ESOP) of $814,000. These items were partially offset by an increase in treasury stock and noncontrolling interest of $110,000 and $382,000, respectively and a decrease in OCI of $7.3 million. The increase in OCI represents temporary
fluctuations resulting from changes in market rates in relation to average yields in the available for sale portfolio.





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|ESB Financial Corporation |  | 14 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Results of Operations

General.The Company reported net income of $14.2 million, $12.0 million and $10.2 million in
2010, 2009 and 2008, respectively.

Average
Balance Sheet and Yield/Rate Analysis.The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest
income from interest-earning assets and the resultant average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resultant average costs, net interest income, interest rate spread and the net interest margin
earned on average interest-earning assets. For purposes of this table, average balances are calculated using monthly averages and the average loan balances include non-accrual loans and exclude the allowance for loan losses and interest income
includes accretion of net deferred loan fees. Yields on tax-exempt securities and loans (tax-exempt for federal income tax purposes) are shown on a fully tax equivalent basis utilizing a federal tax rate of 34%.





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|ESB Financial Corporation |  | 15 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)







|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|--------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- |  | -------- | - | ------ | --------------------------- |  |  | ----- |  |  | -------------- |  |  | -------- | - | --------- | ----------- |  | - | ------ |  |  | -------------- | ----- |  | -------- |  |  | ----------- |  | - | --------- |  |  | - | ------ |  |  |  | ----- | 
|(Dollar amounts in thousands)                                                                                               |  | 2010           |           |  |          |   |        | Year ended December 31,2009 |  |  |       |  |  | 2008           | 
|                                                                                                                            |  | AverageBalance |           |  | Interest |   |        | Yield /Rate                 |  |  |       |  |  | AverageBalance |  |  | Interest |   |           | Yield /Rate |  |   |        |  |  | AverageBalance |       |  | Interest |  |  | Yield /Rate | 
|Interest-earning assets:                                                                                                    |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|Taxable securities available for sale                                                                                       |  | $              | 770,176   |  |          | $ | 35,134 |                             |  |  | 4.56% |  |  |                |  |  |          | $ | 847,578   |             |  | $ | 43,095 |  |  |                | 5.08% |  |          |  |  |             |  | $ | 922,276   |  |  | $ | 48,140 |  |  |  | 5.22% | 
|Taxable corporate bonds AFS                                                                                                 |  |                | 147,453   |  |          |   | 6,314  |                             |  |  | 4.28% |  |  |                |  |  |          |   | 109,089   |             |  |   | 4,709  |  |  |                | 4.32% |  |          |  |  |             |  |   | 46,325    |  |  |   | 1,960  |  |  |  | 4.23% | 
|Tax-exempt securities available for sale                                                                                    |  |                | 132,164   |  |          |   | 5,933  |                             |  |  | 6.80% |  |  |                |  |  |          |   | 121,078   |             |  |   | 5,400  |  |  |                | 6.76% |  |          |  |  |             |  |   | 109,786   |  |  |   | 4,844  |  |  |  | 6.68% | 
|                                                                                                                            |  |                | 1,049,793 |  |          |   | 47,381 |                             |  |  | 4.80% |  |  |                |  |  |          |   | 1,077,745 |             |  |   | 53,204 |  |  |                | 5.19% |  |          |  |  |             |  |   | 1,078,387 |  |  |   | 54,944 |  |  |  | 5.33% | 
|Mortgage loans                                                                                                              |  |                | 491,014   |  |          |   | 27,596 |                             |  |  | 5.62% |  |  |                |  |  |          |   | 489,817   |             |  |   | 28,438 |  |  |                | 5.81% |  |          |  |  |             |  |   | 485,950   |  |  |   | 29,142 |  |  |  | 6.00% | 
|Other loans                                                                                                                 |  |                | 161,185   |  |          |   | 9,071  |                             |  |  | 5.63% |  |  |                |  |  |          |   | 173,324   |             |  |   | 10,027 |  |  |                | 5.79% |  |          |  |  |             |  |   | 163,179   |  |  |   | 10,210 |  |  |  | 6.26% | 
|Tax-exempt loans                                                                                                            |  |                | 19,241    |  |          |   | 800    |                             |  |  | 6.30% |  |  |                |  |  |          |   | 19,124    |             |  |   | 806    |  |  |                | 6.38% |  |          |  |  |             |  |   | 16,098    |  |  |   | 683    |  |  |  | 6.43% | 
|                                                                                                                            |  |                | 671,440   |  |          |   | 37,467 |                             |  |  | 5.64% |  |  |                |  |  |          |   | 682,265   |             |  |   | 39,271 |  |  |                | 5.82% |  |          |  |  |             |  |   | 665,227   |  |  |   | 40,035 |  |  |  | 6.07% | 
|Cash equivalents                                                                                                            |  |                | 21,348    |  |          |   | 16     |                             |  |  | 0.07% |  |  |                |  |  |          |   | 21,529    |             |  |   | 20     |  |  |                | 0.09% |  |          |  |  |             |  |   | 15,665    |  |  |   | 157    |  |  |  | 1.00% | 
|FHLB stock                                                                                                                  |  |                | 27,184    |  |          |   | -      |                             |  |  | -     |  |  |                |  |  |          |   | 27,470    |             |  |   | -      |  |  |                | -     |  |          |  |  |             |  |   | 29,649    |  |  |   | 1,122  |  |  |  | 3.78% | 
|                                                                                                                            |  |                | 48,532    |  |          |   | 16     |                             |  |  | 0.03% |  |  |                |  |  |          |   | 48,999    |             |  |   | 20     |  |  |                | 0.04% |  |          |  |  |             |  |   | 45,314    |  |  |   | 1,279  |  |  |  | 2.82% | 
|Total interest-earning assets                                                                                               |  |                | 1,769,765 |  |          |   | 84,864 |                             |  |  | 4.99% |  |  |                |  |  |          |   | 1,809,009 |             |  |   | 92,495 |  |  |                | 5.29% |  |          |  |  |             |  |   | 1,788,928 |  |  |   | 96,258 |  |  |  | 5.54% | 
|Other noninterest-earning assets                                                                                            |  |                | 174,345   |  |          |   | -      |                             |  |  | -     |  |  |                |  |  |          |   | 162,422   |             |  |   | -      |  |  |                | -     |  |          |  |  |             |  |   | 141,204   |  |  |   | -      |  |  |  | -     | 
|Total assets                                                                                                                |  | $              | 1,944,110 |  |          | $ | 84,864 |                             |  |  | 4.54% |  |  |                |  |  |          | $ | 1,971,431 |             |  | $ | 92,495 |  |  |                | 4.85% |  |          |  |  |             |  | $ | 1,930,132 |  |  | $ | 96,258 |  |  |  | 5.13% | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|Interest-bearing liabilities:                                                                                               |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|Interest-bearing demand deposits                                                                                            |  | $              | 291,292   |  |          | $ | 981    |                             |  |  | 0.34% |  |  |                |  |  |          | $ | 255,929   |             |  | $ | 761    |  |  |                | 0.30% |  |          |  |  |             |  | $ | 238,426   |  |  | $ | 1,350  |  |  |  | 0.57% | 
|Time deposits                                                                                                               |  |                | 620,155   |  |          |   | 13,289 |                             |  |  | 2.14% |  |  |                |  |  |          |   | 588,496   |             |  |   | 17,035 |  |  |                | 2.89% |  |          |  |  |             |  |   | 558,076   |  |  |   | 21,058 |  |  |  | 3.77% | 
|                                                                                                                            |  |                | 911,447   |  |          |   | 14,270 |                             |  |  | 1.57% |  |  |                |  |  |          |   | 844,425   |             |  |   | 17,796 |  |  |                | 2.11% |  |          |  |  |             |  |   | 796,502   |  |  |   | 22,408 |  |  |  | 2.81% | 
|FHLB advances                                                                                                               |  |                | 335,551   |  |          |   | 11,818 |                             |  |  | 3.52% |  |  |                |  |  |          |   | 459,727   |             |  |   | 20,372 |  |  |                | 4.43% |  |          |  |  |             |  |   | 578,565   |  |  |   | 27,671 |  |  |  | 4.78% | 
|Repurchase agreements                                                                                                       |  |                | 358,833   |  |          |   | 12,555 |                             |  |  | 3.50% |  |  |                |  |  |          |   | 344,146   |             |  |   | 12,704 |  |  |                | 3.69% |  |          |  |  |             |  |   | 266,771   |  |  |   | 11,262 |  |  |  | 4.22% | 
|Other borrowings                                                                                                            |  |                | 19,564    |  |          |   | 795    |                             |  |  | 4.06% |  |  |                |  |  |          |   | 29,425    |             |  |   | 955    |  |  |                | 3.25% |  |          |  |  |             |  |   | 18,785    |  |  |   | 811    |  |  |  | 4.32% | 
|                                                                                                                            |  |                | 713,948   |  |          |   | 25,168 |                             |  |  | 3.53% |  |  |                |  |  |          |   | 833,298   |             |  |   | 34,031 |  |  |                | 4.08% |  |          |  |  |             |  |   | 864,121   |  |  |   | 39,744 |  |  |  | 4.60% | 
|Preferred securities- fixed                                                                                                 |  |                | 36,083    |  |          |   | 2,111  |                             |  |  | 5.85% |  |  |                |  |  |          |   | 36,083    |             |  |   | 2,111  |  |  |                | 5.85% |  |          |  |  |             |  |   | 36,083    |  |  |   | 2,111  |  |  |  | 5.85% | 
|Preferred securities- adjustable                                                                                            |  |                | 10,310    |  |          |   | 348    |                             |  |  | 3.38% |  |  |                |  |  |          |   | 10,310    |             |  |   | 409    |  |  |                | 3.97% |  |          |  |  |             |  |   | 13,094    |  |  |   | 852    |  |  |  | 6.51% | 
|                                                                                                                            |  |                | 46,393    |  |          |   | 2,459  |                             |  |  | 5.30% |  |  |                |  |  |          |   | 46,393    |             |  |   | 2,520  |  |  |                | 5.43% |  |          |  |  |             |  |   | 49,177    |  |  |   | 2,963  |  |  |  | 6.03% | 
|Total interest-bearing liabilities                                                                                          |  |                | 1,671,788 |  |          |   | 41,897 |                             |  |  | 2.51% |  |  |                |  |  |          |   | 1,724,116 |             |  |   | 54,347 |  |  |                | 3.15% |  |          |  |  |             |  |   | 1,709,800 |  |  |   | 65,115 |  |  |  | 3.81% | 
|Noninterest-bearing demand deposits                                                                                         |  |                | 78,902    |  |          |   | -      |                             |  |  | -     |  |  |                |  |  |          |   | 70,134    |             |  |   | -      |  |  |                | -     |  |          |  |  |             |  |   | 66,258    |  |  |   | -      |  |  |  | -     | 
|Other noninterest-bearing liabilities                                                                                       |  |                | 21,049    |  |          |   | -      |                             |  |  | -     |  |  |                |  |  |          |   | 20,438    |             |  |   | -      |  |  |                | -     |  |          |  |  |             |  |   | 24,389    |  |  |   | -      |  |  |  | -     | 
|Total liabilities                                                                                                           |  |                | 1,771,739 |  |          |   | 41,897 |                             |  |  | 2.36% |  |  |                |  |  |          |   | 1,814,688 |             |  |   | 54,347 |  |  |                | 2.99% |  |          |  |  |             |  |   | 1,800,447 |  |  |   | 65,115 |  |  |  | 3.62% | 
|Stockholders equity                                                                                                        |  |                | 172,371   |  |          |   | -      |                             |  |  | -     |  |  |                |  |  |          |   | 156,743   |             |  |   | -      |  |  |                | -     |  |          |  |  |             |  |   | 129,685   |  |  |   | -      |  |  |  | -     | 
|Total liabilities and equity                                                                                                |  | $              | 1,944,110 |  |          | $ | 41,897 |                             |  |  | 2.16% |  |  |                |  |  |          | $ | 1,971,431 |             |  | $ | 54,347 |  |  |                | 2.76% |  |          |  |  |             |  | $ | 1,930,132 |  |  | $ | 65,115 |  |  |  | 3.37% | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |      
|Net interest income                                                                                                         |  |                |           |  |          | $ | 42,967 |                             |  |  |       |  |  |                |  |  |          |   |           |             |  | $ | 38,148 |  |  |                |       |  |          |  |  |             |  |   |           |  |  | $ | 31,143 |  |  |  |       | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|Interest rate spread (difference between weighted average rate on interest-earning assets and interest-bearing
liabilities) |  |                |           |  |          |   |        |                             |  |  | 2.48% |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                | 2.14% |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  | 1.73% | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 
|Net interest margin (net interest income as a percentage of average interest-earning assets)                                |  |                |           |  |          |   |        |                             |  |  | 2.62% |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                | 2.29% |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  | 1.90% | 
|                                                                                                                            |  |                |           |  |          |   |        |                             |  |  |       |  |  |                |  |  |          |   |           |             |  |   |        |  |  |                |       |  |          |  |  |             |  |   |           |  |  |   |        |  |  |  |       | 





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 16 |  | 2010 Annual Report



---

##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Analysis of Changes in Net Interest Income.The following table analyzes the changes in interest income and interest expense in terms of: (i) changes in volume of interest-earning assets and interest-bearing liabilities
and (ii) changes in yield and rates. The table reflects the extent to which changes in the Companys interest income and interest expense are attributable to changes in rate (change in rate multiplied by prior year volume), changes in
volume (changes in volume multiplied by prior year rate) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on
a consistent basis between the volume and rate variances.



|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|---------------------------------- |  | -------------------------- | ------- |  | -------------------------- | - | ------- | ----- |  | - | -------- |  |  | ---- | ------- |  | ----- | - | ------- |  |  | - | -------- | 
|(Dollar amounts in thousands)      |  | 2010 vs. 2009              |         |  | 2009 vs. 2008              |  
|                                   |  | Increase (decrease) due to |         |  | Increase (decrease) due to |  
|                                   |  | Volume                     |         |  | Rate                       |   |         | Total |  |   | Volume   |  |  | Rate |         |  | Total |  
|Interest income:                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|Securities                         |  | $                          | (1,352) |  |                            | $ | (4,471) |       |  | $ | (5,823)  |  |  | $    | (33)    |  |       | $ | (1,707) |  |  | $ | (1,740)  | 
|Loans                              |  |                            | (617)   |  |                            |   | (1,187) |       |  |   | (1,804)  |  |  |      | 1,009   |  |       |   | (1,773) |  |  |   | (764)    | 
|Cash equivalents                   |  |                            | -       |  |                            |   | (4)     |       |  |   | (4)      |  |  |      | 43      |  |       |   | (180)   |  |  |   | (137)    | 
|FHLB stock                         |  |                            | -       |  |                            |   | -       |       |  |   | -        |  |  |      | (77)    |  |       |   | (1,045) |  |  |   | (1,122)  | 
|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|                                   |  |                            |         |  |                            |  
|Total interest-earning assets      |  |                            | (1,969) |  |                            |   | (5,662) |       |  |   | (7,631)  |  |  |      | 942     |  |       |   | (4,705) |  |  |   | (3,763)  | 
|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|Interest expense:                  |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|Deposits                           |  |                            | 1,327   |  |                            |   | (4,853) |       |  |   | (3,526)  |  |  |      | 1,283   |  |       |   | (5,895) |  |  |   | (4,612)  | 
|FHLB advances                      |  |                            | (4,861) |  |                            |   | (3,693) |       |  |   | (8,554)  |  |  |      | (5,376) |  |       |   | (1,923) |  |  |   | (7,299)  | 
|Repurchase agreements              |  |                            | 529     |  |                            |   | (678)   |       |  |   | (149)    |  |  |      | 2,980   |  |       |   | (1,538) |  |  |   | 1,442    | 
|Other borrowings                   |  |                            | (366)   |  |                            |   | 206     |       |  |   | (160)    |  |  |      | 380     |  |       |   | (236)   |  |  |   | 144      | 
|Subordinated debt                  |  |                            | -       |  |                            |   | (61)    |       |  |   | (61)     |  |  |      | (162)   |  |       |   | (281)   |  |  |   | (443)    | 
|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|                                   |  |                            |         |  |                            |  
|Total interest-bearing liabilities |  |                            | (3,371) |  |                            |   | (9,079) |       |  |   | (12,450) |  |  |      | (895)   |  |       |   | (9,873) |  |  |   | (10,768) | 
|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|                                   |  |                            |         |  |                            |  
|Net interest income                |  | $                          | 1,402   |  |                            | $ | 3,417   |       |  | $ | 4,819    |  |  | $    | 1,837   |  |       | $ | 5,168   |  |  | $ | 7,005    | 
|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 
|                                   |  |                            |         |  |                            |   |         |       |  |   |          |  |  |      |         |  |       |   |         |  |  |   |          | 

2010 Results Compared to 2009 Results

General.The Company reported net income of $14.2 million and $12.0 million for 2010 and 2009, respectively. The $2.2 million, or 18.5%, increase in net income between 2010 and 2009 can
primarily be attributed to a decrease in interest expense of $12.5 million as well as an increase in noninterest income of $872,000, partially offset by a decrease in interest income of $7.6 million and increases in provision for loan losses,
noninterest expense, provision for income taxes and noncontrolling interest of $492,000, $1.0 million, $1.2 million and $780,000, respectively.

Net interest income.Net interest
income, the primary source of revenue for the Company, is determined by the Companys interest rate spread, which is defined as the difference between income on earning assets and the cost of funds supporting those assets and the relative
amounts of interest earning assets and interest bearing liabilities. Management periodically adjusts the mix of assets and liabilities, as well as the rates earned or paid on those assets and liabilities in order to manage and improve net interest
income. The level of interest rates and changes in the amount and composition of interest earning assets and liabilities affect the Companys net interest income. Historically from an interest rate risk perspective, it has been
managements perception that differing interest rate environments can cause sensitivity to the Companys net interest income, these being extended low long-term interest rates or rapidly rising short-term interest rates as well as a
sustained inverted yield curve. Net interest income increased by $4.8 million, or 12.6%, to $43.0 million for 2010, compared to $38.1 million for 2009. This increase in net interest income can be attributed to a decrease in interest expense of $12.5
million, or 22.9%, which was only partially offset by a decrease in interest income of $7.6 million, or 8.3%. The decrease to interest expense reflects a 64 basis point decrease in the cost of interest bearing liabilities to 2.51% for 2010 from
3.15% for 2009.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 17 |  | 2010 Annual Report



---

##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Interest income.Interest income decreased $7.6 million, or 8.3%, to $84.9 million for 2010, compared to $92.5 million for 2009. This decrease in interest income can be attributed to decreases in
interest earned on loans receivable and securities available for sale of $1.8 million and $5.8 million, respectively.

Interest earned on loans receivable decreased $1.8 million, or 4.6%, to $37.5 million for 2010, compared to $39.3 million for 2009. This
decrease was attributable to a decrease in the yield on the portfolio to 5.64% at December 31, 2010 as compared to 5.82% at December 31, 2009, as well as a decrease in the average balance of loans outstanding of $10.8 million, or 1.6%, to
$671.4 million for the year ended December 31, 2010, as compared to $682.3 million for the year ended December 31, 2009.

Interest earned on securities decreased $5.8 million, or 10.9%, to $47.4 million for 2010 compared to $53.2 million for 2009. This decrease was primarily attributable to a decline in the tax equivalent
yield on the portfolio of 39 basis points to 4.80% for 2010, compared to 5.19% for 2009, as well as a decrease in the average balance of securities of $28.0 million, or 2.6% to $1.0 billion for the year ended December 31, 2010, as compared to
$1.1 billion for the year ended December 31, 2009.

Interest expense.Interest expense decreased $12.5 million, or 22.9%, to $41.9 million for
2010, compared to $54.3 million for 2009. This decrease in interest expense can be attributed to decreases in interest incurred on deposits, borrowed funds and junior subordinated notes of $3.5 million, $8.9 million and $61,000, respectively.

Interest incurred on deposits decreased $3.5 million, or 19.8%, to $14.3 million for 2010, compared to $17.8 million for
2009. This decrease was primarily attributable to a decrease in the cost of interest earning deposits to 1.57% in 2010 from 2.11% in 2009, partially offset by an increase of $67.0 million, or 7.9%, in the average balance of interest-bearing deposits
to $911.4 million for 2010 as compared to $844.4 million for 2009. The Company manages its cost of interest-bearing deposits by diligently monitoring the interest rates on its products as well as the rates being offered by its competition through
weekly interest rate committee meetings and utilizing rate surveys and hence subsequently adjusting rates accordingly.

Interest incurred on borrowings, which includes FHLB advances and repurchase agreements decreased $8.9 million, or 26.0%, to $25.2
million for 2010, compared to $34.0 million for 2009. This decrease was primarily attributable to a decrease in the average balance of borrowed funds of $119.4 million, or 14.3%, to $713.9 million for 2010, compared to $833.3 million for 2009, as
well as a decrease in the cost of these funds to 3.53% for 2010 compared to 4.08% for 2009. The Company, as part of its wholesale strategy, continues to manage its cost of funds through its policy of laddering the maturities of borrowings up to a
five year period. This strategy allows the Company the flexibility to alter its borrowing structure quarterly. During 2010, the Company replaced approximately $175.0 million of maturing wholesale borrowings at a weighted average rate of 4.98% and an
original call/maturity of 3.7 years with borrowings of approximately $80.4 million at a weighted average rate of 2.65% and an average call/maturity of 3.9 years. The restructuring of these borrowings contributed to the overall decline in interest
expense for 2010. For purposes of determining the average life of the borrowings, the Company utilizes the call date if applicable.

Interest expense on junior subordinated notes decreased $61,000, or 2.4%, to $2.5 million at December 31, 2010. This decrease was due to a decline in the cost of these funds to 5.30% for 2010,
compared to 5.43% for 2009.

Provision for
loan losses.The Company records provisions for loan losses to bring the total allowance for loan losses to a level deemed adequate to cover probable losses in
the loan portfolio. In determining the appropriate level of allowance for loan losses, management considers historical loss experience, the financial condition of borrowers, economic conditions (particularly as they relate to markets where the
Company originates loans), the status of non-performing assets, the estimated underlying value of the collateral and other factors related to the collectibility of the loan portfolio. The provision for loan losses increased $492,000 to $1.4 million
for the year





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 18 |  | 2010 Annual Report



---

##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





ended December 31, 2010 compared to $912,000 in the prior year. These provisions were due in part to an increase in nonperforming loans as well as the normal operations of the Company for
2010. As a result of the provisions for loan losses during 2010 and 2009, the Companys allowance for loan losses amounted to $6.5 million, or 1.0%, of the Companys total loan portfolio at December 31, 2010 compared to $6.0 million,
or 0.9%, at December 31, 2009. The Companys allowance for loan losses as a percentage of non-performing loans at December 31, 2010 and December 31, 2009 was 49.78% and 147.58%, respectively. This decrease between the periods is
a result of the increase in the balance of the TDR and the non-performing loans.

Noninterest income.Noninterest income increased $872,000, or 24.3%, to $4.5 million for
2010, compared to $3.6 million for 2009. This increase can be attributed to increases in income from real estate joint ventures of $3.0 million partially offset by decreases in fees and service charges, net gain on sale of loans, the cash surrender
value of the bank owned life insurance, net realized gain on securities available for sale and other income of $72,000, $163,000, $182,000, $246,000 and $39,000, respectively. The income was also offset by increases in the net impairment losses on
securities and net realized loss on derivatives of $622,000 and $831,000 respectively.

Net realized gain on investments
decreased $246,000 as there were no security sales in 2010. Net impairment losses on securities increased $622,000 to reflect a loss of $1.2 million for 2010 compared to a loss of $617,000 for 2009. During 2010 the Company incurred pre-tax
impairment charges of approximately $1.2 million, including approximately $810,000 on a $2.5 million collateralized debt obligation that is comprised of sixteen financial institutions, $212,000 on a private-label mortgage-backed security having a
book value of approximately $1.7 million and approximately $217,000 on five of its equity investments in various banks that had experienced a decline in their market value for the last several quarters. There was non-credit related other than
temporary impairment (OTTI) on these debt securities recognized in other comprehensive income (OCI) during the period of approximately $600,000.

Additionally, the Company had a loss on derivatives in 2010 of $711,000 compared to gains in 2009 of $120,000 because of market value adjustments to the Companys interest rate caps.

Income from the cash surrender value of BOLI decreased $182,000, or 20.2%, to $717,000 for 2010, compared to $899,000 for 2009. The BOLI
consists of separate account policies backed by separate account assets. These assets re-priced in 2010 during a declining rate environment, which resulted in lower overall yields.

Income from real estate joint ventures increased $3.0 million to a gain of $1.1 million for 2010, compared to a loss of $1.9 million for
2009. Partially offsetting the income recognized for the year was a pre-tax write-down of land acquisition and development costs as well as unit construction costs of approximately $1.6 million at the Companys joint ventures.

Net gain on sale of loans held for sale decreased $163,000, or 80.3% to $40,000 for the period ended December 31, 2010 from $203,000
at December 31, 2009. During the period, the Company originated loans held for sale of approximately $3.3 million and sold approximately $3.4 million. In comparison, in 2009 the Company originated approximately $18.3 million and sold
approximately $18.3 million loans held for sale.

Noninterest expense.Noninterest expenses increased $1.0 million, or 3.8%, to $27.8 million for 2010, compared to $26.8 million for 2009. This increase can be primarily attributed to increases in
compensation and employee benefits, premises and equipment, data processing, advertising and other expenses of $1.2 million, $279,000, $33,000, $34,000 and $180,000, respectively, partially offset by decreases to federal deposit insurance premiums
and amortization of intangible assets of $640,000 and $81,000, respectively.

Compensation and employee benefits increased
$1.2 million, or 8.3%, to $15.9 million for 2010, compared to $14.7 million in 2009. This increase was related to normal salary adjustments and bonuses between the years of





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|ESB Financial Corporation |  | 19 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





approximately $679,000 as well as increases to stock option expense, retirement plan expense, employee life and health insurance expenses and various taxes and insurance of $138,000, $178,000,
$191,000 and $16,000, respectively.

Premises and equipment expense increased $279,000, or 11.4%, to $2.7 million for 2010
compared to $2.4 million for 2009. This increase is primarily related to a write-down of approximately $154,000 at the Companys AMSCO subsidiary for a property with significant structural damage, as well as increases, that were part of the
normal course of business, in repairs and maintenance, taxes and depreciation to the Companys other properties.

Federal
deposit insurance premiums expense decreased $640,000 to $1.9 million for 2010 compared to $2.5 million for 2009. The decrease relates to a special assessment by the FDIC in the amount of $891,000 in 2009 that did not exist in 2010. This decrease
was partially offset by increases to the 2010 quarterly assessments. The Banks quarterly assessments increased in 2010 in relation to its growth in deposits.

Amortization of intangible assets decreased $81,000, or 16.4%, to $413,000 for 2010, compared to $494,000 for 2009. The decrease was to the normal amortization of the core deposit intangible of prior
acquisitions. Amortization is expected to total $332,000, $251,000, $170,000, $110,000 and $8,000 for the years 2011, 2012, 2013, 2014 and 2015, respectively.

Provision for income taxes.The
provision for income taxes increased $1.2 million or 49.2%, to $3.6 million for 2010 as compared to $2.4 million in 2009. The effective tax rate for 2010 was 19.9% compared to 16.5% for 2009. This was primarily due to the $3.4 million, or 23.6%,
increase in pre-tax income as well as a slight decrease in the percentage of the Companys tax free income to total income.

Net Income Attributable to the noncontrolling
interest.Minority interest increased $780,000 to income of $433,000 in 2010 as compared to a loss of $347,000 for 2009. This represents the portion of the
Companys profits on the consolidated joint ventures earned by the partners.

2009 Results Compared to 2008 Results

General.The Company reported net income of $12.0 million and $10.2 million for 2009 and 2008, respectively. The $1.8 million, or 17.6%, increase in net income between 2009 and 2008 can
primarily be attributed to a decrease in interest expense, provision for loan losses and net income attributable to the noncontrolling interest of $10.8 million, $494,000 and $556,000, respectively, partially offset by decreases in interest income
and noninterest income of $3.8 million and $1.7 million, respectively and increases in noninterest expense and provision for income taxes of $3.7 million and $834,000, respectively.

Net interest income.Net interest income, the primary source of revenue for the Company, is determined by the Companys interest rate spread, which is defined as the difference between income on
earning assets and the cost of funds supporting those assets and the relative amounts of interest earning assets and interest bearing liabilities. Management periodically adjusts the mix of assets and liabilities, as well as the rates earned or paid
on those assets and liabilities in order to manage and improve net interest income. The level of interest rates and changes in the amount and composition of interest earning assets and liabilities affect the Companys net interest income.
Historically and from an interest rate risk perspective, it has been managements perception that differing interest rate environments can cause sensitivity to the Companys net interest income, these being extended low long-term interest
rates or rapidly rising short-term interest rates as well as a sustained inverted yield curve. Net interest income increased by $7.0 million, or 22.5%, to $38.1 million for 2009, compared to $31.1 million for 2008. This increase in net interest
income can be attributed to a decrease in interest expense of $10.8 million, or 16.5%, which was only partially offset by a decrease in interest income of $3.8 million, or 3.9%. The decrease to interest expense reflects a 66 basis point decrease in
the cost of interest bearing liabilities to 3.15% for 2009 from 3.81% for 2008.





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|ESB Financial Corporation |  | 20 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Interest income.Interest income decreased $3.8 million, or 3.9%, to $92.5 million for 2009, compared to $96.3 million for 2008. This decrease in interest income can be attributed to decreases in
interest earned on loans receivable, securities available for sale, FHLB stock and cash equivalents of $764,000, $1.7 million, $1.1 million and $137,000, respectively. Cash equivalents include cash on hand and in banks, interest-earning deposits and
federal funds sold.

Interest earned on loans receivable decreased $764,000, or 1.9%, to $39.3 million for 2009, compared to
$40.0 million for 2008. This decrease was attributable to a decrease in the yield on the portfolio to 5.82% at December 31, 2009 as compared to 6.07% at December 31, 2008, partially offset by an increase in the average balance of loans
outstanding of $17.0 million, or 2.6%, to $682.3 million for the year ended December 31, 2009, as compared to $665.2 million for the year ended December 31, 2008.

Interest earned on securities decreased $1.7 million, or 3.2%, to $53.2 million for 2009 compared to $54.9 million for 2008. This decrease was primarily attributable to a decline in the tax equivalent
yield on the portfolio of 14 basis points to 5.19% for 2009, compared to 5.33% for 2008, as well as a slight decrease in the average balance of securities of $642,000, or 0.06%.

Interest earned on FHLB stock decreased $1.1 million, or 100.0%, for the year ended December 31, 2009 compared to the same period in
the prior year. This decrease was the result of the decision by the FHLB of Pittsburgh to suspend dividends on FHLB stock beginning in the fourth quarter of 2008.

Interest earned on cash equivalents decreased $137,000, or 87.3%, to $20,000 for 2009, compared to $157,000 for 2008 as the yield decreased to 0.09% for 2009, compared to 1.00% for 2008. This decline was
partially offset by an increase in the average balance of these instruments of $5.9 million, or 37.4%, to $21.5 million at December 31, 2009 as compared to $15.7 million at December 31, 2008.

Interest expense.Interest expense decreased $10.8 million, or 16.5%, to $54.3 million for 2009, compared to $65.1 million for 2008. This decrease in interest expense can be attributed to decreases
in interest incurred on deposits, borrowed funds and junior subordinated notes of $4.6 million, $5.7 million and $443,000, respectively.

Interest incurred on deposits decreased $4.6 million, or 20.6%, to $17.8 million for 2009, compared to $22.4 million for 2008. This decrease was primarily attributable to a decrease in the cost of
interest earning deposits to 2.11% in 2009 from 2.81% in 2008, partially offset by an increase of $47.9 million, or 6.02%, in the average balance of interest-bearing deposits to $844.4 million for 2009 as compared to $796.5 million for 2008. The
Company manages its cost of interest-bearing deposits by diligently monitoring the interest rates on its products as well as the rates being offered by its competition through weekly interest rate committee meetings and utilizing rate surveys and
hence subsequently adjusting rates accordingly.

Interest incurred on borrowings, which includes FHLB advances and repurchase
agreements decreased $5.7 million, or 14.4%, to $34.0 million for 2009, compared to $39.7 million for 2008. This decrease was primarily attributable to a decrease in the cost of these funds to 4.08% for 2009 compared to 4.60% for 2008, as well as a
decrease in the average balance of borrowed funds of $30.8 million, or 3.6%, to $833.3 million for 2009, compared to $864.1 million for 2008. The Company, as part of its wholesale strategy, continues to manage its cost of funds through its policy of
laddering the maturities of borrowings up to a five year period. This strategy allows the Company the flexibility to alter its borrowing structure quarterly. During 2009, the Company replaced approximately $281.8 million of maturing wholesale
borrowings at a weighted average rate of 5.15% and an original call/maturity of 2.8 years with borrowings of approximately $189.1 million at a weighted average rate of 2.89% and an average call/maturity of 3.9 years. The restructuring of these
borrowings contributed to the overall decline in interest expense for 2009. For purposes of determining the average life of the borrowings, the Company utilizes the call date if applicable.





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|ESB Financial Corporation |  | 21 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Interest expense on junior subordinated notes decreased $443,000, or 15.0%, to $2.5 million at December 31, 2009 from $3.0 million at
December 31, 2008. This decrease was primarily attributable to a decrease in the cost of these funds to 5.43% for 2009, compared to 6.03% for 2008 as well as a decrease in the average balance of these funds of $2.8 million, or 5.7%, to $46.4
million for 2009, compared to $49.2 million for 2008.

Provision for loan losses.The Company records provisions for loan losses to bring the total allowance for loan losses to a level deemed adequate to cover probable losses in the loan portfolio. In
determining the appropriate level of allowance for loan losses, management considers historical loss experience, the financial condition of borrowers, economic conditions (particularly as they relate to markets where the Company originates loans),
the status of non-performing assets, the estimated underlying value of the collateral and other factors related to the collectibility of the loan portfolio. The provision for loan losses decreased $494,000 to $912,000 for the year ended
December 31, 2009 compared to $1.4 million in the prior year. These provisions were part of the normal operations of the Company for 2009. As a result of the provisions for loan losses during 2009 and 2008, the Companys allowance for loan
losses amounted to $6.0 million, or 0.88%, of the Companys total loan portfolio at December 31, 2009, compared to $6.0 million, or 0.85%, at December 31, 2008. The Companys allowance for loan losses as a percentage of
non-performing loans at December 31, 2009 and December 31, 2008 was 147.58% and 239.95%, respectively.

Noninterest income.Noninterest income decreased $1.7 million, or 31.9%, to $3.6 million for
2009, compared to $5.3 million for 2008. This decrease can be attributed to decreases in income from real estate joint ventures of $3.0 million and a decrease in the cash surrender value of the bank owned life insurance of $229,000, partially offset
by increases in fees and service charges, net gain on sale of loans and other income of $50,000, $201,000 and $202,000, respectively, as well as a decrease in the net realized loss on securities available for sale and derivatives of $485,000 and
$616,000, respectively.

Net realized loss on investments decreased $485,000 to reflect an overall loss of $371,000 for 2009
compared to a net loss of $856,000 for 2008. During 2009 the Company incurred pre-tax impairment charges of approximately $617,000, including approximately $551,000 on a $2.5 million collateralized debt obligation that is comprised of sixteen
financial institutions and approximately $66,000 on three of its equity investments in small banks that had experienced a decline in their market value for the last several quarters. These losses were offset by gains of approximately $246,000 on the
sale of two of the Companys equity investments. Additionally, the Company had a gain on derivatives in 2009 of $120,000 compared to losses in 2008 of $616,000 because of market value adjustments to the Companys interest rate caps.

Income from real estate joint ventures decreased $3.0 million to a loss of $1.9 million for 2009 compared to income of $1.1
million for 2008. Included in this decrease was a pre-tax write-down of land acquisition and development costs as well as unit construction costs of approximately $2.5 million at two of the Companys joint ventures.

Fees and service charges increased $50,000, or 1.3%, to $4.0 million for 2009, compared to $3.9 million for 2008. These increases are
primarily attributed to increase in fees on our checking and savings products of approximately $97,000, including an increase of $72,000 in fees on NOW accounts primarily due to increased participation in our ESB Rewards program for debit card
holders. The ESB Rewards program offers customers the ability to earn points, based on debit card usage, which can be redeemed for prizes. Offsetting the increase in fees related to checking and savings products were decreases to various loan fees
of approximately $47,000.





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|ESB Financial Corporation |  | 22 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Net gain on sale of loans held for sale increased to $203,000 for the period ended December 31, 2009 from $2,000 at December 31,
2008. During the period the Company originated loans held for sale of approximately $18.3 million and sold approximately $18.1 million of loans held for sale.

Noninterest expense.Noninterest
expenses increased $3.8 million, or 16.2%, to $26.8 million for 2009, compared to $23.0 million for 2008. This increase can be primarily attributed to increases in compensation and employee benefits, federal deposit insurance premiums, data
processing, advertising and other expenses of $1.1 million, $2.4 million, $166,000, $132,000 and $128,000, respectively, partially offset by decreases to premises and equipment and amortization of intangible assets of $80,000 and $107,000,
respectively.

Compensation and employee benefits increased $1.1 million, or 8.0%, to $14.7 million for 2009, compared to
$13.6 million in 2008. This increase was related to normal salary adjustments and bonuses between the years of approximately $734,000 as well as increases to stock option expense, retirement plan expense and various taxes and insurance of $46,000,
$221,000 and $80,000, respectively.

Federal deposit insurance premiums expense increased $2.4 million to $2.5 million for
2009, compared to $119,000 for 2008. This increase is primarily due to increases in the quarterly rates assessed by the Federal Deposit Insurance Corporation, as well as a special assessment by the FDIC in the amount of $891,000, paid in the third
quarter of 2009.

Data processing expense increased $166,000, or 8.5%, to $2.1 million for 2009, compared to $2.0 million for
2008. This increase is primarily related to enhancements in technology.

Amortization of intangible assets decreased $107,000,
or 17.8%, to $494,000 for 2009, compared to $601,000 for 2008. The decrease was to the normal amortization of the core deposit intangible of prior acquisitions. Amortization is expected to total $413,000, $332,000, $251,000, $170,000, $100,000 and
$8,000 for the years 2010, 2011, 2012, 2013, 2014 and 2015, respectively.

Provision for income taxes.The provision for income taxes increased $834,000, or 53.9%, to
$2.4 million for 2009 as compared to $1.5 million in 2008. The effective tax rate for 2009 was 16.6% compared to 13.2% for 2008. This was primarily due to the $2.6 million, or 22.4%, increase in pre-tax income as well as a decrease in the percentage
of the Companys tax free income to total income.

Net Income Attributable to the noncontrolling interest.Minority interest decreased $556,000
to a loss of $347,000 for 2009 compared to income of $209,000 for 2008. This decrease was directly related to the previously mentioned write-downs at the joint ventures as well as the decrease in income from sales and represents the portion of the
Companys profits on the consolidated joint ventures earned by the partners.

Asset and Liability Management

The primary objective of the Companys asset and liability management function is to maximize the Companys net
interest income while simultaneously maintaining an acceptable level of interest rate risk given the Companys operating environment, capital and liquidity requirements, performance objectives and overall business focus. The principal
determinant of the exposure of the Companys earnings to interest rate risk is the timing difference between the repricing or maturity of interest-earning assets and the repricing or maturity of its interest-bearing liabilities. The
Companys asset and liability management policies are designed to decrease interest rate sensitivity primarily by shortening the maturities of interest-earning assets while at the same time extending the maturities of interest-bearing
liabilities. The Board of Directors of the Company continues to believe in strong asset/liability management in order to insulate the Company from material and prolonged increases in interest rates. As a result of this policy, the Company emphasizes
a larger, more diversified portfolio of residential mortgage loans in the form of mortgage-backed securities. Mortgage-backed securities generally increase the quality of the Companys assets by virtue of the insurance or 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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|ESB Financial Corporation |  | 23 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





The Companys Board of Directors has established an Asset and Liability Management Committee consisting of outside directors, the
President and Chief Executive Officer, Group Senior Vice President/Chief Financial Officer, Group Senior Vice President/Operations and Group Senior Vice President/Lending. This committee, which meets quarterly, generally monitors various asset and
liability management policies and strategies, which were implemented by the Company over the past few years. These strategies have included: (i) an emphasis on the investment in adjustable-rate and shorter duration mortgage-backed securities,
(ii) an emphasis on the origination of single-family residential adjustable-rate mortgages (ARMs), residential construction loans and commercial real estate loans, which generally have adjustable or floating interest rates and/or shorter
maturities than traditional single-family residential loans and consumer loans, which generally have shorter terms and higher interest rates than mortgage loans, (iii) increase the duration of the liability base of the Company by extending the
maturities of savings deposits, borrowed funds and repurchase agreements and (iv) the purchase of off-balance sheet interest rate caps and structured borrowings with imbedded caps which help to insulate the Banks interest rate risk
position from increases in interest rates.

As of December 31, 2010, the implementation of these asset and liability
initiatives resulted in the following: (i) $176.5 million or 23.5% of the Companys portfolio of mortgage-backed securities were secured by ARMs; (ii) $199.1 million or 30.3% of the Companys total loan portfolio had adjustable
interest rates or maturities of 12 months or less and $64.0 million or 18.9% of the Companys portfolio of single-family residential mortgage loans (including residential construction loans) consisted of ARMs, (iii) the weighted average
call/maturity of the Companys FHLB advances and repurchase agreements was 3.8 years and (iv) the Company had $100.0 million in notional amount of interest rate caps and $165.0 million in structured borrowings with $190.0 million in
notional amount of imbedded caps.

Interest Rate Sensitivity Gap Analysis

The implementation of the foregoing asset and liability initiatives and strategies, combined with other external factors such as demand
for the Companys products and economic and interest rate environments in general, has resulted in the Company historically being able to maintain a one-year interest rate sensitivity gap ranging between 0.0% of total assets to a negative 20.0%
of total assets. The one-year interest rate sensitivity gap is defined as the difference between the Companys interest-earning assets, which are scheduled to mature or reprice within one year and its interest-bearing liabilities, which are
scheduled to mature or reprice within one year. At December 31, 2010, the Companys interest-earning assets maturing or repricing within one year totaled $668.1 million while the Companys interest-bearing liabilities maturing or
repricing within one-year totaled $704.1 million, providing a deficiency of interest-earning assets over interest-bearing liabilities of $36.0 million or a negative 1.9% of total assets. At December 31, 2010, the percentage of the
Companys assets to liabilities maturing or repricing within one year was 94.9%. The Company strives to maintain its one-year interest rate sensitivity gap between a range of 0.0% and a negative 20.0% of total assets.





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|ESB Financial Corporation |  | 24 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





The following table presents the amounts of interest-earning assets and interest-bearing liabilities outstanding as of December 31,
2010 which are expected to mature, prepay or reprice in each of the future time periods presented:



|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|---------------------------------------------- |  | ----------------------- | -------- |  | ------------------------------- | - | -------- | --------------------------- |  | - | ---------------------------- |  |  | -------------------- | --------- |  | ----- | - | ------- |  |  | - | --------- | 
|(Dollar amounts in thousands)                  |  | Due insix monthsor less |          |  | Due withinsix monthsto one year |   |          | Due withinone tothree years |  |   | Due withinthree tofive years |  |  | Due inoverfive years |           |  | Total |  
|Total interest-earning assets                  |  | $                       | 490,500  |  |                                 | $ | 177,578  |                             |  | $ | 477,037                      |  |  | $                    | 231,573   |  |       | $ | 366,836 |  |  | $ | 1,743,524 | 
|Total interest-bearing liabilities             |  |                         | 529,939  |  |                                 |   | 174,194  |                             |  |   | 553,284                      |  |  |                      | 250,751   |  |       |   | 215,704 |  |  |   | 1,723,872 | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|Maturity or repricing gap during the period    |  | $                       | (39,439) |  |                                 | $ | 3,384    |                             |  | $ | (76,247)                     |  |  | $                    | (19,178)  |  |       | $ | 151,132 |  |  | $ | 19,652    | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|Cumulative gap                                 |  | $                       | (39,439) |  |                                 | $ | (36,055) |                             |  | $ | (112,302)                    |  |  | $                    | (131,480) |  |       | $ | 19,652  |  |  |   |           | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|Ratio of gap during the period to total assets |  |                         | (2.06%)  |  |                                 |   | 0.18%    |                             |  |   | (3.98%)                      |  |  |                      | (1.00%)   |  |       |   | 7.90%   |  |  |   |           | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|Ratio of cumulative gap to total assets        |  |                         | (2.06%)  |  |                                 |   | (1.88%)  |                             |  |   | (5.87%)                      |  |  |                      | (6.87%)   |  |       |   | 1.03%   |  |  |   |           | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|Total assets                                   |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  | $ | 1,913,867 | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 
|                                               |  |                         |          |  |                                 |   |          |                             |  |   |                              |  |  |                      |           |  |       |   |         |  |  |   |           | 

Historically, the one-year interest rate sensitivity
gap has been the most common industry standard used to measure an institutions interest rate risk position. In recent years, in addition to utilizing interest rate sensitivity gap analysis, the Company has increased its emphasis on the
utilization of interest rate sensitivity simulation analysis to evaluate and manage interest rate risk.

Interest Rate
Sensitivity Simulation Analysis

The Company also utilizes income simulation modeling in measuring its interest rate
risk and managing its interest rate sensitivity. The Asset and Liability Management Committee of the Company believes that simulation modeling enables the Company to more accurately evaluate and manage the possible effects on net interest income due
to the exposure to changing market interest rates, the slope of the yield curve and different loan and mortgage-backed security prepayment and deposit decay assumptions under various interest rate scenarios.

As with gap analysis and earnings simulation modeling, assumptions about the timing and variability of cash flows are critical in
economic value of equity (EVE) valuation analysis. Particularly important are the assumptions driving mortgage prepayments and the assumptions about expected attrition of the core deposit portfolios. These assumptions are based on the Companys
historical experience and industry standards and are applied consistently across the different rate risk measures.

The Company has
established the following guidelines for assessing interest rate risk:

Net interest income simulation.Given a 200 basis point parallel and gradual increase or decrease in
market interest rates, the Company strives to maintain the change in net interest income to no more than approximately 10% for a one-year period.

Economic Value of Equity (EVE).EVE is the
net present value of the Companys existing assets and liabilities. EVE is expressed as a percentage of the value of equity to total assets. Given a 200 basis point immediate and permanent increase or decrease in market interest rates, the
Company strives to maintain the EVE increase or decrease to no more than approximately 50% of stockholders equity.





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|ESB Financial Corporation |  | 25 |  | 2010 Annual Report



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##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





The following table presents the simulated impact of a 100 basis point or 200 basis point upward or downward shift of market interest
rates on net interest income, return on average equity, diluted earnings per share and the change in EVE. This analysis was done assuming that the interest-earning asset and interest-bearing liability levels at December 31, 2010 remained
constant. The impact of the market rate movements was developed by simulating the effects of rates changing gradually over a one-year period from the December 31, 2010 levels for net interest income, return on average equity and diluted
earnings per share. The impact of market rate movements was developed by simulating the effects of an immediate and permanent change in rates at December 31, 2010 for the change in EVE. The impact of the rate change for net interest income is
compared to the base amount which can fluctuate from period to period.



|                                                 |  |          |         |  |        |  |          |          |  |  |        |  |  |        |          |  |  |  |     | 
|------------------------------------------------ |  | -------- | ------- |  | ------ |  | -------- | -------- |  |  | ------ |  |  | ------ | -------- |  |  |  | --- | 
|                                                 |  | Increase |         |  |        |  |          | Decrease | 
|                                                 |  | +100BP   |         |  | +200BP |  |          |          |  |  | -100BP |  |  | -200BP |         
|Net interest income - increase (decrease)        |  |          | 2.88%   |  |        |  | 4.91%    |          |  |  |        |  |  |        | (4.19%)  |  |  |  | N/A | 
|Return on average equity - increase (decrease)   |  |          | 5.25%   |  |        |  | 8.89%    |          |  |  |        |  |  |        | (7.49%)  |  |  |  | N/A | 
|Diluted earnings per share - increase (decrease) |  |          | 5.38%   |  |        |  | 9.19%    |          |  |  |        |  |  |        | (7.85%)  |  |  |  | N/A | 
|EVE - increase (decrease)                        |  |          | (6.14%) |  |        |  | (14.38%) |          |  |  |        |  |  |        | (16.73%) |  |  |  | N/A | 

The following table presents the simulated impact of a 100 basis point or 200 basis point upward or downward shift of market interest rates on net interest income, return on average equity, diluted
earnings per share and the change in EVE. This analysis was done assuming that the interest-earning asset and interest-bearing liability levels at December 31, 2009 remained constant. The impact of the market rate movements was developed by
simulating the effects of rates changing gradually over a one-year period from the December 31, 2009 levels for net interest income, return on average equity and diluted earnings per share. The impact of market rate movements was developed by
simulating the effects of an immediate and permanent change in rates at December 31, 2009 for the change in EVE. The impact of the rate change for net interest income is compared to the base amount which can fluctuate from period to period.



|                                                 |  |          |         |  |        |  |          |          |  |  |        |  |  |        |         |  |  |  |     | 
|------------------------------------------------ |  | -------- | ------- |  | ------ |  | -------- | -------- |  |  | ------ |  |  | ------ | ------- |  |  |  | --- | 
|                                                 |  | Increase |         |  |        |  |          | Decrease | 
|                                                 |  | +100BP   |         |  | +200BP |  |          |          |  |  | -100BP |  |  | -200BP |        
|Net interest income - increase (decrease)        |  |          | 2.31%   |  |        |  | 3.70%    |          |  |  |        |  |  |        | (0.49%) |  |  |  | N/A | 
|Return on average equity - increase (decrease)   |  |          | 3.85%   |  |        |  | 6.12%    |          |  |  |        |  |  |        | (0.79%) |  |  |  | N/A | 
|Diluted earnings per share - increase (decrease) |  |          | 3.95%   |  |        |  | 6.30%    |          |  |  |        |  |  |        | (0.76%) |  |  |  | N/A | 
|EVE - increase (decrease)                        |  |          | (7.87%) |  |        |  | (19.35%) |          |  |  |        |  |  |        | (5.62%) |  |  |  | N/A | 

Liquidity and Capital Resources

The Companys goal
in liquidity management is to ensure that sufficient cash flow exists to address deposit fluctuation, loan demand and debt service requirements. Liquidity is the availability of funds, or assurance that funds will be available, to honor all cash
outflow commitments as they come due. These commitments are generally met through cash inflows. The Companys primary sources of funds generally have been deposits obtained through the offices of the Bank, borrowings from the FHLB, repurchase
agreement borrowings and amortization and prepayments of outstanding loans and maturing investment securities. While payments of principal and interest on loans and other investments are relatively predictable sources of funds, deposit flows are
much less predictable since they are greatly influenced by the level of interest rates, the state of the economy, competition and industry conditions. Liquidity risk is the risk of not being able to obtain funds at a reasonable price within a
reasonable period of time to meet financial commitments when due. The Company measures its liquidity position on an ongoing basis and estimates how funding requirements are likely to evolve over time.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 26 |  | 2010 Annual Report



---

##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





Liquidity management is integral to other key elements such as capital adequacy, asset quality and profitability and is a fundamental component in the safe and sound management of the Company.
The Company supports the process of liquidity planning by assessing potential future liquidity needs and taking into account various possible changes in economic, market, political, regulatory and other external or internal conditions. Such planning
involves identifying known, expected and potential cash outflows and weighing alternative business management strategies to ensure adequate cash inflows. The Board of Directors has approved a Liquidity Policy and has designated the Asset Liability
Committee (ALCO) to oversee compliance of this policy. The ALCO has assigned responsibility of the management and supervision of the overall liquidity to the Investment Committee.

Net cash provided by operating activities totaled $24.0 million for the year ended December 31, 2010. Net cash provided by operating
activities was primarily comprised of net income of $14.7 million as well as slight variances in other operating activities.

Funds provided by investing activities totaled $46.9 million during the year ended December 31, 2010. Primary sources of funds
include principal repayments of loans receivable and securities available for sale of $216.7 million and $268.3 million, respectively, as well as $9.0 million of proceeds from real estate held for investment. Primary uses of funds were $185.1
million of loan origination and purchases and $249.8 million for purchases of securities available for sale and $12.0 million for funding of real estate held for investment.

Funds used by financing activities totaled $51.4 million for the year ended December 31, 2010. The primary uses of funds were for repayments of long and short term borrowings, funding dividends paid
and the purchase of treasury stock of $177.1 million, $17.5 million $4.8 million and $1.1 million. Partially offsetting these uses were sources of funds including an increase in deposits and proceeds from long-term borrowings of $68.3 million and
$80.4 million, respectively.

At December 31, 2010 the total approved loan commitments outstanding amounted to $5.2
million. At the same date, commitments under unused lines of credit and credit card lines amounted to $83.9 million, the unadvanced portion of construction loans approximated $12.2 million and letters of credit amounted to $14.8 million.
Certificates of deposit scheduled to mature in one year or less at December 31, 2010 totaled $410.5 million.

Historically, the Company used its sources of funds primarily to meet its ongoing commitments to pay maturing savings certificates and
savings withdrawals, fund loan commitments and maintain a substantial portfolio of investment securities. The Company has been able to generate sufficient cash through the retail deposit market, its traditional funding source and through FHLB
advances and other borrowings, to provide the cash utilized in investing activities. Management believes that the Company currently has adequate liquidity available to respond to liquidity demands.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 27 |  | 2010 Annual Report



---

##### Table of Contents

Managements Discussion and Analysis of

Financial Condition and Results of Operations(continued)





The Companys contractual obligations at December 31, 2010 are as follows:



|                                       |  |       |         |  |                       |   |         |           |  |   |           |  |  |                  |         |  |  |   |         | 
|-------------------------------------- |  | ----- | ------- |  | --------------------- | - | ------- | --------- |  | - | --------- |  |  | ---------------- | ------- |  |  | - | ------- | 
|(Dollar amounts in thousands)          |  |       |         |  | Payment due by period |   |         |           | 
|                                       |  |       |         |  |                      
|Contractual Obligations                |  | Total |         |  | Less than 1year       |   |         | 1-3 Years |  |   | 3-5 Years |  |  | More than 5years |        
|                                       |  |       |         |  |                      
|Long-term debt obligations (1)         |  | $     | 697,265 |  |                       | $ | 93,266  |           |  | $ | 315,363   |  |  | $                | 161,679 |  |  | $ | 126,957 | 
|Time deposits (1)                      |  |       | 231,707 |  |                       |   | 11,317  |           |  |   | 159,117   |  |  |                  | 57,333  |  |  |   | 3,940   | 
|Operating lease obligations            |  |       | 555     |  |                       |   | 75      |           |  |   | 150       |  |  |                  | 152     |  |  |   | 178     | 
|Supplemental executive retirement plan |  |       | 5,325   |  |                       |   | 85      |           |  |   | 170       |  |  |                  | 170     |  |  |   | 4,900   | 
|Directors retirement plan             |  |       | 807     |  |                       |   | 125     |           |  |   | 262       |  |  |                  | 267     |  |  |   | 153     | 
|                                       |  |       |         | 
|Total Contractual Obligations          |  | $     | 935,659 |  |                       | $ | 104,868 |           |  | $ | 475,062   |  |  | $                | 219,601 |  |  | $ | 136,128 | 
|                                       |  |       |         | 
|                                       |  |       |         | 



|(1) | Excludes Interest
|--- | -----------------

The sources of liquidity and capital resources discussed above are believed by management to be sufficient to fund outstanding loan commitments and meet other obligations.

Current regulatory requirements specify that ESB and similar institutions must maintain, tier one leverage capital equal to 3.0% of
adjusted total assets and total capital equal to 8.0% of risk-weighted assets. The FDIC has adopted more stringent core capital requirements which require that all banks, except for the most highly rated banks, have at least an additional 100 to 200
basis points over those levels to be considered well capitalized. Therefore, an absolute minimum leverage ratio of not less than 4.0% must be maintained by those banks that are not highly rated or that are anticipating or experiencing significant
growth. The FDIC reserves the right to apply this higher standard to any insured financial institution when considering an institutions capital adequacy. At December 31, 2010, ESB was in compliance with all regulatory capital requirements
with tier one leverage capital and risk-based capital ratios of 8.1% and 15.1%, respectively.

Impact of Inflation and
Changing Prices

The consolidated financial statements of the Company and related notes presented herein have been
prepared in accordance with U.S. generally accepted accounting principles which require the measurement of financial condition and operating results in terms of historical dollars, without considering changes in the relative purchasing power of
money over time due to inflation.

Unlike most industrial companies, substantially all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institutions performance than the effects of general levels of inflation. Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services since such prices are affected by inflation to a larger degree than interest rates. In the current interest rate environment, liquidity and the maturity structure of the
Companys assets and liabilities are critical to the maintenance of acceptable performance levels.

Recent Accounting
and Regulatory Pronouncements

The Companys discussion of recent accounting and regulatory pronouncements can be
found in Note 1 of the Companys consolidated financial statements.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 28 |  | 2010 Annual Report



---

##### Table of Contents

Consolidated Statements of Financial Condition



(Dollar amounts in thousands, except share data)



|                                                                          |      |              |           |      |  |   |           |  
|------------------------------------------------------------------------- | ---- | ------------ | --------- | ---- |  | - | --------- | -
|                                                                          |      | December 31, |          
|                                                                          | 2010 |              |           | 2009 | 
|Assets                                                                    |      |              |           |      |  |   |           |  
|Cash on hand and in banks                                                 |      | $            | 5,632     |      |  | $ | 5,894     |  
|Interest-earning deposits                                                 |      |              | 30,072    |      |  |   | 10,390    |  
|Federal funds sold                                                        |      |              | 3         |      |  |   | 16        |  
|                                                                          |      |              |           |      |  |   |           |  
|Cash and cash equivalents                                                 |      |              | 35,707    |      |  |   | 16,300    |  
|Securities available for sale; cost of $1,050,712 and $1,071,735          |      |              | 1,077,672 |      |  |   | 1,106,910 |  
|Loans receivable, net of allowance for loan losses of $6,547 and $6,027   |      |              | 640,887   |      |  |   | 671,387   |  
|Loans held for sale                                                       |      |              | 80        |      |  |   | 201       |  
|Accrued interest receivable                                               |      |              | 9,607     |      |  |   | 10,312    |  
|Federal Home Loan Bank (FHLB) stock                                       |      |              | 26,097    |      |  |   | 27,470    |  
|Premises and equipment, net                                               |      |              | 13,882    |      |  |   | 13,043    |  
|Real estate acquired through foreclosure, net                             |      |              | 1,083     |      |  |   | 725       |  
|Real estate held for investment                                           |      |              | 22,293    |      |  |   | 27,479    |  
|Goodwill                                                                  |      |              | 41,599    |      |  |   | 41,599    |  
|Intangible assets                                                         |      |              | 895       |      |  |   | 1,313     |  
|Bank owned life insurance                                                 |      |              | 30,098    |      |  |   | 29,381    |  
|Securities receivable                                                     |      |              | 2,173     |      |  |   | 2,947     |  
|Prepaid expenses and other assets                                         |      |              | 11,794    |      |  |   | 11,610    |  
|                                                                          |      |              |           |      |  |   |           |  
|Total assets                                                              |      | $            | 1,913,867 |      |  | $ | 1,960,677 |  
|                                                                          |      |              |           |      |  |   |           |  
|Liabilities and Stockholders Equity                                      |      |              |           |      |  |   |           |  
|Liabilities:                                                              |      |              |           |      |  |   |           |  
|Deposits                                                                  |      | $            | 1,012,645 |      |  | $ | 944,347   |  
|FHLB advances                                                             |      |              | 290,440   |      |  |   | 420,422   |  
|Repurchase agreements                                                     |      |              | 363,000   |      |  |   | 343,000   |  
|Other borrowings                                                          |      |              | 15,623    |      |  |   | 19,826    |  
|Junior subordinated notes                                                 |      |              | 46,393    |      |  |   | 46,393    |  
|Advance payments by borrowers for taxes and insurance                     |      |              | 2,441     |      |  |   | 2,661     |  
|Accounts payable for land development                                     |      |              | 3,409     |      |  |   | 4,608     |  
|Accrued expenses and other liabilities                                    |      |              | 12,563    |      |  |   | 14,668    |  
|                                                                          |      |              |           |      |  |   |           |  
|Total liabilities                                                         |      |              | 1,746,514 |      |  |   | 1,795,925 |  
|                                                                          |      |              |           |      |  |   |           |  
|Stockholders Equity:                                                     |      |              |           |      |  |   |           |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued |      |              | -         |      |  |   | -         |  
|Common stock, $.01 par value, 30,000,000 shares authorized;               |      |              |           |      |  |   |           |  
|13,805,812 shares issued;                                                 |      |              |           |      |  |   |           |  
|12,033,940 and 12,036,553 shares outstanding                              |      |              | 138       |      |  |   | 138       |  
|Additional paid-in capital                                                |      |              | 102,229   |      |  |   | 101,571   |  
|Treasury stock, at cost; 1,771,872 and 1,769,259 shares                   |      |              | (20,412   | )    |  |   | (20,302   | )
|Unearned Employee Stock Ownership Plan (ESOP) shares                      |      |              | -         |      |  |   | (814      | )
|Retained earnings                                                         |      |              | 70,605    |      |  |   | 61,660    |  
|Accumulated other comprehensive income, net                               |      |              | 15,334    |      |  |   | 22,658    |  
|                                                                          |      |              |           |      |  |   |           |  
|Total ESB Financial Corporations stockholders equity                    |      |              | 167,894   |      |  |   | 164,911   |  
|Noncontrolling interest                                                   |      |              | (541      | )    |  |   | (159      | )
|                                                                          |      |              |           |      |  |   |           |  
|Total stockholders equity                                                |      |              | 167,353   |      |  |   | 164,752   |  
|                                                                          |      |              |           |      |  |   |           |  
|Total liabilities and stockholders equity                                |      | $            | 1,913,867 |      |  | $ | 1,960,677 |  
|                                                                          |      |              |           |      |  |   |           |  

See accompanying notes to consolidated financial statements.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 29 |  | 2010 Annual Report



---

##### Table of Contents

Consolidated Statements of Operations



(Dollar amounts in thousands, except share data)

|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|--------------------------------------------------------------------- | ---- | ----------------------- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                      |      | Year ended December 31, |           
|                                                                      | 2010 |                         |            | 2009 |  |   | 2008       |  
|Interest income:                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Loans receivable                                                      |      | $                       | 37,467     |      |  | $ | 39,271     |   |  | $ | 40,035     |  
|Taxable securities available for sale                                 |      |                         | 41,448     |      |  |   | 47,804     |   |  |   | 50,100     |  
|Tax-exempt securities available for sale                              |      |                         | 5,933      |      |  |   | 5,400      |   |  |   | 4,844      |  
|FHLB stock                                                            |      |                         | -          |      |  |   | -          |   |  |   | 1,122      |  
|Interest-earning deposits and federal funds sold                      |      |                         | 16         |      |  |   | 20         |   |  |   | 157        |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Total interest income                                                 |      |                         | 84,864     |      |  |   | 92,495     |   |  |   | 96,258     |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Interest expense:                                                     |      |                         |            |      |  |   |            |   |  |   |            |  
|Deposits                                                              |      |                         | 14,270     |      |  |   | 17,796     |   |  |   | 22,408     |  
|FHLB advances and repurchase agreements                               |      |                         | 25,168     |      |  |   | 34,031     |   |  |   | 39,744     |  
|Junior subordinated notes                                             |      |                         | 2,459      |      |  |   | 2,520      |   |  |   | 2,963      |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Total interest expense                                                |      |                         | 41,897     |      |  |   | 54,347     |   |  |   | 65,115     |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Net interest income                                                   |      |                         | 42,967     |      |  |   | 38,148     |   |  |   | 31,143     |  
|Provision for loan losses                                             |      |                         | 1,404      |      |  |   | 912        |   |  |   | 1,406      |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Net interest income after provision for loan losses                   |      |                         | 41,563     |      |  |   | 37,236     |   |  |   | 29,737     |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Noninterest income:                                                   |      |                         |            |      |  |   |            |   |  |   |            |  
|Fees and service charges                                              |      |                         | 3,894      |      |  |   | 3,966      |   |  |   | 3,916      |  
|Net gain on sale of loans                                             |      |                         | 40         |      |  |   | 203        |   |  |   | 2          |  
|Increase of cash surrender value of bank owned life insurance         |      |                         | 717        |      |  |   | 899        |   |  |   | 1,128      |  
|Net realized gain on securities available for sale                    |      |                         | -          |      |  |   | 246        |   |  |   | -          |  
|Impairment losses on investment securities                            |      |                         |            |      |  |   |            |   |  |   |            |  
|Total other-than-temporary impairment losses                          |      |                         | (1,839     | )    |  |   | (617       | ) |  |   | (856       | )
|Portion of loss recognized in other comprehensive income before taxes |      |                         | 600        |      |  |   | -          |   |  |   | -          |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Net impairment losses on investment securities                        |      |                         | (1,239     | )    |  |   | (617       | ) |  |   | (856       | )
|Net realized (loss) gain on derivatives                               |      |                         | (711       | )    |  |   | 120        |   |  |   | (616       | )
|Income (loss) from real estate joint ventures                         |      |                         | 1,122      |      |  |   | (1,905     | ) |  |   | 1,102      |  
|Other                                                                 |      |                         | 644        |      |  |   | 683        |   |  |   | 601        |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Total noninterest income                                              |      |                         | 4,467      |      |  |   | 3,595      |   |  |   | 5,277      |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Noninterest expense:                                                  |      |                         |            |      |  |   |            |   |  |   |            |  
|Compensation and employee benefits                                    |      |                         | 15,902     |      |  |   | 14,678     |   |  |   | 13,596     |  
|Premises and equipment                                                |      |                         | 2,719      |      |  |   | 2,440      |   |  |   | 2,520      |  
|Federal deposit insurance premiums                                    |      |                         | 1,900      |      |  |   | 2,540      |   |  |   | 119        |  
|Data processing                                                       |      |                         | 2,151      |      |  |   | 2,118      |   |  |   | 1,952      |  
|Amortization of intangible assets                                     |      |                         | 413        |      |  |   | 494        |   |  |   | 601        |  
|Advertising                                                           |      |                         | 608        |      |  |   | 574        |   |  |   | 442        |  
|Other                                                                 |      |                         | 4,120      |      |  |   | 3,940      |   |  |   | 3,812      |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Total noninterest expense                                             |      |                         | 27,813     |      |  |   | 26,784     |   |  |   | 23,042     |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Income before provision for income taxes                              |      |                         | 18,217     |      |  |   | 14,047     |   |  |   | 11,972     |  
|Provision for income taxes                                            |      |                         | 3,553      |      |  |   | 2,382      |   |  |   | 1,548      |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Net income before noncontrolling interest                             |      |                         | 14,664     |      |  |   | 11,665     |   |  |   | 10,424     |  
|Less: net income (loss) attributable to noncontrolling interest       |      |                         | 433        |      |  |   | (347       | ) |  |   | 209        |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Net income attributable to ESB Financial Corporation                  |      | $                       | 14,231     |      |  | $ | 12,012     |   |  | $ | 10,215     |  
|                                                                      |      |                         |            |      |  |   |            |   |  |   |            |  
|Net income per share:                                                 |      |                         |            |      |  |   |            |   |  |   |            |  
|Basic                                                                 |      | $                       | 1.19       |      |  | $ | 1.01       |   |  | $ | 0.85       |  
|Diluted                                                               |      | $                       | 1.18       |      |  | $ | 1.00       |   |  | $ | 0.84       |  
|Cash dividends declared per share                                     |      | $                       | 0.40       |      |  | $ | 0.40       |   |  | $ | 0.40       |  
|Weighted average shares outstanding                                   |      |                         | 11,987,718 |      |  |   | 11,944,901 |   |  |   | 12,044,075 |  
|Weighted average shares and share equivalents outstanding             |      |                         | 12,069,921 |      |  |   | 12,031,533 |   |  |   | 12,124,485 |  

See accompanying
notes to consolidated financial statements.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 30 |  | 2010 Annual Report



---

##### Table of Contents

Consolidated Statements of Changes in Stockholders Equity



(Dollar amounts in thousands, except share data)

|                                                                         |  |             |     |  |                          |   |         |               |  |   |                    |   |  |                  |         |   |                                                       |   |        |                        |  |   |                          |   |  |   |      |   |  |   |         |  
|------------------------------------------------------------------------ |  | ----------- | --- |  | ------------------------ | - | ------- | ------------- |  | - | ------------------ | - |  | ---------------- | ------- | - | ----------------------------------------------------- | - | ------ | ---------------------- |  | - | ------------------------ | - |  | - | ---- | - |  | - | ------- | -
|                                                                         |  | Commonstock |     |  | Additionalpaid-incapital |   |         | Treasurystock |  |   | UnearnedESOPshares |   |  | Retainedearnings |         |   | Accumulatedothercomprehensiveincome (loss),net of tax |   |        | NoncontrollingInterest |  |   | Totalstockholdersequity |  
|                                                                         |  |             |     | 
|Balance at January 1, 2008                                               |  | $           | 138 |  |                          | $ | 100,884 |               |  |   | $    (16,688)      |   |  | $                | (2,571) |   |                                                       | $ | 50,818 |                        |  |   | $     264                |   |  | $ | 812  |   |  | $ | 133,657 |  
|Comprehensive results:                                                   |  |             |     |  |                          |   |         |               |  |   |                    |   |  |                  |         |   |                                                       |   |        |                        |  |   |                          |   |  |   |      |   |  |   |         |  
|Net income                                                               |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | 10,215 |                        |  |   | -                        |   |  |   | 209  |   |  |   | 10,424  |  
|Other comprehensive results, net                                         |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | 5,630                    |   |  |   | -    |   |  |   | 5,630   |  
|Reclassification adjustment                                              |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | 565                      |   |  |   | -    |   |  |   | 565     |  
|                                                                         |  |             |     | 
|Total comprehensive results                                              |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | 10,215 |                        |  |   | 6,195                    |   |  |   | 209  |   |  |   | 16,619  |  
|Cash dividends at $0.40 per share                                        |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | (4,783 | )                      |  |   | -                        |   |  |   | -    |   |  |   | (4,783  | )
|Purchase of treasury stock, at cost (334,273 shares)                     |  |             | -   |  |                          |   | -       |               |  |   | (3,410             | ) |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | (3,410  | )
|Reissuance of treasury stock for stock option exercises (51,285 shares)  |  |             | -   |  |                          |   | -       |               |  |   | 727                |   |  |                  | -       |   |                                                       |   | (461   | )                      |  |   | -                        |   |  |   | -    |   |  |   | 266     |  
|Compensation expense on ESOP                                             |  |             | -   |  |                          |   | 1       |               |  |   | -                  |   |  |                  | 899     |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 900     |  
|Additional ESOP shares purchased                                         |  |             |     |  |                          |   | (76     | )             |  |   |                    |   |  |                  |         |   |                                                       |   |        |                        |  |   |                          |   |  |   |      |   |  |   | (76     | )
|Tax effect of compensatory stock options                                 |  |             | -   |  |                          |   | 20      |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 20      |  
|Effect of compensation expense for stock options                         |  |             | -   |  |                          |   | 175     |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 175     |  
|Capital disbursement for noncontrolling interest                         |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | (340 | ) |  |   | (340    | )
|Accrued compensation expense MRP                                         |  |             | -   |  |                          |   | 37      |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 37      |  
|                                                                         |  |             |     | 
|Balance at December 31, 2008                                             |  |             | 138 |  |                          |   | 101,041 |               |  |   | (19,371            | ) |  |                  | (1,672  | ) |                                                       |   | 55,789 |                        |  |   | 6,459                    |   |  |   | 681  |   |  |   | 143,065 |  
|Comprehensive results:                                                   |  |             |     |  |                          |   |         |               |  |   |                    |   |  |                  |         |   |                                                       |   |        |                        |  |   |                          |   |  |   |      |   |  |   |         |  
|Net income                                                               |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | 12,012 |                        |  |   | -                        |   |  |   | (347 | ) |  |   | 11,665  |  
|Other comprehensive results, net                                         |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | 15,954                   |   |  |   | -    |   |  |   | 15,954  |  
|Reclassification adjustment                                              |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | 245                      |   |  |   | -    |   |  |   | 245     |  
|                                                                         |  |             |     | 
|Total comprehensive results                                              |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | 12,012 |                        |  |   | 16,199                   |   |  |   | (347 | ) |  |   | 27,864  |  
|Cash dividends at $0.40 per share                                        |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | (4,766 | )                      |  |   | -                        |   |  |   | -    |   |  |   | (4,766  | )
|Purchase of treasury stock, at cost (232,151 shares)                     |  |             | -   |  |                          |   | -       |               |  |   | (2,932             | ) |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | (2,932  | )
|Reissuance of treasury stock for stock option exercises (145,628 shares) |  |             | -   |  |                          |   | -       |               |  |   | 2,001              |   |  |                  | -       |   |                                                       |   | (1,375 | )                      |  |   | -                        |   |  |   | -    |   |  |   | 626     |  
|Compensation expense on ESOP                                             |  |             | -   |  |                          |   | 234     |               |  |   | -                  |   |  |                  | 858     |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 1,092   |  
|Additional ESOP shares purchased                                         |  |             | -   |  |                          |   | (123    | )             |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | (123    | )
|Tax effect of compensatory stock options                                 |  |             | -   |  |                          |   | 166     |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 166     |  
|Effect of compensation expense for stock options                         |  |             | -   |  |                          |   | 218     |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 218     |  
|Capital disbursement for noncontrolling interest                         |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | (493 | ) |  |   | (493    | )
|Accrued compensation expense MRP                                         |  |             | -   |  |                          |   | 35      |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 35      |  
|                                                                         |  |             |     | 
|Balance at December 31, 2009                                             |  |             | 138 |  |                          |   | 101,571 |               |  |   | (20,302            | ) |  |                  | (814    | ) |                                                       |   | 61,660 |                        |  |   | 22,658                   |   |  |   | (159 | ) |  |   | 164,752 |  
|Comprehensive results:                                                   |  |             |     |  |                          |   |         |               |  |   |                    |   |  |                  |         |   |                                                       |   |        |                        |  |   |                          |   |  |   |      |   |  |   |         |  
|Net income                                                               |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | 14,231 |                        |  |   | -                        |   |  |   | 433  |   |  |   | 14,664  |  
|Other comprehensive results, net                                         |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | (8,142                   | ) |  |   | -    |   |  |   | (8,142  | )
|Reclassification adjustment                                              |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | 818                      |   |  |   | -    |   |  |   | 818     |  
|                                                                         |  |             |     | 
|Total comprehensive results                                              |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | 14,231 |                        |  |   | (7,324                   | ) |  |   | 433  |   |  |   | 7,340   |  
|Cash dividends at $0.40 per share                                        |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | (4,793 | )                      |  |   | -                        |   |  |   | -    |   |  |   | (4,793  | )
|Purchase of treasury stock, at cost (80,142 shares)                      |  |             | -   |  |                          |   | -       |               |  |   | (1,143             | ) |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | (1,143  | )
|Reissuance of treasury stock for stock option exercises (77,529 shares)  |  |             | -   |  |                          |   | -       |               |  |   | 1,033              |   |  |                  | -       |   |                                                       |   | (493   | )                      |  |   | -                        |   |  |   | -    |   |  |   | 540     |  
|Compensation expense on ESOP                                             |  |             | -   |  |                          |   | 383     |               |  |   | -                  |   |  |                  | 814     |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 1,197   |  
|Additional ESOP shares purchased                                         |  |             | -   |  |                          |   | (189    | )             |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | (189    | )
|Tax effect of compensatory stock options                                 |  |             | -   |  |                          |   | 74      |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 74      |  
|Effect of compensation expense for stock options                         |  |             | -   |  |                          |   | 355     |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 355     |  
|Capital disbursement for noncontrolling interest                         |  |             | -   |  |                          |   | -       |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | (815 | ) |  |   | (815    | )
|Accrued compensation expense MRP                                         |  |             | -   |  |                          |   | 35      |               |  |   | -                  |   |  |                  | -       |   |                                                       |   | -      |                        |  |   | -                        |   |  |   | -    |   |  |   | 35      |  
|                                                                         |  |             |     | 
|Balance at December 31, 2010                                             |  | $           | 138 |  |                          | $ | 102,229 |               |  | $ | (20,412            | ) |  | $                | -       |   |                                                       | $ | 70,605 |                        |  | $ | 15,334                   |   |  | $ | (541 | ) |  | $ | 167,353 |  
|                                                                         |  |             |     | 

See accompanying notes to consolidated financial statements.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 31 |  | 2010 Annual Report



---

##### Table of Contents

Consolidated Statements of Cash Flows



(Dollar amounts in thousands)

|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|--------------------------------------------------------------------------------- | ---- | ----------------------- | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                                  |      | Year ended December 31, |         
|                                                                                  | 2010 |                         |          | 2009 |  |   | 2008     |  
|Operating activities:                                                             |      |                         |          |      |  |   |          |   |  |   |          |  
|Net income                                                                        |      | $                       | 14,664   |      |  | $ | 11,665   |   |  | $ | 10,424   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |      |                         |          |      |  |   |          |   |  |   |          |  
|Depreciation for premises and equipment                                           |      |                         | 1,068    |      |  |   | 902      |   |  |   | 946      |  
|Provision for loan losses                                                         |      |                         | 1,404    |      |  |   | 912      |   |  |   | 1,406    |  
|Amortization of premiums and accretion of discounts                               |      |                         | 2,296    |      |  |   | 2,043    |   |  |   | 1,681    |  
|Origination of loans held for sale                                                |      |                         | (3,287   | )    |  |   | (18,296  | ) |  |   | (364     | )
|Proceeds from sale of loans held for sale                                         |      |                         | 3,448    |      |  |   | 18,298   |   |  |   | 366      |  
|Gain on sale of loans held for sale                                               |      |                         | (40      | )    |  |   | (203     | ) |  |   | (2       | )
|Net realized gain on securities available for sale                                |      |                         | -        |      |  |   | (246     | ) |  |   | -        |  
|Net impairment losses on investment securities                                    |      |                         | 1,239    |      |  |   | 617      |   |  |   | 856      |  
|Net realized loss (gain) on derivatives                                           |      |                         | 711      |      |  |   | (120     | ) |  |   | 616      |  
|Amortization of intangible assets                                                 |      |                         | 413      |      |  |   | 494      |   |  |   | 601      |  
|Compensation expense on ESOP and MRP                                              |      |                         | 1,232    |      |  |   | 1,127    |   |  |   | 937      |  
|Compensation expense on stock options                                             |      |                         | 355      |      |  |   | 218      |   |  |   | 175      |  
|Increase of cash surrender value of bank owned life insurance                     |      |                         | (717     | )    |  |   | (899     | ) |  |   | (1,128   | )
|Decrease (increase) in accrued interest receivable                                |      |                         | 705      |      |  |   | (260     | ) |  |   | (413     | )
|Increases in deferred tax asset                                                   |      |                         | (377     | )    |  |   | (1,101   | ) |  |   | (971     | )
|Decrease (increase) in prepaid FDIC assessment                                    |      |                         | 1,777    |      |  |   | (6,310   | ) |  |   | -        |  
|Decrease (increase) in prepaid expenses and other assets                          |      |                         | 345      |      |  |   | (4,647   | ) |  |   | 707      |  
|(Decrease) increase in accrued expenses and other liabilities                     |      |                         | (2,105   | )    |  |   | 3,767    |   |  |   | 63       |  
|(Gain) loss on sale of real estate acquired through foreclosure                   |      |                         | (67      | )    |  |   | 139      |   |  |   | 127      |  
|Writedown of real estate held for investment                                      |      |                         | 1,573    |      |  |   | 2,672    |   |  |   | 303      |  
|Other                                                                             |      |                         | (668     | )    |  |   | (427     | ) |  |   | (205     | )
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Net cash provided by operating activities                                         |      |                         | 23,969   |      |  |   | 10,345   |   |  |   | 16,125   |  
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Investing activities:                                                             |      |                         |          |      |  |   |          |   |  |   |          |  
|Loan originations and purchases                                                   |      |                         | (185,080 | )    |  |   | (174,026 | ) |  |   | (206,658 | )
|Purchases of:                                                                     |      |                         |          |      |  |   |          |   |  |   |          |  
|Securities available for sale                                                     |      |                         | (249,769 | )    |  |   | (197,107 | ) |  |   | (189,968 | )
|Interest rate cap contracts                                                       |      |                         | (970     | )    |  |   | (189     | ) |  |   | (774     | )
|FHLB stock                                                                        |      |                         | -        |      |  |   | -        |   |  |   | (7,047   | )
|Premises and equipment                                                            |      |                         | (1,910   | )    |  |   | (2,302   | ) |  |   | (672     | )
|Principal repayments of:                                                          |      |                         |          |      |  |   |          |   |  |   |          |  
|Loans receivable                                                                  |      |                         | 216,767  |      |  |   | 193,668  |   |  |   | 143,178  |  
|Securities available for sale                                                     |      |                         | 268,288  |      |  |   | 209,631  |   |  |   | 161,144  |  
|Proceeds from the sale of:                                                        |      |                         |          |      |  |   |          |   |  |   |          |  
|Securities available for sale                                                     |      |                         | -        |      |  |   | 992      |   |  |   | -        |  
|Real estate acquired through foreclosure                                          |      |                         | 1,123    |      |  |   | (2       | ) |  |   | 1,085    |  
|Proceeds from bank owned life insurance                                           |      |                         | -        |      |  |   | -        |   |  |   | 645      |  
|Redemption of FHLB stock                                                          |      |                         | 1,373    |      |  |   | -        |   |  |   | 11,027   |  
|Funding of real estate held for investment                                        |      |                         | (11,951  | )    |  |   | (10,532  | ) |  |   | (17,154  | )
|Proceeds from real estate held for investment                                     |      |                         | 8,987    |      |  |   | 10,262   |   |  |   | 6,210    |  
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Net cash provided by (used in) investing activities                               |      |                         | 46,858   |      |  |   | 30,395   |   |  |   | (98,984  | )
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Financing activities:                                                             |      |                         |          |      |  |   |          |   |  |   |          |  
|Net increase in deposits                                                          |      |                         | 68,298   |      |  |   | 67,018   |   |  |   | 34,475   |  
|Proceeds from long-term borrowings                                                |      |                         | 80,423   |      |  |   | 189,093  |   |  |   | 346,766  |  
|Repayments of long-term borrowings                                                |      |                         | (177,108 | )    |  |   | (284,418 | ) |  |   | (273,015 | )
|Net decrease in short-term borrowings                                             |      |                         | (17,500  | )    |  |   | (7,935   | ) |  |   | (12,451  | )
|Redemption of junior subordinated notes                                           |      |                         | -        |      |  |   | -        |   |  |   | (5,155   | )
|Proceeds received from exercise of stock options                                  |      |                         | 614      |      |  |   | 792      |   |  |   | 286      |  
|Dividends paid                                                                    |      |                         | (4,815   | )    |  |   | (4,828   | ) |  |   | (4,926   | )
|Payments to acquire treasury stock                                                |      |                         | (1,143   | )    |  |   | (2,932   | ) |  |   | (3,410   | )
|Stock purchased by ESOP                                                           |      |                         | (189     | )    |  |   | (123     | ) |  |   | (76      | )
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Net cash (used in) provided by financing activities                               |      |                         | (51,420  | )    |  |   | (43,333  | ) |  |   | 82,494   |  
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                              |      |                         | 19,407   |      |  |   | (2,593   | ) |  |   | (365     | )
|Cash and cash equivalents at beginning of period                                  |      |                         | 16,300   |      |  |   | 18,893   |   |  |   | 19,258   |  
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  
|Cash and cash equivalents at end of period                                        |      | $                       | 35,707   |      |  | $ | 16,300   |   |  | $ | 18,893   |  
|                                                                                  |      |                         |          |      |  |   |          |   |  |   |          |  

Continued





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 32 |  | 2010 Annual Report



---

##### Table of Contents

Consolidated Statements of Cash Flows(continued)



(Dollar amounts in thousands)

|                                                                            |      |                         |        |      |  |   |        |  |  |   |        | 
|--------------------------------------------------------------------------- | ---- | ----------------------- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                                                            |      | Year ended December 31, |       
|                                                                            | 2010 |                         |        | 2009 |  |   | 2008   | 
|Supplemental information:                                                   |      |                         |        |      |  |   |        |  |  |   |        | 
|Interest paid                                                               |      | $                       | 42,759 |      |  | $ | 56,282 |  |  | $ | 65,163 | 
|Income taxes paid                                                           |      |                         | 4,316  |      |  |   | 3,245  |  |  |   | 2,278  | 
|                                                                            |      |                         |       
|Supplemental schedule of non-cash investing and financing activities:       |      |                         |        |      |  |   |        |  |  |   |        | 
|Transfers from loans receivable to real estate acquired through foreclosure |      |                         | 1,757  |      |  |   | 469    |  |  |   | 81     | 
|Transfers between other assets and other liabilities                        |      |                         | 56     |      |  |   | -      |  |  |   | -      | 
|Originated loans for real estate held for investment                        |      |                         | 5,378  |      |  |   | 2,700  |  |  |   | 6,306  | 
|Dividends declared but not paid                                             |      |                         | 1,203  |      |  |   | 1,204  |  |  |   | 1,212  | 

See accompanying notes to
consolidated financial statements.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 33 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements





|1. |  | Summary of Significant Accounting Policies
|-- |  | ------------------------------------------

Principles of Consolidation

ESB
Financial Corporation (the Company) is a publicly traded Pennsylvania thrift holding company. The consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries, ESB Bank (ESB or the
Bank), THF, Inc. (THF), AMSCO, Inc. (AMSCO) and ESB Financial Services, Inc. ESB is a Pennsylvania chartered Federal Deposit Insurance Corporation (FDIC) insured stock savings bank.

AMSCO is engaged in real estate development and construction of 1 - 4 family residential units independently or in
conjunction with its joint ventures. The Bank has provided all development and construction financing. The joint ventures which are 51% owned or greater by AMSCO have been included in the consolidated financial statements and are reflected within
other noninterest income or expense. The Banks loans to AMSCO and related interest have been eliminated in consolidation.

In addition to the elimination of the loans and interest to the joint ventures described above, all other significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires
management to make some estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Certain amounts previously reported have been
reclassified to conform to the current year financial statement presentation. The reclassification had no effect on net income.

Operating Segments

An operating
segment is defined as a component of an enterprise that engages in business activities that generate revenue and incur expense, the operating results of which are reviewed by management and for which discrete financial information is available. At
December 31, 2010, the Company was doing business through 24 full service banking branches, one loan production office and its various other subsidiaries. Loans and deposits are primarily generated from the areas where banking branches are
located. The Company derives its income predominantly from interest on loans and securities and to a lesser extent, noninterest income. The Companys principal expenses are interest paid on deposits and borrowed funds and normal operating
costs. The Companys operations are principally in the savings and loan industry. Consistent with internal reporting, the Companys operations are reported in one operating segment, which is community banking.

Cash Equivalents

Cash equivalents include cash on hand and in banks, interest-earning deposits with original maturities of 90 days or less and federal funds sold. The Board of Governors of the Federal Reserve imposes
certain reserve requirements on all depository institutions. These reserves are maintained in the form of vault cash or as a noninterest bearing balance with the Federal Reserve Bank. Required reserves at the Federal Reserve Bank averaged $740,000
and $652,000 during the year 2010 and 2009, respectively.

Securities Available for Sale and Held for
Maturity

Securities include investments primarily in bonds, notes and to a lesser extent equity
securities and are classified as either available for sale or held to maturity at the time of purchase based on managements





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|ESB Financial Corporation |  | 34 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



intent. Such intent includes consideration of the interest rate environment, prepayment risk, credit risk, maturity and repricing characteristics, liquidity considerations, investment and
asset/liability management policies and other pertinent factors. Unrealized holding gains and losses, net of applicable income taxes, on available for sale securities are reported as OCI until realized. Gains and losses on the sale of securities are
determined using the specific identification method and are included in operations in the period sold.

Management monitors all of the Companys securities for OTTI on a quarterly basis and determines whether any
impairment should be recorded. For a security to be considered for OTTI, its characteristics would have to consist of an accumulation of these factors:



| |  |  | Fair value is significantly below cost
| | - |  | --------------------------------------



| |  |  | Decline in fair value is attributable to specific adverse conditions affecting a particular investment, specific conditions in an industry or
geographic area
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Management does not possess both the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery
in fair value
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The decline in fair value has existed for an extended period of time
| | - |  | --------------------------------------------------------------------



| |  |  | Debt security has been downgraded by a rating agency
| | - |  | ----------------------------------------------------



| |  |  | Financial condition of the issuer has deteriorated and the issuer has reduced or eliminated scheduled dividends or interest payments
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SEC filings  disclosures that would indicate an inability by the issuer to satisfy their obligations
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Audits  the Company will review the issuers audits to determine if they have received going concern audit opinions
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | Other debt of the issuers  the Company will review the market prices of other debt of the issuer to determine if the market loss of an issue
is related to credit or interest rate risk.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management will more closely evaluate the
securities that have unrealized losses of 15% or more. If management determines that the declines in value of the security are not temporary, or if management does not have the ability to hold the security until maturity, which is the case with
equity securities, then management will record impairment on the security. For equity securities, typically the amount of impairment is the difference between the securitys book value and current fair market value determined by independent
market pricing. For debt securities evaluated for impairment, management will determine what portion of the unrealized valuation loss is attributed to projected or known loss of principal, and what portion is attributed to market pricing not
reflective of the true value of the security, based on current cash flow analysis. Management will generally record impairment equivalent to the projected or known loss of principal, known as the credit loss. The other portion of the fair market
value loss is attributed to market factors and it is managements opinion that these fair value losses are temporary and not permanent. All impairment is recorded as a loss on securities and is included in the Companys consolidated
statements of operations.

Yields and carrying values for certain mortgage-backed securities are subject to
normal interest rate and prepayment risks. Premiums and discounts on securities are recognized in interest income using the interest method over the period to maturity.





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|ESB Financial Corporation |  | 35 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



Loans Receivable

Loans receivable, for which management has the intent and the Company has the ability to hold for the foreseeable future
or until maturity or payoff, are reported at their outstanding unpaid principal balances reduced by any charge-offs and net of any deferred fees or costs on loans originated, unamortized premiums or discounts on loans purchased and the allowance for
loan losses.

Interest income on loans is accrued and credited to operations as earned. Interest income is not
accrued for loans delinquent 90 days or greater. Interest on impaired loans is discontinued when, in managements opinion, the borrower may be unable to meet contractual payments. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest receipts on nonaccrual and impaired loans are recognized as interest revenue or applied to principal when management believes the ultimate collectibility of principal is in doubt.

The Company maintains records of the full amount of interest that is owed by the borrowers. A non-accrual loan will
generally be placed back on accrual status only when the delinquency is less than 90 days.

Discounts and
premiums on purchased loans are recognized in interest income using the interest method over the remaining period to contractual maturity, adjusted for prepayments. Loan origination fees and certain direct origination costs are capitalized and
recognized as an adjustment to the yield of the related loan over the loans period to maturity. Loans originated and intended for sale are carried at the lower of cost or estimated market value in the aggregate.

Impaired loans are commercial and commercial real estate loans for which it is probable the Company will not be able to
collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of impaired loans is not the
same as the definition of nonaccrual loans, although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility, while not classifying the loan as impaired. Factors
considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of impaired loans is determined by the difference between the present value of the expected cash flows related
to the loan, using current interest rates and its recorded value, or, as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is
probable, impairment is measured based on the fair value of the collateral.

Mortgage loans on one-to four
family properties and all consumer loans are large groups of smaller balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as less than 90 days, generally are
not classified as impaired. Management determines the significance of payment delays on a case-by-case basis, taking into consideration all circumstances surrounding the loan and the borrower including the length of the delay, the borrowers
prior payment record and the amount of shortfall in relation to the principal and interest owed.

Allowance for loan losses

Management establishes the allowance for loan losses based upon its evaluation of the pertinent factors underlying the
types and quality of loans in the portfolio. Commercial loans and commercial real estate loans are reviewed on a regular basis with a focus on larger loans along with loans which have experienced past payment or financial deficiencies. Larger
commercial loans and commercial real estate loans which are





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|ESB Financial Corporation |  | 36 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



60 days or more past due are selected for impairment testing in accordance with GAAP. These loans are analyzed to determine if they are impaired, which means that it is probable that
all amounts will not be collected according to the contractual terms of the loan agreement. All 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 groups of loans with similar risk characteristics. The Company allocates allowances
based on the factors described below, which conform to the Companys asset classification policy. In reviewing risk within the Banks loan portfolio, management has determined there to be several different risk categories within the loan
portfolio. The allowance for loan losses consists of amounts applicable to: (i) the commercial loan portfolio; (ii) the commercial real estate portfolio; (iii) the consumer loan portfolio; (iv) the residential portfolio. Factors
considered in this process included general loan terms, collateral and availability of historical data to support the analysis. Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance
allocations. Certain qualitative factors are then added to the historical loss percentages to get the adjusted factor to be applied to non classified loans. The following qualitative factors are analyzed:



| |  |  | Levels of and trends in delinquencies and nonaccruals
| | - |  | -----------------------------------------------------



| |  |  | Trends in volume and terms
| | - |  | --------------------------



| |  |  | Changes in lending policies and procedures
| | - |  | ------------------------------------------



| |  |  | Volatility of losses within each risk category
| | - |  | ----------------------------------------------



| |  |  | Loans and Lending staff acquired through acquisition
| | - |  | ----------------------------------------------------



| |  |  | Economic trends
| | - |  | ---------------



| |  |  | Concentrations of credit
| | - |  | ------------------------



| |  |  | Experience depth and ability of management
| | - |  | ------------------------------------------

The Company also maintains an unallocated allowance to account for any factors or conditions that may cause a potential
loss but are not specifically addressed in the process described above. The Company analyzes its loan portfolio each quarter to determine the appropriateness of its allowance for loan losses.

The allowance for loan losses is maintained at a level believed to be adequate by management to absorb probable losses
inherent in the portfolio and is based on the size and current risk characteristics of the loan portfolio, an assessment of individual problem loans and actual loss experience, current economic events in specific industries and other pertinent
factors such as regulatory guidance and general economic conditions. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans,
estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current economic trends, all of which may be susceptible to significant change. Loan losses are charged off against the allowance, while
recoveries of amounts previously charged off are credited to the allowance. A provision for loan losses is charged to operations based on managements periodic evaluation of the factors previously mentioned, as well as other pertinent factors.
Evaluations are conducted quarterly, during which loans may be charged off upon reaching various stages of delinquency and depending upon the loan type.





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|ESB Financial Corporation |  | 37 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



Loan Charge-off Policies

Consumer loans are generally fully or partially charged down to the fair value of collateral securing
the asset when the loan is 180 days past due for open-end loans or 120 days past due for closed-end loans unless the loan is well secured and in the process of collection. All other loans are generally charged down to the net realizable value when
the loan is 90 days past due.

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to a borrowers financial difficulties, management may
grant a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a TDR. Management strives to identify borrowers in financial difficulty early and work with
them to modify to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid
foreclosure or repossession of the collateral. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. In
addition to the allowance for the pooled portfolios, management has developed a separate allowance for loans that are identified as impaired through a TDR. These loans are excluded from pooled loss forecasts and a separate reserve is provided under
the accounting guidance for loan impairment. Consumer loans whose terms have been modified in a TDR are also individually analyzed for estimated impairment.

Real Estate Acquired Through Foreclosure

Real estate properties acquired through foreclosure are initially recorded at the lower of cost or 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 cost or fair value less estimated costs to sell. Revenue and expenses from operations of the properties, gains and losses on sales and additions to the valuation
allowance are included in operating results.

Federal Home Loan Bank Stock

The Bank is a member of the FHLB of Pittsburgh and as such, is required to maintain a minimum investment in FHLB stock
that varies with the level of advances outstanding with the FHLB. The stock is bought from and sold to the FHLB based upon its $100 par value. The stock does not have a readily determinable fair value and as such is classified as restricted stock,
carried at cost and evaluated for impairment when necessary. The stocks value is determined by the ultimate recoverability of the par value rather than by recognizing temporary declines. The determination of whether the par value will
ultimately be recovered is influenced by criteria such as the following: (a) the significance of the decline in net assets of the FHLB as compared to the capital stock amount and the length of time this situation has persisted
(b) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance (c) the impact of legislative and regulatory changes on the customer base of the FHLB and
(d) the liquidity position of the FHLB.

The FHLB has incurred losses in the past two years and has
suspended the payment of dividends. The losses are primarily attributable to impairment of investment securities associated with the extreme economic conditions in place over the last two years. Management evaluated the stock and concluded that the
stock was not impaired for the periods presented herein. More consideration was given to the long-term prospects





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|ESB Financial Corporation |  | 38 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



for the FHLB as opposed to the recent stress caused by the extreme economic conditions the world is facing. Management also considered that the FHLBs regulatory capital ratios have
increased from the prior year, liquidity appears adequate, and new shares of FHLB stock continue to exchange hands at the $100 par value.

Premises and Equipment

Land is
carried at cost. Premises, furniture and equipment and leasehold improvements are carried at cost less accumulated depreciation or amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related
assets, which are twenty-five to fifty years for buildings and three to ten years for furniture and equipment. Amortization of leasehold improvements is computed using the straight-line method over the term of the related lease.

Goodwill and Intangible Assets

Goodwill consisted of $41.6 million at December 31, 2010 and 2009, respectively. The Company evaluates goodwill for
impairment. This impairment assessment is performed at least annually. The fair value of the Company and the implied fair value of goodwill at the respective reporting unit level were estimated as of October 31, 2010 using the market value
approach, utilizing industry comparable information. The Company concluded that the recorded value of goodwill was not impaired as a result of the evaluation. Core deposit intangible was $871,000 and $1.3 million at December 31, 2010 and 2009,
respectively. The core deposit intangible assets are amortized on a sum of the years digit basis over the estimated useful life, generally up to ten years. Amortization of finite lived assets is expected to total $332,000, $251,000, $170,000,
$110,000 and $8,000 for the years 2011, 2012, 2013, 2014 and 2015, respectively.

Advertising Costs

Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to
$608,000, $574,000, and $442,000 for 2010, 2009, and 2008, respectively.

Mortgage Servicing Assets

At December 31, 2010, the remaining balance and fair value of the servicing asset was $24,000,
which is recorded in other assets. Servicing assets are amortized in proportion to and over the period of, estimated net servicing revenues. Impairment of servicing assets is based on fair value of those assets, estimated using discounted cash flows
and prepayment assumptions for the market area of the servicing portfolio. For purposes of measuring impairment, the servicing asset is stratified based on interest rate. The amount of impairment recognized is the amount by which the capitalized
servicing asset for a stratum exceeds the fair value of that stratum. During 2010 the Company recovered a portion of the impairment valuation of approximately $9,000. The remaining impairment valuation is $30,000 at December 31, 2010. There was
an impairment valuation of $39,000 at December 31, 2009 and $32,000 at December 31, 2008. The amortization taken on the servicing asset for the year ended December 31, 2010 and 2009 was $14,000 and $15,000, respectively. The Company
had total loans serviced for others of $14.8 million, $21.6 million and $24.8 million at December 31, 2010, 2009 and 2008, respectively.

Income Taxes

Deferred tax assets
and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.





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|ESB Financial Corporation |  | 39 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



Bank-Owned Life Insurance (BOLI)

The Company owns insurance on the lives of a certain group of key employees. The policies were
purchased to help offset the increases in the costs of various fringe benefit plans including healthcare. The cash surrender value of these policies is included as an asset on the consolidated statements of financial condition and any increases in
cash surrender value are recorded as noninterest income on the consolidated statements of operations. In the event of the death of an insured individual under these policies, the Company would receive a death benefit.

Financial Instruments

As part of its overall interest rate risk management activities, the Company utilizes derivative instruments to manage
its exposure to various types of interest rate risk. Interest rate swaps and interest rate caps are the primary instruments the Company uses for interest rate risk management. Derivative instruments are recorded at fair value as either part of
prepaid expenses and other assets or accrued expenses and other liabilities on the consolidated statements of financial condition. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the
resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used
to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

The Company formally documents the relationship between the hedging instruments and hedged items, as well as the risk management objective and strategy, before undertaking an accounting hedge. To qualify
for hedge accounting, the derivatives and related hedged items must be designated as a hedge at inception of the hedge relationship. For accounting hedge relationships, we formally assess, both at the inception of the hedge and on an ongoing basis,
if the derivatives are highly effective in offsetting designated changes in the fair value or cash flows of the hedged item. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued.

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related
to the hedged risk are recognized in earnings. To the extent the change in fair value of the derivative does not offset the change in fair value of the hedged item, the difference or ineffectiveness is reflected in earnings in the same financial
statement category as the hedged item.

For derivatives designated as cash flow hedges, the effective portion
of changes in the fair value of the derivative is initially reported in OCI and subsequently reclassified to earnings when the hedged transaction affects earnings and the ineffective portion of changes in the fair value of the derivative is
recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the
designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

At December 31, 2010 there were ten interest rate cap contracts outstanding with notional amounts totaling $100.0 million. These derivative instruments are not hedged and therefore adjustments to
fair value are recorded in current earnings.

During the second and third quarters of fiscal 2009, the Company
entered into two interest rate swap contracts to manage its exposure to interest rate risk. These interest rate swap transactions involved the exchange of the Companys interest payment on $35.0 million in junior subordinated notes which become
floating rate notes in 2011 for a fixed rate interest payment without the exchange of the underlying principal





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|ESB Financial Corporation |  | 40 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



amount. Entering into interest rate derivatives potentially exposes the Company to the risk of counterparties failure to fulfill their legal obligations including, but not limited to,
potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Management utilizes the
Change in Variable Cash Flows Method to measure hedge ineffectiveness. To the extent that the cumulative change in anticipated cash flows from the hedging derivative offsets from 80% to 125% of the cumulative change in anticipated cash flows from
the hedged exposure, the hedged is deemed effective. As of December 31, 2010 the interest rate swaps were deemed to be effective, therefore no amounts were charged to current earnings. The Company also does not expect to reclassify any hedge
related amounts from OCI to earnings over the next twelve months.

The pay fixed interest rate swap contracts
outstanding at December 31, 2010 are being utilized to hedge $35.0 million in floating rate junior subordinated notes. The interest rate swaps are carried at fair value. Below is a summary of the interest rate swap contracts and the terms at
December 31, 2010:



|                       |  |                |        |  |               |  |           |         |  |  |                 |   |  |              |      |   |                |  |           |  |  |   |       | 
|---------------------- |  | -------------- | ------ |  | ------------- |  | --------- | ------- |  |  | --------------- | - |  | ------------ | ---- | - | -------------- |  | --------- |  |  | - | ----- | 
|(Dollars in thousands) |  | NotionalAmount |        |  | EffectiveDate |  |           | PayRate |  |  | ReceiveRate (*) |   |  | MaturityDate |      |   | UnrealizedLoss | 
|Cash Flow Hedge        |  | $              | 20,000 |  |               |  | 2/10/2011 |         |  |  | 4.18            | % |  |              | 0.30 | % |                |  | 2/10/2018 |  |  | $ | 1,785 | 
|Cash Flow Hedge        |  |                | 15,000 |  |               |  | 2/10/2011 |         |  |  | 3.91            | % |  |              | 0.30 | % |                |  | 2/10/2018 |  |  |   | 1,072 | 
|                       |  |                |        |  |               |  |           |         |  |  |                 |   |  |              |      |   |                |  |           |  |  |   |       | 
|                       |  | $              | 35,000 |  |               |  |           |         |  |  |                 |   |  |              |      |   |                |  |           |  |  | $ | 2,857 | 
|                       |  |                |        |  |               |  |           |         |  |  |                 |   |  |              |      |   |                |  |           |  |  |   |       | 
|                       |  |                |        |  |               |  |           |         |  |  |                 |   |  |              |      |   |                |  |           |  |  |   |       | 



| | * | Variable receive rate based upon contract rates in effect at December 31, 2010
| | - | ------------------------------------------------------------------------------

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over
transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of the right) to pledge or exchange
the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Stock-Based Compensation

The
Company accounts for stock compensation based on the grant-date fair value of all share-based payment awards that are expected to vest, including employee share options to be recognized as employee compensation expense over the requisite service
period.

During the years ended December 31, 2010, 2009 and 2008, the Company recorded $355,000, $218,000,
and $175,000, respectively, in compensation expense and tax benefits of $20,000, $20,000 and $22,000, respectively, related to our share-based compensation awards. As of December 31, 2010, there was approximately $40,000 of unrecognized
compensation cost related to unvested share-based compensation awards granted in 2007. That cost is expected to be recognized in 2011. There was approximately $93,000 of unrecognized compensation cost related to unvested share-based compensation
awards granted in 2008. That cost is expected to be recognized over the next two years. There was approximately $190,000 of unrecognized compensation cost related to unvested share-based compensation awards granted in 2009. That cost is expected to
be recognized over the next three years. Finally, there was approximately $472,000 of unrecognized compensation cost related to unvested share-based compensation awards granted in 2010. That cost is expected to be recognized over the next four
years.

The Company has recorded $74,000, $166,000 and $20,000 in excess tax benefits has been classified as
financing cash inflows for the years ended December 31, 2010, 2009 and 2008 in the Consolidated Statements of Cash Flows.





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|ESB Financial Corporation |  | 41 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



For purposes of computing results, the
Company estimated the fair values of stock options using the Black-Scholes option-pricing model. The model requires the use of subjective assumptions that can materially affect fair value estimates. Therefore, the pro forma results are estimates of
results of operations as if compensation expense had been recognized for the stock option plans. The fair value of each option is amortized into compensation expense on a straight line basis between the grant date for the option and each vesting
date. The fair value of each stock option granted was estimated using the following weighted-average assumptions:



|                                 |  |  |  |  |      |  |        |      |  |  |        |  |  |  |        | 
|-------------------------------- |  |  |  |  | ---- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                                 |  |  |  |  | 2010 |  |        | 2009 |  |  | 2008   | 
|Assumptions                      |  |  |  |  |      |  |        |      |  |  |        | 
|Volatility                       |  |  |  |  |      |  | 38.98% |      |  |  | 33.10% |  |  |  | 36.29% | 
|Interest Rates                   |  |  |  |  |      |  | 2.16%  |      |  |  | 2.69%  |  |  |  | 3.29%  | 
|Dividend Yields                  |  |  |  |  |      |  | 2.68%  |      |  |  | 3.47%  |  |  |  | 3.88%  | 
|Weighted Average Life (in years) |  |  |  |  |      |  | 7.2    |      |  |  | 7.2    |  |  |  | 6.9    | 

The weighted average fair value of each stock option granted for 2010, 2009 and 2008 was $4.76, $2.70 and $2.78 respectively. The total intrinsic value of options exercised during the years ended
December 31, 2010, 2009 and 2008, was $192,000, $498,000 and $259,000, respectively. The total intrinsic value of in-the-money stock options was $2.7 million, $1.8 million and $1.8 million at the year ended December 31, 2010, 2009 and 2008
respectively. The total intrinsic value of the exercisable stock options was $1.8 million, $1.1 million and $1.4 million at the year ended December 31, 2010, 2009 and 2008, respectively.

Net Income Per Share

The following table summarizes the Companys net income per share for the years ended December 31:



|                                                        |  |      |        |  |      |   |        |      |  |   |        | 
|------------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|(Amounts in thousands, except per share data)           |  |      |        |  |      |   |        |      | 
|                                                        |  | 2010 |        |  | 2009 |   |        | 2008 | 
|Net income                                              |  | $    | 14,231 |  |      | $ | 12,012 |      |  | $ | 10,215 | 
|Weighted-average common shares outstanding              |  |      | 11,988 |  |      |   | 11,945 |      |  |   | 12,044 | 
|                                                        |  |      |        |  |      |   |        |      |  |   |        | 
|                                                        |  |      |       
|Basic earnings per share                                |  | $    | 1.19   |  |      | $ | 1.01   |      |  | $ | 0.85   | 
|                                                        |  |      |        |  |      |   |        |      |  |   |        | 
|Weighted-average common shares outstanding              |  |      | 11,988 |  |      |   | 11,945 |      |  |   | 12,044 | 
|                                                        |  |      |       
|Common stock equivalents due to effect of stock options |  |      | 82     |  |      |   | 87     |      |  |   | 80     | 
|                                                        |  |      |        |  |      |   |        |      |  |   |        | 
|                                                        |  |      |       
|Total weighted-average common shares and equivalents    |  |      | 12,070 |  |      |   | 12,032 |      |  |   | 12,124 | 
|                                                        |  |      |        |  |      |   |        |      |  |   |        | 
|                                                        |  |      |       
|Diluted earnings per share                              |  | $    | 1.18   |  |      | $ | 1.00   |      |  | $ | 0.84   | 
|                                                        |  |      |        |  |      |   |        |      |  |   |        | 
|                                                        |  |      |        |  |      |   |        |      |  |   |        | 

The unallocated shares controlled by
the ESOP of 74,349 at December 31, 2009, are not considered in the weighted average shares outstanding until the shares are committed for allocation to an employees individual account. The ESOP did not have any unallocated shares at
December 31, 2010.

All of the outstanding options were included in the computation of diluted earnings
per share for 2010 because the options exercise price was less than the average market price of the common shares.

Options to purchase 80,310 shares of common stock at a weighted average exercise price of $15.35 per share expiring November 2013 and 84,040 shares of common stock at a weighted average exercise price





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|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 42 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



of $14.50 per share expiring November 2014
were outstanding as of December 31, 2009 but were not included in the computation of diluted earnings per share for 2009 because the options exercise price was greater than the average market price of the common shares.

Options to purchase 91,632 shares of common stock at a weighted average exercise price of $10.83 per share expiring
November 2012, 80,310 shares of common stock at a weighted average exercise price of $15.35 per share expiring November 2013, 84,040 shares of common stock at a weighted average exercise price of $14.50 per share expiring November 2014, 78,300
shares of common stock at a weighted average exercise price of $12.20 per share expiring June 2015, 16,110 shares of common stock at a weighted average exercise price of $12.40 per share expiring June 2015 and 89,730 shares of common stock at a
weighted average exercise price of $10.75 per share expiring November 2016 were outstanding as of December 31, 2008 but were not included in the computation of diluted earnings per share for 2008 because the options exercise price was
greater than the average market price of the common shares.

Reclassifications

Certain amounts in the 2009 financial statements have been reclassified to conform to the 2010 presentation format. These
reclassifications had no effect on stockholders equity or net income

Effect of Recent Accounting
and Regulatory Pronouncements

In January 2011, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) 2011-01, Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.The amendments in this update temporarily delay the effective
date of the disclosures about troubled debt restructurings in Update 2010-20, enabling public-entity creditors to provide those disclosures after the FASB clarifies the guidance for determining what constitutes a troubled debt restructuring. The
deferral in this update will result in more consistent disclosures about troubled debt restructurings. This amendment does not defer the effective date of the other disclosure requirements in Update 2010-20. In the proposed update for
determining what constitutes a troubled debt restructuring, the FASB proposed that the clarifications would be effective for interim and annual periods ending after June 15, 2011. For the new disclosures about troubled debt restructurings in
Update 2010-20, those clarifications would be applied retrospectively to the beginning of the fiscal year in which the proposal is adopted. The adoption of this guidance is not expected to have a significant impact on the Companys
consolidated financial statements.

In December, 2010, the FASB issued ASU No. 2010-28, When to
Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.This ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting
units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should
consider whether there are any adverse qualitative factors indicating impairment may exist. The qualitative factors are consistent with the existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual
tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments in this update are effective for fiscal year and interim
periods within those years, beginning after December 15, 2010. Early adoption is not permitted. For nonpublic entities, the amendments are effective for fiscal years and interim periods within those years, beginning after December 15,
2011. Nonpublic entities may early adopt the amendments using the effective date for public entities. This ASU is not expected to have a significant impact on the Companys consolidated financial statements.





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|ESB Financial Corporation |  | 43 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



In September, 2010, the FASB issued ASU
No. 2010-25, Plan Accounting  Defined Contribution Pension Plans. The amendments in this ASU require that participant loans be classified as notes receivable from participants, which are segregated from plan investments and
measured at their unpaid principal balance plus any accrued but unpaid interest. The amendments in this update are effective for fiscal years ending after December 15, 2010 and did not have a significant impact on the Companys
consolidated financial statements.

In August, 2010, the FASB issued ASU No. 2010-21, Accounting for
Technical Amendments to Various SEC Rules and Schedules. This ASU amends various Securities and Exchange Commission (SEC) paragraphs pursuant to the issuance of Release No. 33-9026: Technical Amendments to Rules, Forms,
Schedules, and Codification of Financial Reporting Policies and did not have a significant impact on the Companys consolidated financial statements.

In August, 2010, the FASB issued ASU No. 2010-22, Technical Corrections to SEC Paragraphs  An announcement made by the staff of the U.S. Securities and Exchange Commission. This ASU
amends various SEC paragraphs based on external comments received and the issuance of Staff Accounting Bulletin (SAB) 112, which amends or rescinds portions of certain SAB topics and did not have a significant impact on the
Companys consolidated financial statements.

In July 2010, the FASB issued ASU No. 2010-20,
Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. ASU 2010-20 is intended to provide additional information to assist financial statement users in assessing an
entitys credit risk exposures and evaluating the adequacy of its allowance for credit losses. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010.
The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. The amendments in ASU No. 2010-20 encourage, but do not require,
comparative disclosures for earlier reporting periods that ended before initial adoption. However, an entity should provide comparative disclosures for those reporting periods ending after initial adoption. This update did not have significant
impact on the Companys consolidated financial statements. The Company has reflected the new disclosures required effective as of December 31, 2010 in footnote 3, Loans Receivable.

In April 2010, FASB issued ASU No. 2010-18, Receivables (Topic 310): Effect of a Loan Modification When the Loan
is a Part of a Pool That is Accounted for as a Single Asset  a consensus of the FASB Emerging Issues Task Force. ASU No. 2010-18 clarifies the treatment for a modified loan that was acquired as part of a pool of assets. Refinancing or
restructuring the loan does not make it eligible for removal from the pool, the FASB said. The amendment will be effective for loans that are part of an asset pool and are modified during financial reporting periods ending July 15, 2010 or
later. The ASU did not have a significant impact on the Companys consolidated financial statements.

In
March 2010, the FASB issued ASU No. 2010-11, Derivatives and Hedging. ASU No. 2010-11 provides clarification and related additional examples to improve financial reporting by resolving potential ambiguity about the breadth of the
imbedded credit derivative scope exception in ASC 815-15-15-8. ASU No. 2010-11 is effective at the beginning of the first fiscal quarter beginning after June 15, 2010 and did not have a significant impact on the Companys consolidated
financial statements.

In February 2010, the FASB issued ASU No. 2010-08, Technical Corrections to
Various Topics. ASU No. 2010-08 clarifies guidance on imbedded derivatives and hedging. ASU No. 2010-08 is effective for interim and annual periods beginning after December 15, 2009. The adoption of this guidance did not have a
material impact on the Companys financial position or results of operation.





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|ESB Financial Corporation |  | 44 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|1. |  | Summary of Significant Accounting Policies(continued)
|-- |  | -----------------------------------------------------



In January 2010, the FASB issued ASU
No. 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash  a consensus of the FASB Emerging Issues Task Force. ASU No. 2010-01 clarifies that the stock portion of a
distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in
EPS prospectively and is not a stock dividend. ASU No. 2010-01 is effective for interim and annual periods ending on or after December 15, 2009 and should be applied on a retrospective basis. The adoption of this guidance did not have a
material impact on the Companys financial position or results of operation.

In January 2010, the FASB
issued ASU No. 2010-05, Compensation  Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation. ASU No. 2010-05 updates existing guidance to address the SEC staffs views on
overcoming the presumption that for certain shareholders escrowed share arrangements represent compensation. ASU No. 2010-05 is effective January 15, 2010. The adoption of this guidance did not have a material impact on the Companys
financial position or results of operation.

In January 2010, the FASB issued ASU No. 2010-06, Fair
Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 amends Subtopic 820-10 to clarify existing disclosures, require new disclosures and includes conforming amendments to
guidance on employers disclosures about postretirement benefit plan assets. ASU No. 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances and
settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company has presented the
necessary disclosures in footnote 13 Fair Value and is currently evaluating the impact of the remaining disclosures.

In December 2009, the FASB issued ASU No. 2009-16, Accounting for Transfer of Financial Assets. ASU 2009-16 provides guidance to improve the relevance, representational faithfulness and
comparability of the information that an entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferors continuing
involvement, if any, in transferred financial assets. ASU No. 2009-16 is effective for annual periods beginning after November 15, 2009 and for interim periods within those fiscal years. The adoption of this guidance did not have a
significant impact on the Companys consolidated financial statements.





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|ESB Financial Corporation |  | 45 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|2. |  | Securities
|-- |  | ----------

The following table summarizes the Companys securities:



|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|----------------------------------- |  | ------------- | --------- |  | --------------- | - | ------ | ---------------- |  | - | ---------- |  |  | - | --------- | 
|(Dollar amounts in thousands)       |  | Amortizedcost |           |  | Unrealizedgains |   |        | Unrealizedlosses |  |   | Fair value | 
|                                    |  |               |           | 
|December 31, 2010:                  |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|Trust preferred securities          |  | $             | 46,467    |  |                 | $ | 116    |                  |  | $ | (7,607)    |  |  | $ | 38,976    | 
|Municipal securities                |  |               | 165,479   |  |                 |   | 2,040  |                  |  |   | (4,342)    |  |  |   | 163,177   | 
|Equity securities                   |  |               | 1,424     |  |                 |   | 434    |                  |  |   | (8)        |  |  |   | 1,850     | 
|Corporate bonds                     |  |               | 118,862   |  |                 |   | 3,800  |                  |  |   | -          |  |  |   | 122,662   | 
|Mortgage-backed securities          |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|U.S. sponsored entities             |  |               | 706,034   |  |                 |   | 33,752 |                  |  |   | (1,524)    |  |  |   | 738,262   | 
|Private label                       |  |               | 12,446    |  |                 |   | 463    |                  |  |   | (164)      |  |  |   | 12,745    | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|Subtotal mortgage-backed securities |  |               | 718,480   |  |                 |   | 34,215 |                  |  |   | (1,688)    |  |  |   | 751,007   | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|Total securities                    |  | $             | 1,050,712 |  |                 | $ | 40,605 |                  |  | $ | (13,645)   |  |  | $ | 1,077,672 | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|                                    |  |               |           | 
|December 31, 2009:                  |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|Trust preferred securities          |  | $             | 47,272    |  |                 | $ | 66     |                  |  | $ | (6,761)    |  |  | $ | 40,577    | 
|Municipal securities                |  |               | 145,642   |  |                 |   | 5,014  |                  |  |   | (562)      |  |  |   | 150,094   | 
|Equity securities                   |  |               | 775       |  |                 |   | 189    |                  |  |   | (57)       |  |  |   | 907       | 
|Corporate bonds                     |  |               | 84,332    |  |                 |   | 4,052  |                  |  |   | (203)      |  |  |   | 88,181    | 
|Mortgage-backed securities          |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|U.S. sponsored entities             |  |               | 778,278   |  |                 |   | 34,254 |                  |  |   | (514)      |  |  |   | 812,018   | 
|Private label                       |  |               | 15,436    |  |                 |   | 68     |                  |  |   | (371)      |  |  |   | 15,133    | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|Subtotal mortgage-backed securities |  |               | 793,714   |  |                 |   | 34,322 |                  |  |   | (885)      |  |  |   | 827,151   | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|Total securities                    |  | $             | 1,071,735 |  |                 | $ | 43,643 |                  |  | $ | (8,468)    |  |  | $ | 1,106,910 | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 
|                                    |  |               |           |  |                 |   |        |                  |  |   |            |  |  |   |           | 

The private-label mortgage backed
securities totaled $12.7 million and $15.1 million as of December 31, 2010 and December 31, 2009, respectively and are secured by residential real estate.

During 2010, the Company did not have any security sales, however the Company recorded impairment charges of approximately
$810,000 on a $2.5 million collateralized debt obligation (CDO), $212,000 on a private-label mortgage-backed security and approximately $217,000 on five of its equity investments in various banks that had experienced a decline in their market value
for the last several quarters. There was non-credit related OTTI on these securities recognized in OCI during the period of approximately $600,000.

The proceeds from the sale of securities as of December 31, 2009 were $992,000. Gross realized gains on sales of securities available for sale were $246,000 in 2009. Impairment charges on available
for sale securities of $617,000 were recorded for 2009 on securities that were deemed to be other-than-temporarily impaired. Included in the impairment charges for 2009 was approximately $66,000 on three of the Companys equity investments in
various banks that had experienced a decline in their market value for several quarters and $551,000 on a CDO.

During 2008, the Company did not have any security sales, however the Company recorded impairment charges of $553,000 and
$303,000, respectively on a CDO and four of its equity investments in various banks that had experienced a decline in their market value for several quarters.

Included in the $39.0 million of trust preferred securities are standalone trust preferred securities with a fair value of $38.6 million that are investment-grade rated by at least one rating agency. In
addition, there was one pooled trust preferred security with a par value of $2.5 million and a fair value of $400,000, that was not investment-grade rated. The Company took an impairment charge of approximately $810,000 on this debt obligation
during 2010. This security is a CDO currently comprised of trust preferred securities of 16





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|ESB Financial Corporation |  | 46 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|2. |  | Securities(continued)
|-- |  | ---------------------



financial institutions and has a Moodys rating of Ca, which is below investment grade. The Company had an independent third party analyze this bond at December 31, 2010 and determined
that no additional impairment existed.

Because of the subprime crisis current markets for variable rate
corporate trust preferred bonds are illiquid. In order to determine prices of these securities the Company utilizes a discounted cash flow method. This method is described more fully in footnote 12, Fair Value.

The following is a roll forward for the year ended December 31, 2010 of the amounts recognized in earnings related
to credit losses on securities which the Company has recorded other-than-temporary impairment charges through earnings and other comprehensive income:



|                                                                                                                                    |  |   |       | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | - | ----- | 
|(Dollars in thousands)                                                                                                              |  |   |      
|                                                                                                                                    |  |   | Total | 
|January 1, 2010                                                                                                                     |  | $ | -     | 
|Credit losses on securities for which other-than-temporary impairment was not previously recognized                                 |  |   | 1,022 | 
|Additional increases as a result of impairment charges recognized on investments for which an OTTI charge was previously
recognized |  |   | -     | 
|                                                                                                                                    |  |   |       | 
|December 31, 2010                                                                                                                   |  | $ | 1,022 | 
|                                                                                                                                    |  |   |       | 
|                                                                                                                                    |  |   |       | 

At December 31, 2010 and 2009,
the Bank did not have any corporate bonds whose book value exceeded 10% of equity.

The following table shows
the Companys investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2010 and 2009:



|                                    |  |                     |     |  |                   |   |         |                  |  |   |                |  |  |           |    |  |                  |   |        |                |  |   |           |  |  |                  |     |  |  |   |         |  |  |   |        | 
|----------------------------------- |  | ------------------- | --- |  | ----------------- | - | ------- | ---------------- |  | - | -------------- |  |  | --------- | -- |  | ---------------- | - | ------ | -------------- |  | - | --------- |  |  | ---------------- | --- |  |  | - | ------- |  |  | - | ------ | 
|As of December 31, 2010             |  |                     |     |  |                   |   |         |                  |  |   |                |  |  |           |    |  |                  |   |        |                |  |   |           |  |  |                  |    
|                                    |  |                     |    
|(Dollar amounts in thousands)       |  | Less than 12 Months |     |  | 12 Months or more |   |         | Total            | 
|                                    |  | # ofSecurities      |     |  | FairValue         |   |         | Unrealizedlosses |  |   | # ofSecurities |  |  | FairValue |    |  | Unrealizedlosses |   |        | # ofSecurities |  |   | FairValue |  |  | Unrealizedlosses |    
|                                    |  |                     |     |  |                   |   |         |                  | 
|Trust preferred securities          |  |                     | -   |  |                   | $ | -       |                  |  | $ | -              |  |  |           | 10 |  |                  | $ | 37,360 |                |  | $ | 7,607     |  |  |                  | 10  |  |  | $ | 37,360  |  |  | $ | 7,607  | 
|                                    |  |                     |     |  |                   |   |         |                  | 
|Municipal securities                |  |                     | 85  |  |                   |   | 67,411  |                  |  |   | 2,750          |  |  |           | 21 |  |                  |   | 19,773 |                |  |   | 1,592     |  |  |                  | 106 |  |  |   | 87,184  |  |  |   | 4,342  | 
|                                    |  |                     |     |  |                   |   |         |                  | 
|Equity securities                   |  |                     | -   |  |                   |   | -       |                  |  |   | -              |  |  |           | 1  |  |                  |   | 130    |                |  |   | 8         |  |  |                  | 1   |  |  |   | 130     |  |  |   | 8      | 
|                                    |  |                     |     |  |                   |   |         |                  | 
|Mortgage-backed securities          |  |                     |     |  |                   |   |         |                  |  |   |                |  |  |           |    |  |                  |   |        |                |  |   |           |  |  |                  |     |  |  |   |         |  |  |   |        | 
|                                    |  |                     |     |  |                   |   |         |                  | 
|U.S. sponsored entities             |  |                     | 21  |  |                   |   | 87,741  |                  |  |   | 1,524          |  |  |           | -  |  |                  |   | -      |                |  |   | -         |  |  |                  | 21  |  |  |   | 87,741  |  |  |   | 1,524  | 
|                                    |  |                     |     |  |                   |   |         |                  | 
|Private label                       |  |                     | -   |  |                   |   | -       |                  |  |   | -              |  |  |           | 3  |  |                  |   | 3,914  |                |  |   | 164       |  |  |                  | 3   |  |  |   | 3,914   |  |  |   | 164    | 
|                                    |  |                     |     | 
|Subtotal mortgage-backed securities |  |                     | 21  |  |                   |   | 87,741  |                  |  |   | 1,524          |  |  |           | 3  |  |                  |   | 3,914  |                |  |   | 164       |  |  |                  | 24  |  |  |   | 91,655  |  |  |   | 1,688  | 
|                                    |  |                     |     | 
|                                    |  |                     |     |  |                   |   |         |                  | 
|Total                               |  |                     | 106 |  |                   | $ | 155,152 |                  |  | $ | 4,274          |  |  |           | 35 |  |                  | $ | 61,177 |                |  | $ | 9,371     |  |  |                  | 141 |  |  | $ | 216,329 |  |  | $ | 13,645 | 
|                                    |  |                     |     | 
|                                    |  |                     |     | 





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|ESB Financial Corporation |  | 47 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|2. |  | Securities(continued)
|-- |  | ---------------------





|                                    |  |                     |    |  |                   |   |        |                  |  |   |                |  |  |           |    |  |                  |   |        |                |  |   |           |  |  |                  |    |  |  |   |         |  |  |   |       | 
|----------------------------------- |  | ------------------- | -- |  | ----------------- | - | ------ | ---------------- |  | - | -------------- |  |  | --------- | -- |  | ---------------- | - | ------ | -------------- |  | - | --------- |  |  | ---------------- | -- |  |  | - | ------- |  |  | - | ----- | 
|As of December 31, 2009             |  |                     |    |  |                   |   |        |                  |  |   |                |  |  |           |    |  |                  |   |        |                |  |   |           |  |  |                  |   
|                                    |  |                     |   
|(Dollar amounts in thousands)       |  | Less than 12 Months |    |  | 12 Months or more |   |        | Total            | 
|                                    |  | # ofSecurities      |    |  | FairValue         |   |        | Unrealizedlosses |  |   | # ofSecurities |  |  | FairValue |    |  | Unrealizedlosses |   |        | # ofSecurities |  |   | FairValue |  |  | Unrealizedlosses |   
|                                    |  |                     |    |  |                   |   |        |                  | 
|Trust preferred securities          |  |                     | -  |  |                   | $ | -      |                  |  | $ | -              |  |  |           | 9  |  |                  | $ | 37,608 |                |  | $ | 6,761     |  |  |                  | 9  |  |  | $ | 37,608  |  |  | $ | 6,761 | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|Municipal securities                |  |                     | 1  |  |                   |   | 2,222  |                  |  |   | 54             |  |  |           | 13 |  |                  |   | 16,336 |                |  |   | 508       |  |  |                  | 14 |  |  |   | 18,558  |  |  |   | 562   | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|Equity securities                   |  |                     | -  |  |                   |   | -      |                  |  |   | -              |  |  |           | 4  |  |                  |   | 350    |                |  |   | 57        |  |  |                  | 4  |  |  |   | 350     |  |  |   | 57    | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|Corporate bonds                     |  |                     | 1  |  |                   |   | 2,996  |                  |  |   | 33             |  |  |           | 1  |  |                  |   | 3,613  |                |  |   | 170       |  |  |                  | 2  |  |  |   | 6,609   |  |  |   | 203   | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|Mortgage-backed securities          |  |                     |    |  |                   |   |        |                  |  |   |                |  |  |           |    |  |                  |   |        |                |  |   |           |  |  |                  |    |  |  |   |         |  |  |   |       | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|U.S. sponsored entities             |  |                     | 13 |  |                   |   | 53,402 |                  |  |   | 494            |  |  |           | 1  |  |                  |   | 2,471  |                |  |   | 20        |  |  |                  | 14 |  |  |   | 55,873  |  |  |   | 514   | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|Private label                       |  |                     | -  |  |                   |   | -      |                  |  |   | -              |  |  |           | 4  |  |                  |   | 7,818  |                |  |   | 371       |  |  |                  | 4  |  |  |   | 7,818   |  |  |   | 371   | 
|                                    |  |                     |    | 
|Subtotal mortgage-backed securities |  |                     | 13 |  |                   |   | 53,402 |                  |  |   | 494            |  |  |           | 5  |  |                  |   | 10,289 |                |  |   | 391       |  |  |                  | 18 |  |  |   | 63,691  |  |  |   | 885   | 
|                                    |  |                     |    | 
|                                    |  |                     |    |  |                   |   |        |                  | 
|Total                               |  |                     | 15 |  |                   | $ | 58,620 |                  |  | $ | 581            |  |  |           | 32 |  |                  | $ | 68,196 |                |  | $ | 7,887     |  |  |                  | 47 |  |  | $ | 126,816 |  |  | $ | 8,468 | 
|                                    |  |                     |    | 
|                                    |  |                     |    | 

The Company primarily invests in
mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, government bonds and to a lesser extent equity securities. The policy of the Company is to recognize an OTTI on equity securities where the fair value has been
significantly below cost for three consecutive quarters. Declines in the fair value of the corporate bonds that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI losses and
charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized
losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted
that at December 31, 2010, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not
intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed
quarterly. Creditrelated OTTI losses on individual securities were recognized during 2010 in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in OCI. The credit-related OTTI recognized during 2010 and
2009 was $1.0 million and $551,000, respectively and was related to securities having a book value of $2.3 million at December 31, 2010 and $1.4 million at December 31, 2009. The noncredit-related OTTI was $600,000 and $0 for 2010 and
2009, respectively.

The following table summarizes scheduled maturities of the Companys securities as
of December 31, 2010, excluding equity securities which have no maturity dates:



|                                |  |                        |      |   |               |   |           |            |  |   |           | 
|------------------------------- |  | ---------------------- | ---- | - | ------------- | - | --------- | ---------- |  | - | --------- | 
|(Dollar amounts in thousands)   |  | Available for sale     |     
|                                |  |                        |      |  
|                                |  | Weighted
Average Yield |      |   | Amortizedcost |   |           | Fair value | 
|Due in one year or less         |  |                        | 5.24 | % |               | $ | 39,276    |            |  | $ | 39,865    | 
|Due from one year to five years |  |                        | 5.05 | % |               |   | 68,296    |            |  |   | 72,037    | 
|Due from five to ten years      |  |                        | 4.86 | % |               |   | 124,832   |            |  |   | 130,678   | 
|Due after ten years             |  |                        | 4.08 | % |               |   | 816,884   |            |  |   | 833,242   | 
|                                |  |                        |      |  
|                                |  |                        | 4.28 | % |               | $ | 1,049,288 |            |  | $ | 1,075,822 | 
|                                |  |                        |      |  
|                                |  |                        |      |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 48 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|2. |  | Securities(continued)
|-- |  | ---------------------



For purposes of the maturity table,
mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than
their weighted-average contractual maturities because of principal prepayments.

Securities, with carrying
values of $89.7 million and $80.9 million as of December 31, 2010 and 2009, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.



|3. |  | Loans Receivable
|-- |  | ----------------

The following table summarizes the Companys loans receivable as of December 31:



|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|------------------------------------ |  | --------------- | ------- | - |  |  |  | --------------- |  | - | ------- | -
|(In thousands)                       |  | December 312010 |         |   |  |  |  | December 312009 | 
|Mortgage loans:                      |  |                 |         |   |  |  |  |                 |  |   |         |  
|Residential real estate              |  |                 |         |   |  |  |  |                 |  |   |         |  
|Single family                        |  | $               | 314,051 |   |  |  |  |                 |  | $ | 329,984 |  
|Multi family                         |  |                 | 30,091  |   |  |  |  |                 |  |   | 37,664  |  
|Construction                         |  |                 | 48,687  |   |  |  |  |                 |  |   | 45,749  |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Total residential real estate        |  |                 | 392,829 |   |  |  |  |                 |  |   | 413,397 |  
|Commercial real estate               |  |                 |         |   |  |  |  |                 |  |   |         |  
|Commercial                           |  |                 | 82,347  |   |  |  |  |                 |  |   | 84,409  |  
|Construction                         |  |                 | 9,701   |   |  |  |  |                 |  |   | 5,360   |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Total commercial real estate         |  |                 | 92,048  |   |  |  |  |                 |  |   | 89,769  |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Subtotal mortgage loans              |  |                 | 484,877 |   |  |  |  |                 |  |   | 503,166 |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Other loans:                         |  |                 |         |   |  |  |  |                 |  |   |         |  
|Consumer loans                       |  |                 |         |   |  |  |  |                 |  |   |         |  
|Home equity loans                    |  |                 | 71,645  |   |  |  |  |                 |  |   | 73,195  |  
|Dealer auto and RV loans             |  |                 | 50,781  |   |  |  |  |                 |  |   | 56,876  |  
|Other loans                          |  |                 | 9,960   |   |  |  |  |                 |  |   | 10,421  |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Total consumer loans                 |  |                 | 132,386 |   |  |  |  |                 |  |   | 140,492 |  
|Commercial business                  |  |                 | 40,431  |   |  |  |  |                 |  |   | 43,377  |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Subtotal other loans                 |  |                 | 172,817 |   |  |  |  |                 |  |   | 183,869 |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Total loans receivable               |  |                 | 657,694 |   |  |  |  |                 |  |   | 687,035 |  
|Less:                                |  |                 |         |   |  |  |  |                 |  |   |         |  
|Allowance for loan losses            |  |                 | 6,547   |   |  |  |  |                 |  |   | 6,027   |  
|Deferred loan fees and net discounts |  |                 | (1,983  | ) |  |  |  |                 |  |   | (2,334  | )
|Loans in process                     |  |                 | 12,243  |   |  |  |  |                 |  |   | 11,955  |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|Net loans receivable                 |  |                 | 640,887 |   |  |  |  |                 |  |   | 671,387 |  
|Loans held for sale                  |  |                 |         |   |  |  |  |                 |  |   |         |  
|Mortgage loans:                      |  |                 |         |   |  |  |  |                 |  |   |         |  
|Residential - single family          |  | $               | 80      |   |  |  |  |                 |  | $ | 201     |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  
|                                     |  |                 |         |   |  |  |  |                 |  |   |         |  

At December 31, 2010 and 2009,
the Company conducted its business through 24 offices in Allegheny, Beaver, Butler and Lawrence counties in Pennsylvania which also serves as its primary lending area. Management does not believe it has significant concentrations of credit risk to
any one group of borrowers given its underwriting and collateral requirements.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 49 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|3. |  | Loans Receivable(continued)
|-- |  | ---------------------------



Management has an established methodology to
determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, The Company has segmented certain loans in the portfolio by product
type. Loans are segmented into the following pools: commercial business loans, commercial real estate loans, residential real estate loans and consumer loans. The Company sub-segments residential real estate loans into the following three classes:
single family, construction and multi-family. Commercial real estate is sub-segmented into commercial and construction classes. The Company also sub-segments the consumer loan portfolio into the following three classes: home equity, dealer
automobile and recreational vehicle (RV) and other consumer loans. Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance allocations. These historical loss percentages are calculated over a
three year period for all portfolio segments. Certain qualitative factors are then added to the historical loss percentages to get the adjusted factor to be applied to non classified loans. The following qualitative factors are analyzed for each
portfolio segment:



| |  |  | Levels of and trends in delinquencies and nonaccruals
| | - |  | -----------------------------------------------------



| |  |  | Trends in volume and terms
| | - |  | --------------------------



| |  |  | Changes in lending policies and procedures
| | - |  | ------------------------------------------



| |  |  | Volatility of losses within each risk category
| | - |  | ----------------------------------------------



| |  |  | Loans and Lending staff acquired through acquisition
| | - |  | ----------------------------------------------------



| |  |  | Economic trends
| | - |  | ---------------



| |  |  | Concentrations of credit
| | - |  | ------------------------



| |  |  | Experience depth and ability of management
| | - |  | ------------------------------------------

These qualitative factors are reviewed each quarter and adjusted based upon relevant changes within the portfolio. During
2010, the qualitative factors for changes in levels of and trends in delinquencies were increased for residential mortgages, commercial mortgages, dealer automobile & RV loans and commercial loans. Changes in portfolio volumes during 2010
resulted in a reduction to the related factors for residential mortgages, dealer automobile and RV loans and commercial loans. The qualitative factor for changes in lending policies and procedures for commercial loans was reduced during the year due
to the liquidation of the Companys syndicated loan portfolio. During 2010, the qualitative factors for volatility of losses were reduced for consumer loans based upon a reduction in the calculated volatility. The factors related to loans and
lending staff acquired through acquisition were reduced for the entire portfolio due to the fact that the Companys last acquisition became over five years old during the year. Increases in local unemployment rates resulted in an increase in
the factors applied for economic trends for all loans except commercial real estate loans.

In terms of the
Companys loan portfolio, the consumer, commercial business and commercial real estate loans are deemed to have more risk than the residential real estate loans in the portfolio. The commercial loans not secured by real estate are highly
dependent on the borrowers financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. Within the
consumer loan portfolio, the dealer auto and RV loans have historically carried more risk than the other segments of the consumer portfolio.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 50 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|3. |  | Loans Receivable(continued)
|-- |  | ---------------------------



Loans by Segment

The total allowance reflects managements estimate of loan losses inherent in the loan portfolio at the balance
sheet date. The Company considers the allowance for loan losses of $6.5 million adequate to cover loan losses inherent in the loan portfolio, at December 31, 2010. The following table presents by portfolio segment, the changes in the allowance
for loan losses and the recorded investment in loans for the year ended December 31, 2010:



|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|--------------------------------------------------------------- |  | ---------- | ------ | - | --------------------- | - | ------ | -------- |  | - | ----------- |  |  | ----------- | ------- |  | ----- | - | --- | - |  | - | ------- | 
|(Dollar amounts in thousands)                                   |  |            |        |   |                       |   |        |          | 
|                                                                |  | Commercial |        |   | CommercialReal Estate |   |        | Consumer |  |   | Residential |  |  | Unallocated |         |  | Total |  
|Allowance for loan losses:                                      |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Beginning balance                                               |  | $          | 864    |   |                       | $ | 1,620  |          |  | $ | 1,093       |  |  | $           | 2,206   |  |       | $ | 244 |   |  | $ | 6,027   | 
|Charge-offs                                                     |  |            | 58     |   |                       |   | 168    |          |  |   | 583         |  |  |             | 177     |  |       |   | -   |   |  |   | 986     | 
|Recoveries                                                      |  |            | 1      |   |                       |   | -      |          |  |   | 98          |  |  |             | 3       |  |       |   | -   |   |  |   | 102     | 
|Provision                                                       |  |            | 365    |   |                       |   | 350    |          |  |   | 464         |  |  |             | 225     |  |       |   | -   |   |  |   | 1,404   | 
|Reallocations                                                   |  |            | (388   | ) |                       |   | 29     |          |  |   | 53          |  |  |             | 316     |  |       |   | (10 | ) |  |   | -       | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending Balance                                                  |  | $          | 784    |   |                       | $ | 1,831  |          |  | $ | 1,125       |  |  | $           | 2,573   |  |       | $ | 234 |   |  | $ | 6,547   | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending balance: individually evaluated for impairment           |  | $          | 472    |   |                       | $ | 839    |          |  | $ | 47          |  |  | $           | -       |  |       | $ | -   |   |  | $ | 1,358   | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending balance: collectively evaluated for impairment           |  | $          | 312    |   |                       | $ | 992    |          |  | $ | 1,078       |  |  | $           | 2,573   |  |       | $ | 234 |   |  | $ | 5,189   | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending balance: loans acquired with deteriorated credit quality |  | $          | -      |   |                       | $ | -      |          |  | $ | -           |  |  | $           | -       |  |       | $ | -   |   |  | $ | -       | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Loans Receivable:                                               |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending Balance                                                  |  | $          | 40,431 |   |                       | $ | 92,048 |          |  | $ | 132,386     |  |  | $           | 392,829 |  |       | $ | -   |   |  | $ | 657,694 | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending balance: individually evaluated for impairment           |  | $          | 837    |   |                       | $ | 8,432  |          |  | $ | 155         |  |  | $           | -       |  |       | $ | -   |   |  | $ | 9,424   | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending balance: collectively evaluated for impairment           |  | $          | 39,594 |   |                       | $ | 83,616 |          |  | $ | 132,231     |  |  | $           | 392,829 |  |       | $ | -   |   |  | $ | 648,270 | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|Ending balance: loans acquired with deteriorated credit quality |  | $          | -      |   |                       | $ | -      |          |  | $ | -           |  |  | $           | -       |  |       | $ | -   |   |  | $ | -       | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 
|                                                                |  |            |        |   |                       |   |        |          |  |   |             |  |  |             |         |  |       |   |     |   |  |   |         | 





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 51 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|3. |  | Loans Receivable(continued)
|-- |  | ---------------------------



The following is a summary of the changes in
the allowance for loan losses:



|                              |  |   |        |  
|----------------------------- |  | - | ------ | -
|(Dollar amounts in thousands) |  |   |       
|                              |  |   | Totals |  
|Balance, January 1, 2008      |  | $ | 5,414  |  
|Provision for loan losses     |  |   | 1,406  |  
|Charge offs                   |  |   | (996   | )
|Recoveries                    |  |   | 182    |  
|                              |  |   |        |  
|Balance, December 31, 2008    |  |   | 6,006  |  
|Provision for loan losses     |  |   | 912    |  
|Charge offs                   |  |   | (1,019 | )
|Recoveries                    |  |   | 128    |  
|                              |  |   |        |  
|Balance, December 31, 2009    |  |   | 6,027  |  
|Provision for loan losses     |  |   | 1,404  |  
|Charge offs                   |  |   | (986   | )
|Recoveries                    |  |   | 102    |  
|                              |  |   |        |  
|Balance, December 31, 2010    |  | $ | 6,547  |  
|                              |  |   |        |  
|                              |  |   |        |  

Credit Quality Information

The following table represents credit exposures by internally assigned grades for year ended
December 31, 2010. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Companys internal credit risk grading system is based on experiences
with similarly graded loans.

The Companys internally assigned grades are as follows:

Pass  loans which are protected by the current net worth and paying capacity of the obligor or by the value of the
underlying collateral.

Special Mention  loans where a potential weakness or risk exists, which could
cause a more serious problem if not corrected.

Substandard  loans that have a well-defined weakness
based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful  loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and
improbable, based on existing circumstances.

Loss  loans classified as a loss are considered
uncollectible, or of such value that continuance as an asset is not warranted.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 52 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|3. |  | Loans Receivable(continued)
|-- |  | ---------------------------





|                              |  |                                      |        |  |                                    |   |        |                                 |  |   |                                   |  |  |            |       |  |  |   |        | 
|----------------------------- |  | ------------------------------------ | ------ |  | ---------------------------------- | - | ------ | ------------------------------- |  | - | --------------------------------- |  |  | ---------- | ----- |  |  | - | ------ | 
|(Dollar amounts in thousands) |  |                                      |        |  |                                    |   |        |                                 |  |   |                                   |  |  |            |       |  |  |   |        | 
|                              |  | ResidentialReal EstateMulti - family |        |  | ResidentialReal EstateConstruction |   |        | CommercialReal EstateCommercial |  |   | CommercialReal EstateConstruction |  |  | Commercial |      
|Pass                          |  | $                                    | 30,091 |  |                                    | $ | 41,302 |                                 |  | $ | 71,999                            |  |  | $          | 9,701 |  |  | $ | 39,483 | 
|Special Mention               |  |                                      | -      |  |                                    |   | 4,876  |                                 |  |   | 1,863                             |  |  |            | -     |  |  |   | 75     | 
|Substandard                   |  |                                      | -      |  |                                    |   | 2,509  |                                 |  |   | 8,485                             |  |  |            | -     |  |  |   | 403    | 
|Doubtful                      |  |                                      | -      |  |                                    |   | -      |                                 |  |   | -                                 |  |  |            | -     |  |  |   | -      | 
|Loss                          |  |                                      | -      |  |                                    |   | -      |                                 |  |   | -                                 |  |  |            | -     |  |  |   | 470    | 
|                              |  |                                      |        |  |                                    |   |        |                                 |  |   |                                   |  |  |            |       |  |  |   |        | 
|Ending Balance                |  | $                                    | 30,091 |  |                                    | $ | 48,687 |                                 |  | $ | 82,347                            |  |  | $          | 9,701 |  |  | $ | 40,431 | 
|                              |  |                                      |        |  |                                    |   |        |                                 |  |   |                                   |  |  |            |       |  |  |   |        | 
|                              |  |                                      |        |  |                                    |   |        |                                 |  |   |                                   |  |  |            |       |  |  |   |        | 

The following table presents
performing and nonperforming single family residential and consumer loans based on payment activity for the year ended December 31, 2010. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans
are considered to be nonperforming when they become 90 days delinquent.



|                              |  |                                     |         |  |                    |   |        |                  |  |   |               |  |  |   |       | 
|----------------------------- |  | ----------------------------------- | ------- |  | ------------------ | - | ------ | ---------------- |  | - | ------------- |  |  | - | ----- | 
|(Dollar amounts in thousands) |  |                                     |         |  |                    |   |        |                  |  |   |               |  |  |   |       | 
|                              |  | ResidentialReal EstateSingle Family |         |  | ConsumerHomeEquity |   |        | DealerAuto andRV |  |   | OtherConsumer | 
|Performing                    |  | $                                   | 311,092 |  |                    | $ | 71,011 |                  |  | $ | 50,563        |  |  | $ | 9,889 | 
|Nonperforming                 |  |                                     | 2,959   |  |                    |   | 634    |                  |  |   | 218           |  |  |   | 71    | 
|                              |  |                                     |         |  |                    |   |        |                  |  |   |               |  |  |   |       | 
|Total                         |  | $                                   | 314,051 |  |                    | $ | 71,645 |                  |  | $ | 50,781        |  |  | $ | 9,960 | 
|                              |  |                                     |         |  |                    |   |        |                  |  |   |               |  |  |   |       | 
|                              |  |                                     |         |  |                    |   |        |                  |  |   |               |  |  |   |       | 

Nonperforming loans also include
certain loans that have been modified in TDRs where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Companys loss
mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to
performing status after considering the borrowers sustained repayment performance for a reasonable period, generally six months.

Non-performing loans, which include non-accrual loans and TDRs, were $13.2 million and $4.1 million at December 31, 2010 and 2009, respectively. The TDRs amounted to $7.5 million and $254,000 at
December 31, 2010 and 2009, respectively. The Company is not committed to lend additional funds to debtors whose loans are on non-accrual status.

For non-performing loans, the interest income that would have been recorded under the original terms of such loans and the interest income actually recognized for the years ended December 31 are
summarized below:



|                                              |  |      |       |  |      |   |     |      |  |   |     | 
|--------------------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- |  | - | --- | 
|(Dollar amounts in thousands)                 |  |      |       |  |      |   |     |      |  |   |     | 
|                                              |  | 2010 |       |  | 2009 |   |     | 2008 | 
|Interest income that would have been recorded |  | $    | 1,055 |  |      | $ | 294 |      |  | $ | 207 | 
|Interest income recognized                    |  |      | 781   |  |      |   | 140 |      |  |   | 122 | 
|                                              |  |      |       |  |      |   |     |      |  |   |     | 
|Interest income foregone                      |  | $    | 274   |  |      | $ | 154 |      |  | $ | 85  | 
|                                              |  |      |       |  |      |   |     |      |  |   |     | 
|                                              |  |      |       |  |      |   |     |      |  |   |     | 





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 53 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|3. |  | Loans Receivable(continued)
|-- |  | ---------------------------



Age Analysis of Past Due Loans
Receivable by Class

Following is a table which includes an aging analysis of the investment of past
due loans receivable as of December 31, 2010.



|                              |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|----------------------------- |  | ------------------ | ----- |  | ------------------ | - | ----- | ----------------- |  | - | ------------- |  |  | ------- | ------ |  | --------------------- | - | ------- | --------------------------------------- |  | - | ------- |  |  | - | - | 
|(Dollar amounts in thousands) |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|                              |  | 30-59 DaysPast Due |       |  | 60-89 DaysPast Due |   |       | 90 DaysOr Greater |  |   | Total PastDue |  |  | Current |        |  | Total LoansReceivable |   |         | RecordedInvestment >90 Days andAccruing | 
|Residential real estate       |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|Single family                 |  | $                  | 2,440 |  |                    | $ | 879   |                   |  | $ | 2,959         |  |  | $       | 6,278  |  |                       | $ | 307,773 |                                         |  | $ | 314,051 |  |  | $ | - | 
|Construction                  |  |                    | -     |  |                    |   | 2,431 |                   |  |   | 13            |  |  |         | 2,444  |  |                       |   | 46,243  |                                         |  |   | 48,687  |  |  |   | - | 
|Multi-family                  |  |                    | -     |  |                    |   | -     |                   |  |   | -             |  |  |         | -      |  |                       |   | 30,091  |                                         |  |   | 30,091  |  |  |   | - | 
|Commercial Real Estate        |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|Commercial                    |  |                    | 133   |  |                    |   | 48    |                   |  |   | 1,106         |  |  |         | 1,287  |  |                       |   | 81,060  |                                         |  |   | 82,347  |  |  |   | - | 
|Construction                  |  |                    | -     |  |                    |   | -     |                   |  |   | -             |  |  |         | -      |  |                       |   | 9,701   |                                         |  |   | 9,701   |  |  |   | - | 
|Consumer                      |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|Consumer - home equity        |  |                    | 181   |  |                    |   | 58    |                   |  |   | 479           |  |  |         | 718    |  |                       |   | 70,927  |                                         |  |   | 71,645  |  |  |   | - | 
|Consumer - dealer auto and RV |  |                    | 872   |  |                    |   | 219   |                   |  |   | 218           |  |  |         | 1,309  |  |                       |   | 49,472  |                                         |  |   | 50,781  |  |  |   | - | 
|Consumer - other              |  |                    | 48    |  |                    |   | 83    |                   |  |   | 71            |  |  |         | 202    |  |                       |   | 9,758   |                                         |  |   | 9,960   |  |  |   | - | 
|Commercial                    |  |                    | 26    |  |                    |   | -     |                   |  |   | 837           |  |  |         | 863    |  |                       |   | 39,568  |                                         |  |   | 40,431  |  |  |   | - | 
|                              |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|Total                         |  | $                  | 3,700 |  |                    | $ | 3,718 |                   |  | $ | 5,683         |  |  | $       | 13,101 |  |                       | $ | 644,593 |                                         |  | $ | 657,694 |  |  | $ | - | 
|                              |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 
|                              |  |                    |       |  |                    |   |       |                   |  |   |               |  |  |         |        |  |                       |   |         |                                         |  |   |         |  |  |   |   | 

Impaired Loans

Management considers commercial loans and commercial real estate loans which are 90 days or more past
due to be impaired. Larger commercial loans and commercial real estate loans which are 60 days or more past due are selected for impairment testing in accordance with GAAP. These loans are analyzed to determine if it is probable that all amounts
will not be collected according to the contractual terms of the loan agreement. If management determines that the fair value of the impaired loan is less than the recorded investment in the loan, impairment is recognized through a provision for loan
loss estimate or a charge-off to the allowance for loan losses.

The following table is a summary of the loans
considered to be impaired as of December 31:



|                                              |  |      |       |  |      |   |       |      |  |   |     | 
|--------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | --- | 
|(Dollar amounts in thousands)                 |  |      |       |  |      |   |       |      |  |   |     | 
|                                              |  | 2010 |       |  | 2009 |   |       | 2008 | 
|Impaired loans with an allocated allowance    |  | $    | 8,117 |  |      | $ | 790   |      |  | $ | 260 | 
|Impaired loans without an allocated allowance |  |      | 1,307 |  |      |   | 357   |      |  |   | 363 | 
|                                              |  |      |       |  |      |   |       |      |  |   |     | 
|Total impaired loans                          |  | $    | 9,424 |  |      | $ | 1,147 |      |  | $ | 623 | 
|                                              |  |      |       |  |      |   |       |      |  |   |     | 
|Allocated allowance on impaired loans         |  | $    | 1,358 |  |      | $ | 108   |      |  | $ | 33  | 
|Portion of impaired loans on non-accrual      |  |      | 9,424 |  |      |   | 1,147 |      |  |   | 623 | 
|Average impaired loans                        |  |      | 2,224 |  |      |   | 899   |      |  |   | 684 | 
|Income recognized on impaired loans           |  |      | 656   |  |      |   | 50    |      |  |   | 69  | 

The Company collectively reviews all residential real estate and consumer loans for impairment.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 54 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|3. |  | Loans Receivable(continued)
|-- |  | ---------------------------



The following table includes the recorded
investment and unpaid principal balances for impaired loans receivable as of December 31, 2010 with the associated allowance for loan losses amount, if applicable.



|                                             |  |                    |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|-------------------------------------------- |  | ------------------ | ----- |  | ---------------------- | - | ----- | ---------------- |  | - | ------------------------- |  |  | ------------------------ | ----- |  |  | - | --- | 
|(Dollar amounts in thousands)                |  |                    |       |  |                        |   |       |                  |  |   |                           |  |  |                          |      
|                                             |  | RecordedInvestment |       |  | UnpaidPrincipalBalance |   |       | RelatedAllowance |  |   | AverageRecordedInvestment |  |  | InterestIncomeRecognized |      
|With no related allowance recorded:          |  |                    |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Commercial real estateCommercial real estate |  | $                  | 1,162 |  |                        | $ | 1,269 |                  |  | $ | -                         |  |  | $                        | 732   |  |  | $ | 57  | 
|Commercial business loans                    |  |                    | 145   |  |                        |   | 192   |                  |  |   | -                         |  |  |                          | 195   |  |  |   | 4   | 
|With an allowance recorded:                  |  |                    |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Commercial real estateCommercial real estate |  |                    | 7,270 |  |                        |   | 7,270 |                  |  |   | 839                       |  |  |                          | 1,198 |  |  |   | 564 | 
|Consumer loansHome equity                    |  |                    | 155   |  |                        |   | 155   |                  |  |   | 47                        |  |  |                          | 24    |  |  |   | 10  | 
|Commercial business loans                    |  |                    | 692   |  |                        |   | 692   |                  |  |   | 472                       |  |  |                          | 75    |  |  |   | 21  | 
|Total:                                       |  |                    |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Commercial Real Estate                       |  |                    | 8,432 |  |                        |   | 8,539 |                  |  |   | 839                       |  |  |                          | 1,930 |  |  |   | 621 | 
|Consumer                                     |  |                    | 155   |  |                        |   | 155   |                  |  |   | 47                        |  |  |                          | 24    |  |  |   | 10  | 
|Commercial                                   |  |                    | 837   |  |                        |   | 884   |                  |  |   | 472                       |  |  |                          | 270   |  |  |   | 25  | 

Nonaccrual Loans

Loans are
considered nonaccrual 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 nonaccrual status, previously accrued but unpaid
interest is deducted from interest income.

On the following table are the loans receivable on nonaccrual
status as of December 31, 2010. The balances are presented by class of loans.



|                              |  |   |        | 
|----------------------------- |  | - | ------ | 
|(Dollar amounts in thousands) |  |   |       
|Commercial                    |  | $ | 837    | 
|Commercial Real Estate        |  |   | 8,432  | 
|Consumer                      |  |   |        | 
|Consumer - Home Equity        |  |   | 634    | 
|Consumer - Dealer auto and RV |  |   | 218    | 
|Consumer - other              |  |   | 71     | 
|Residential                   |  |   | 2,959  | 
|                              |  |   |        | 
|Total                         |  | $ | 13,151 | 
|                              |  |   |        | 
|                              |  |   |        | 



|4. |  | Investment Required by Regulation
|-- |  | ---------------------------------

The Companys subsidiary bank is a member of the FHLB System. As a member, the Bank maintains an investment in the capital stock of the FHLB of Pittsburgh, at cost, in an amount not less than 1.0% of
the unpaid principal balances of residential mortgage loans, 0.3% of total assets or approximately 5.0% of outstanding advances, if any due to the FHLB, whichever is greater, as calculated periodically by the FHLB. Purchases and redemptions of FHLB
stock are made directly with the FHLB at par. In 2008, the FHLB suspended both the payment of dividends and the repurchase of excess capital stock. During the fourth quarter of 2010, the FHLB partially lifted the suspension with a limited repurchase
of excess stock. The dividend





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 55 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|4. |  | Investment Required by Regulation(continued)
|-- |  | --------------------------------------------



suspension remains in effect and no dividends were paid in 2010. This repurchase restriction could result in the Banks investment in FHLB stock being greater than 5.0% of its outstanding
notes payable to the FHLB.



|5. |  | Premises and Equipment
|-- |  | ----------------------

Premises and equipment at December 31 are summarized by major classification as follows:



|                                               |  |      |        |  |      |   |        | 
|---------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|(Dollar amounts in thousands)                  |  | 2010 |        |  | 2009 |  
|Land                                           |  | $    | 3,236  |  |      | $ | 3,236  | 
|Buildings and improvements                     |  |      | 19,177 |  |      |   | 17,666 | 
|Leasehold improvements                         |  |      | 762    |  |      |   | 835    | 
|Furniture, fixtures and equipment              |  |      | 8,068  |  |      |   | 7,996  | 
|                                               |  |      |        |  |      |   |        | 
|                                               |  |      | 31,243 |  |      |   | 29,733 | 
|Less accumulated depreciation and amortization |  |      | 17,361 |  |      |   | 16,690 | 
|                                               |  |      |        |  |      |   |        | 
|                                               |  | $    | 13,882 |  |      | $ | 13,043 | 
|                                               |  |      |        |  |      |   |        | 
|                                               |  |      |        |  |      |   |        | 

Depreciation expense for the years
December 31, 2010, 2009 and 2008 was $1.1 million, $902,000 and $946,000, respectively.

The Company is
obligated under non-cancelable long term operating lease agreements for certain branch offices. These lease agreements, each having renewal options and none expiring later than 2019, have approximate aggregate rentals of $75,000, $75,000, $75,000,
$77,000, $75,000 and $178,000 for the years ended December 31, 2011, 2012, 2013, 2014, 2015 and thereafter, respectively. Rent expense for the years ended December 31, 2010, 2009 and 2008 was $115,000, $126,000 and $119,000, respectively.



|6. |  | Deposits
|-- |  | --------

The following table summarizes the Companys deposits as of December 31:



|                                     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 
|------------------------------------ |  | ------ | --------- |  | ---- |  | ------ | ------ |  | - | ------- |  |  |  | ------ | 
|(Dollar amounts in thousands)        |  | 2010   |           |  | 2009 | 
|                                     |  |        |           |  |      |  |        |       
|                                     |  |        |           | 
|Type of accounts                     |  | Amount |           |  | %    |  |        | Amount |  |   | %       | 
|Noninterest-bearing deposits         |  | $      | 84,272    |  |      |  | 8.3%   |        |  | $ | 68,404  |  |  |  | 7.2%   | 
|NOW account deposits                 |  |        | 128,020   |  |      |  | 12.6%  |        |  |   | 110,379 |  |  |  | 11.8%  | 
|Money Market deposits                |  |        | 32,759    |  |      |  | 3.2%   |        |  |   | 32,256  |  |  |  | 3.4%   | 
|Passbook account deposits            |  |        | 136,730   |  |      |  | 13.6%  |        |  |   | 119,556 |  |  |  | 12.7%  | 
|Time deposits                        |  |        | 630,864   |  |      |  | 62.3%  |        |  |   | 613,752 |  |  |  | 64.9%  | 
|                                     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 
|                                     |  | $      | 1,012,645 |  |      |  | 100.0% |        |  | $ | 944,347 |  |  |  | 100.0% | 
|                                     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 
|                                     |  |        |           | 
|Time deposits mature as follows:     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 
|                                     |  |        |           | 
|Within one year                      |  | $      | 410,474   |  |      |  | 65.1%  |        |  | $ | 410,882 |  |  |  | 66.9%  | 
|After one year through two years     |  |        | 96,689    |  |      |  | 15.3%  |        |  |   | 120,073 |  |  |  | 19.6%  | 
|After two years through three years  |  |        | 62,428    |  |      |  | 9.9%   |        |  |   | 43,791  |  |  |  | 7.1%   | 
|After three years through four years |  |        | 28,949    |  |      |  | 4.6%   |        |  |   | 6,953   |  |  |  | 1.1%   | 
|After four years through five years  |  |        | 28,384    |  |      |  | 4.5%   |        |  |   | 29,181  |  |  |  | 4.8%   | 
|Thereafter                           |  |        | 3,940     |  |      |  | 0.6%   |        |  |   | 2,872   |  |  |  | 0.5%   | 
|                                     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 
|                                     |  | $      | 630,864   |  |      |  | 100.0% |        |  | $ | 613,752 |  |  |  | 100.0% | 
|                                     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 
|                                     |  |        |           |  |      |  |        |        |  |   |         |  |  |  |        | 





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 56 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|6. |  | Deposits(continued)
|-- |  | -------------------



The Company had a total of $198.6 million and $193.7 million in time deposits of $100,000 or more at December 31,
2010 and 2009, respectively.

Interest expense by type of deposit account for the year ended December 31
is as follows:



|                              |  |      |        |  |      |   |        |      |  |   |        | 
|----------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|(Dollar amounts in thousands) |  | 2010 |        |  | 2009 |   |        | 2008 | 
|                              |  |      |       
|NOW account deposits          |  | $    | 454    |  |      | $ | 296    |      |  | $ | 796    | 
|                              |  |      |       
|Money Market deposits         |  |      | 127    |  |      |   | 122    |      |  |   | 133    | 
|                              |  |      |       
|Passbook account deposits     |  |      | 400    |  |      |   | 343    |      |  |   | 421    | 
|                              |  |      |       
|Time deposits                 |  |      | 13,289 |  |      |   | 17,035 |      |  |   | 21,058 | 
|                              |  |      |        |  |      |   |        |      |  |   |        | 
|                              |  |      |       
|                              |  | $    | 14,270 |  |      | $ | 17,796 |      |  | $ | 22,408 | 
|                              |  |      |        |  |      |   |        |      |  |   |        | 
|                              |  |      |        |  |      |   |        |      |  |   |        | 





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 57 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|7. |  | Borrowed Funds
|-- |  | --------------

Borrowed funds, which include FHLB advances, repurchase agreements, ESOP borrowings, corporate borrowings and treasury tax and loan notes payable, as of December 31 are summarized as follows:



|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|--------------------------------------- |  | ------------------------ | ----- |  | ------ | - | ------- | ------------------------ |  |  | ------ |  |  | - | ------- | 
|(Dollar amounts in thousands)           |  | 2010                     |       |  | 2009   |  
|                                        |  | Weighted    average rate |       |  | Amount |   |         | Weighted    average rate |  |  | Amount | 
|                                        |  |                          |       | 
|FHLB advances:                          |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due within 12 months                    |  |                          | 2.87% |  |        | $ | 71,866  |                          |  |  | 4.61%  |  |  | $ | 180,400 | 
|Due beyond 12 months but within 2 years |  |                          | 2.80% |  |        |   | 30,684  |                          |  |  | 2.87%  |  |  |   | 71,866  | 
|Due beyond 2 years but within 3 years   |  |                          | 3.62% |  |        |   | 72,647  |                          |  |  | 2.80%  |  |  |   | 30,684  | 
|Due beyond 3 years but within 4 years   |  |                          | 2.89% |  |        |   | 90,066  |                          |  |  | 3.71%  |  |  |   | 69,027  | 
|Due beyond 4 years but within 5 years   |  |                          | 3.36% |  |        |   | 14,613  |                          |  |  | 3.24%  |  |  |   | 47,876  | 
|Due beyond 5 years                      |  |                          | 3.63% |  |        |   | 10,564  |                          |  |  | 3.86%  |  |  |   | 20,569  | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       |  |        | $ | 290,440 |                          |  |  |        |  |  | $ | 420,422 | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       | 
|Repurchase agreements:                  |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due within 12 months                    |  |                          | 1.61% |  |        | $ | 38,000  |                          |  |  | 2.02%  |  |  | $ | 28,000  | 
|Due beyond 12 months but within 2 years |  |                          | 3.74% |  |        |   | 75,000  |                          |  |  | 2.65%  |  |  |   | 20,000  | 
|Due beyond 2 years but within 3 years   |  |                          | 3.30% |  |        |   | 130,000 |                          |  |  | 3.74%  |  |  |   | 75,000  | 
|Due beyond 3 years but within 4 years   |  |                          | 3.07% |  |        |   | 40,000  |                          |  |  | 3.34%  |  |  |   | 120,000 | 
|Due beyond 4 years but within 5 years   |  |                          | 4.12% |  |        |   | 10,000  |                          |  |  | 2.86%  |  |  |   | 20,000  | 
|Due beyond 5 years                      |  |                          | 4.42% |  |        |   | 70,000  |                          |  |  | 4.38%  |  |  |   | 80,000  | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       |  |        | $ | 363,000 |                          |  |  |        |  |  | $ | 343,000 | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       | 
|Other borrowings:                       |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       | 
|ESOP borrowings                         |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due within 12 months                    |  |                          | -     |  |        |   | -       |                          |  |  | 4.25%  |  |  | $ | 945     | 
|                                        |  |                          |       | 
|Corporate borrowings                    |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due within 12 months                    |  |                          | 6.30% |  |        | $ | 1,400   |                          |  |  | 6.30%  |  |  | $ | 1,400   | 
|Due beyond 12 months but within 2 years |  |                          | 6.30% |  |        |   | 1,400   |                          |  |  | 6.30%  |  |  |   | 1,400   | 
|Due beyond 2 years but within 3 years   |  |                          | 6.30% |  |        |   | 1,400   |                          |  |  | 6.30%  |  |  |   | 1,400   | 
|Due beyond 3 years but within 4 years   |  |                          | 6.30% |  |        |   | 1,400   |                          |  |  | 6.30%  |  |  |   | 1,400   | 
|Due beyond 4 years but within 5 years   |  |                          | 6.30% |  |        |   | 5,600   |                          |  |  | 6.30%  |  |  |   | 1,400   | 
|Due beyond 5 years                      |  |                          | -     |  |        |   | -       |                          |  |  | 6.30%  |  |  |   | 5,600   | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       |  |        | $ | 11,200  |                          |  |  |        |  |  | $ | 12,600  | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       | 
|Treasury tax and loan note payable      |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due within 12 months                    |  |                          | -     |  |        | $ | 191     |                          |  |  | -      |  |  | $ | 135     | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       | 
|Borrowings for joint ventures           |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due beyond 2 years but within 3 years   |  |                          | 3.75% |  |        | $ | 4,232   |                          |  |  | 3.75%  |  |  | $ | 6,146   | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       | 
|Junior subordinated notes               |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|Due beyond 5 years                      |  |                          | 5.44% |  |        | $ | 46,393  |                          |  |  | 5.44%  |  |  | $ | 46,393  | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 
|                                        |  |                          |       |  |        |   |         |                          |  |  |        |  |  |   |         | 

Included in the $290.4 million of
FHLB advances at December 31, 2010, are $20.0 million in structured advances in which the rate is fixed for four years and after four years on a specified date, the FHLB has the one time right (European Call) to call the advance. If the FHLB
does not call these advances on the specified date, the rate remains the same for the remaining term. Should these advances be called, the Company has





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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|7. |  | Borrowed Funds(continued)
|-- |  | -------------------------



the right to pay off the advances without penalty. The Company also has $50.0 million in structured advances with imbedded caps at various strike rates based on the 3 month LIBOR rate. If during
the term of the advance, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured advance is reduced by the difference between the rate and the strike rate. Additionally, the Company has $20.0 million in putable advances.
The Company has the one-time option to terminate these advances on the put date. If the Company does not terminate these advances on the specified date, the rate remains the same for the remaining term.

FHLB advances are secured by FHLB stock, qualifying residential mortgage loans and mortgage-backed securities to the
extent that the fair value of such pledged collateral must be at least equal to the advances outstanding. At December 31, 2010, the Company had a maximum borrowing capacity with the FHLB of $426.8 million, with $124.9 million available for use.

Included in the $363.0 million of repurchase agreements (REPOs) are $90.0 million in structured REPOs with
imbedded caps at various strike rates based on the 3 month LIBOR rate. The terms and conditions of $30.0 million of these structured REPOs are that the rate is fixed for the entire term of the REPO and the terms and conditions of $60.0 million of
these structured REPOs are that the rate is fixed for three years and after 3 years, on a specified date the counterparty has the one time right (European Call) to call the REPO. If the counterparty does not call the REPO on the specified date, the
rate remains the same for the remaining two years. These structured REPOs also include an imbedded cap for the first three year period with a strike rate to the 3 month LIBOR rate. If during the first three years, the 3 month LIBOR rate exceeds the
strike rate, the interest rate on the structured REPO is reduced by the difference between the rate and the strike rate. In addition, the Company has $25.0 million in structured REPOs with double, or $50.0 million notional amount of imbedded caps,
at a strike rate of 3.75% based on the 3 month LIBOR rate. The terms and conditions of these structured REPOs are that the rate is fixed for five years and after 5 years, on a specified date the counterparty has the one time right (European Call) to
call the REPO. If the counterparty does not call the REPO on the specified date, the rate remains the same for the remaining five years. These structured REPOs also include a double imbedded cap for the first five year period with a strike rate to
the 3 month LIBOR rate. If during the first five years, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured REPO is reduced by two times the difference between the rate and the strike rate. At no point shall the
interest rate on these structured REPOs with imbedded caps be less than zero.

Also included in the $363.0
million of REPOs is a $25.0 million structured REPO in which the Company pays a fixed rate of interest. At the reset date and every quarterly period thereafter, the counterparty has the right to terminate the transaction. In addition, the Company
has $30.0 million in structured REPOs in which the rate is fixed for four years and after four years on a specified date, the counterparty has the one time right (European Call) to call the REPO. If the counterparty does not call the REPO on the
specified date, the rate remains the same for the remaining term. It has historically been the Companys position to pay off any borrowings and replace them with fixed rate funding if converted by the counterparty.

The Company enters into sales of securities under agreements to repurchase. Such REPOs are treated as borrowed
funds. The dollar amount of the securities underlying the agreements remains in their respective asset accounts.

REPOs are collateralized by various securities that are either held in safekeeping at the FHLB or delivered to the dealer who arranged the transaction and the Company maintains control of these
securities.

The market value of such securities exceeded the amortized cost of the securities sold under
agreements to repurchase. The market value of the securities as of December 31, 2010 was $426.7 million with an





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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|7. |  | Borrowed Funds(continued)
|-- |  | -------------------------



amortized cost of $400.8 million. The market value of the securities as of December 31, 2009 was $394.6 million with an amortized cost of $374.0 million. The average maturity date of the
mortgage backed securities sold under agreements to repurchase was greater than 90 days for the year ended December 31, 2010 and 2009.

As of December 31, 2010 and 2009, the Company had REPOs with Citigroup of $155.0 million and $165.0 million respectively, Barclays Capital of $70.0 million and $70.0 million, respectively,
Credit Suisse of $103.0 million and $103.0 million, respectively, PNC Bank of $5.0 million and $5.0 million, respectively and Morgan Stanley of $30.0 million and $0, respectively.

As of December 31, 2010, the REPOs with Citigroup had $19.5 million at risk (where the market value of the
securities exceeds the borrowing), with a weighted average maturity of 35 months, Barclays Capital had $8.8 million at risk with a weighted average maturity of 46 months, Credit Suisse had $14.8 million at risk with a weighted average maturity of 36
months, PNC Bank had $888,000 at risk with a weighted average maturity of 15 months and Morgan Stanley had $4.0 million at risk with a weighted average maturity of 38 months.

Borrowings under REPO averaged $359.7 million, $344.4 million and $273.3 million during 2010, 2009 and 2008,
respectively. The maximum amount outstanding at any month-end was $363.0 million, $366.0 million and $337.5 million during 2010, 2009 and 2008, respectively.

The Company, through ESB, has an agreement with the Federal Reserve Bank of Cleveland whereby ESB is an authorized treasury tax loan depository. Under the terms of the note agreement, funds deposited to
the Companys treasury tax and loan account (limited to $150,000 per deposit) accrue interest at a rate of 0.25% below the overnight federal funds rate. The treasury tax loan deposit balance was $150,000 and $100,000 at December 31, 2010
and 2009, respectively.

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 three month 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. The Company had no unamortized deferred debt issuance costs associated with the preferred securities at December 31, 2010 and 2009. On July 23, 2008 the Company redeemed $5.0 million of
the preferred securities of ESB Capital Trust II with proceeds from a $14.0 million loan with First Tennessee Bank, National Association (First Tennessee), with a fixed interest rate of 6.30%. The remainder of the First Tennessee loan
was used to repay an existing loan with First Tennessee with a remaining balance of $9.0 million, which had an interest rate of 5.55% and was due on December 31, 2008.





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|ESB Financial Corporation |  | 60 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|7. |  | Borrowed Funds(continued)
|-- |  | -------------------------



On December 17, 2003, ESB Statutory
Trust (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 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 three month 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. There were no unamortized deferred debt issuance costs associated with the preferred securities at December 31, 2010
and 2009.

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/variable 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 with a quarterly reset equal to the 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 issuance of these preferred securities did not have any
deferred debt issuance costs associated with it.





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|ESB Financial Corporation |  | 61 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|8. |  | Income Taxes
|-- |  | ------------

The provision for income taxes for the years ended December 31, is comprised of the following:



|                              |  |      |       |   |      |   |        |      |  |   |       |  
|----------------------------- |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ----- | -
|(Dollar amounts in thousands) |  | 2010 |       |   | 2009 |   |        | 2008 | 
|                              |  |      |      
|Current expense:              |  |      |       |   |      |   |        |      |  |   |       |  
|Federal                       |  | $    | 3,951 |   |      | $ | 3,442  |      |  | $ | 2,559 |  
|State                         |  |      | (21   | ) |      |   | 41     |      |  |   | (40   | )
|                              |  |      |       |   |      |   |        |      |  |   |       |  
|                              |  |      | 3,930 |   |      |   | 3,483  |      |  |   | 2,519 |  
|Deferred benefit:             |  |      |       |   |      |   |        |      |  |   |       |  
|Federal                       |  |      | (394  | ) |      |   | (1,026 | )    |  |   | (971  | )
|State                         |  |      | 17    |   |      |   | (75    | )    |  |   | -     |  
|                              |  |      |       |   |      |   |        |      |  |   |       |  
|                              |  | $    | 3,553 |   |      | $ | 2,382  |      |  | $ | 1,548 |  
|                              |  |      |       |   |      |   |        |      |  |   |       |  
|                              |  |      |       |   |      |   |        |      |  |   |       |  

In addition to income taxes
applicable to income before taxes in the consolidated statements of operations, the following income tax amounts were recorded to stockholders equity during the years ended December 31:



|                                                                                                       |  |      |       |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------------------------------------ |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|(Dollar amounts in thousands)                                                                          |  | 2010 |       |   | 2009 |   |        | 2008 | 
|                                                                                                       |  |      |      
|Net loss (gain) on securities available for sale                                                       |  | $    | 2,497 |   |      | $ | (8,307 | )    |  | $ | (3,166 | )
|Net loss (gain) on fair value adjustment on derivatives                                                |  |      | 1,043 |   |      |   | (72    | )    |  |   | -      |  
|Net unrecognized pension cost                                                                          |  |      | (63   | ) |      |   | 33     |      |  |   | (26    | )
|Compensation expense for tax purposes in excess of amounts recognized for financial statement purposes |  |      | 74    |   |      |   | 166    |      |  |   | 20     |  
|                                                                                                       |  |      |       |   |      |   |        |      |  |   |        |  
|                                                                                                       |  | $    | 3,551 |   |      | $ | (8,180 | )    |  | $ | (3,172 | )
|                                                                                                       |  |      |       |   |      |   |        |      |  |   |        |  
|                                                                                                       |  |      |       |   |      |   |        |      |  |   |        |  





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|ESB Financial Corporation |  | 62 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|8. |  | Income Taxes(continued)
|-- |  | -----------------------



The tax effects of temporary differences
between the financial reporting basis and income tax basis of assets and liabilities that are included in the net deferred tax asset as of December 31 relate to the following:



|                                                     |  |      |        |  |      |   |        |  
|---------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | -
|(Dollar amounts in thousands)                        |  | 2010 |        |  | 2009 |  
|Deferred tax assets:                                 |  |      |        |  |      |   |        |  
|Allowances for losses on loans and real estate owned |  | $    | 2,238  |  |      | $ | 2,049  |  
|General business credit                              |  |      | 897    |  |      |   | 1,705  |  
|Minimum tax credit carry forward                     |  |      | 3,880  |  |      |   | 3,880  |  
|Writedown of debt                                    |  |      | 1,157  |  |      |   | 725    |  
|Real estate acquired through foreclosure, net        |  |      | 99     |  |      |   | 70     |  
|State net operating loss carryover                   |  |      | 481    |  |      |   | 446    |  
|Defined benefit plans                                |  |      | 296    |  |      |   | 359    |  
|Mortgage servicing rights                            |  |      | 2      |  |      |   | 3      |  
|Investment in joint ventures                         |  |      | 712    |  |      |   | 620    |  
|Interest rate swaps                                  |  |      | 971    |  |      |   | -      |  
|Other                                                |  |      | 1,461  |  |      |   | 1,163  |  
|                                                     |  |      |        |  |      |   |        |  
|Total gross deferred tax assets                      |  |      | 12,194 |  |      |   | 11,020 |  
|Less state valuation allowance                       |  |      | 188    |  |      |   | 136    |  
|                                                     |  |      |        |  |      |   |        |  
|Deferred tax assets after valuation allowance        |  |      | 12,006 |  |      |   | 10,884 |  
|                                                     |  |      |        |  |      |   |        |  
|Deferred tax liabilities:                            |  |      |        |  |      |   |        |  
|Investment in securities available for sale          |  |      | 9,166  |  |      |   | 11,960 |  
|Interest rate swaps                                  |  |      | -      |  |      |   | 72     |  
|Accretion of discounts                               |  |      | 59     |  |      |   | 44     |  
|Core deposit intangible                              |  |      | 296    |  |      |   | 437    |  
|Purchase price adjustments                           |  |      | 131    |  |      |   | 168    |  
|Other                                                |  |      | 202    |  |      |   | 193    |  
|                                                     |  |      |        |  |      |   |        |  
|Gross deferred tax liabilities                       |  |      | 9,854  |  |      |   | 12,874 |  
|                                                     |  |      |        |  |      |   |        |  
|Net deferred tax asset (liability)                   |  | $    | 2,152  |  |      | $ | (1,990 | )
|                                                     |  |      |        |  |      |   |        |  
|                                                     |  |      |        |  |      |   |        |  

As of December 31, 2010 and
2009, the Company determined that it was not required to establish a valuation allowance for federal deferred tax assets since it is more likely than not that the deferred tax asset will be realized through carry-back to taxable income in prior
years, future reversals of existing taxable temporary differences and, to a lesser extent, future taxable income.

The general business credit of $897,000 will be available to reduce future federal income tax up to the year 2030. The alternative minimum tax credit of $3.9 million is available to reduce future regular
income taxes over an indefinite period.

A portion of the deferred tax assets relating to state net operating
loss carryforwards were recorded as part of the purchase price allocation of the acquisition of PHSB Financial Corporation and its wholly owned subsidiary Peoples Home Savings Bank during 2005. The state net operating loss carryforward of $3.6
million expires in 2024. This net operating loss was generated by PHSB Financial Corporation in its final tax return. The Company created an additional state deferred tax asset relating to write-downs taken at the Companys joint venture
projects. The Company did establish a partial valuation allowance for this asset





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|ESB Financial Corporation |  | 63 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|8. |  | Income Taxes(continued)
|-- |  | -----------------------



since it is more likely than not that a portion of the deferred tax asset will not be realized through future taxable income. At December 31, 2010 and 2009, the valuation allowance for state
deferred tax assets was $188,000 and $136,000, respectively.

A reconciliation between the provision for
income taxes and the amount computed by multiplying operating results before income taxes by the statutory federal income tax rate of 35% for the year ended December 31, 2010 and of 34% for the years ended December 31, 2009 and 2008 is as
follows:



|                                                      |  |      |         |  |      |  |         |      |  |  |         | 
|----------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                      |  | 2010 |         |  | 2009 |  |         | 2008 | 
|                                                      |  |      |        
|Tax at statutory rate                                 |  |      | 35.0%   |  |      |  | 34.0%   |      |  |  | 34.0%   | 
|(Decrease) increase resulting from:                   |  |      |         |  |      |  |         |      |  |  |         | 
|Tax free income, net of interest disallowance         |  |      | (11.6%) |  |      |  | (12.8%) |      |  |  | (13.6%) | 
|State income taxes, net of Federal income tax benefit |  |      | (0.1%)  |  |      |  | 0.2%    |      |  |  | (0.2%)  | 
|Earnings of BOLI                                      |  |      | (1.4%)  |  |      |  | (2.1%)  |      |  |  | (3.3%)  | 
|Other, net                                            |  |      | (2.0%)  |  |      |  | (2.8%)  |      |  |  | (3.7%)  | 
|                                                      |  |      |         |  |      |  |         |      |  |  |         | 
|                                                      |  |      |        
|Effective rate                                        |  |      | 19.9%   |  |      |  | 16.5%   |      |  |  | 13.2%   | 
|                                                      |  |      |         |  |      |  |         |      |  |  |         | 
|                                                      |  |      |         |  |      |  |         |      |  |  |         | 

The Company and its subsidiaries
file a consolidated federal income tax return. Prior to 1996, the Bank was permitted under the Internal Revenue 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, 2009 (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.

GAAP prescribes a recognition threshold and a measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination
by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent
likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. Guidance is also provided on
the accounting for and disclosure of unrecognized tax benefits, interest and penalties.

There is currently no
liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated statements of
operations. During 2008, the Internal Revenue Service (IRS) has concluded an audit of the Companys tax returns for the year ended December 31, 2006 in which there was no change necessary to the Companys tax liability. The
Companys federal and state income tax returns for taxable years through December 31, 2006 have been closed for purposes of examination by the IRS and the Pennsylvania Department of Revenue.





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|ESB Financial Corporation |  | 64 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|9. |  | Employee Benefit Plans
|-- |  | ----------------------

Retirement Savings Plan

The
Company has a defined contribution employee retirement plan for the benefit of substantially all employees. The plan provides for regular employer payments that match each participating employees contribution to their individual tax-deferred
retirement account. Employees can contribute up to 100% of their compensation, less required deductions, to the plan and the Company matches 100% of the first 1% and 50% of the remaining 2% through 6% of employee contributions in stock of the
Company. The Company contributed $272,000, $268,000 and $243,000 to the plan during 2010, 2009 and 2008, respectively.

Employee Stock Ownership Plan

The
Company has a tax qualified Employee Stock Ownership Plan (ESOP) for the benefit of its employees. Employees begin to participate in the plan January 1 of the year following their date of hire. Participants become 25% vested in their accounts
after two years of service, 50% after three years of service, 75% after four years of service and 100% after five years of service or, if earlier, upon death, disability or attainment of normal retirement age.

The purchase of shares of the Companys stock by the ESOP is funded by a loan and contributions from the Company,
through the Bank. Unreleased ESOP shares collateralize the loan payable and the cost of these shares is recorded as a contra-equity account in stockholders equity of the Company. The Companys ESOP loan matured in December 2010, the
weighted-average interest rate was 4.25%. The Company secured a new loan in February 2011 for $5.0 million, with a weighted-average interest rate of 4.68% and a maturity date of April 2016. Shares released as debt payments are made by the ESOP to
the loan. The ESOPs sources of repayment of the loans can include dividends, if any, on the unallocated stock held by the ESOP and discretionary contributions from the Company to the ESOP and earnings thereon.

Dividends received on unallocated ESOP shares during 2010, 2009 and 2008 amounted to $22,305, $53,241 and $85,712,
respectively. All of the unallocated dividends were used for debt service on the loan. The Company contributed $1.1 million for each of the years ended December 31, 2010, 2009 and 2008. The ESOP incurred interest on the loan of $23,000, $81,000
and $130,000, for the years ended December 31, 2010, 2009 and 2008, respectively.

Compensation is
recognized under the shares released method and compensation expense is equal to the fair value of the shares committed to be released and unallocated ESOP shares are excluded from outstanding shares for purposes of computing EPS.

During 2010, 2009 and 2008, the Company recognized compensation expense related to the ESOP of $1.2 million, $1.1 million
and $900,000, respectively.

As of December 31, 2010 and 2009, the ESOP held a total of 1,656,868 and
1,652,893 shares, respectively, of the Companys stock and there were 0 and 74,349 unallocated shares, respectively, with a fair value of $0 and $983,000, respectively. During 2010 and 2009, 74,349 and 78,338 shares were released for
allocation, respectively. During 2010, 2009 and 2008, 15,651, 11,662 and 7,878 additional shares were purchased by the Company to be released for allocation at a cost of $189,000, $123,000 and $76,000, respectively. These amounts were included in
the Companys compensation expense related to the ESOP.





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|ESB Financial Corporation |  | 65 |  | 2010 Annual Report



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##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|9. |  | Employee Benefit Plans(continued)
|-- |  | ---------------------------------



Stock Option Plans

The Company maintains various stock option plans (Option Plans), which provide for the grant of stock options to
directors, officers and other key employees. The Option Plans provide for the grant of both incentive stock options and compensatory stock options. Stock options are granted at an exercise price equal to the market price at the date of grant, the
options vest over a specified time and are exercisable on the date they vest and have a maximum term of ten years. These terms are discretionary. Stock option activities under the Option Plans for the years ended December 31 are as follows:



|                                 |  |         |         |   |                                    |   |       |         |  |  |                                    |   |  |         |       |  |                                    |  |         |   |  |   |       | 
|-------------------------------- |  | ------- | ------- | - | ---------------------------------- | - | ----- | ------- |  |  | ---------------------------------- | - |  | ------- | ----- |  | ---------------------------------- |  | ------- | - |  | - | ----- | 
|                                 |  | 2010    |         |   | 2009                               |   |       | 2008    | 
|                                 |  |         |         |   |                                    |   |       |         |  |  |                                    |  
|                                 |  | Options |         |   | WeightedAverageExercisePrice/Share |   |       | Options |  |  | WeightedAverageExercisePrice/Share |   |  | Options |       |  | WeightedAverageExercisePrice/Share | 
|Outstanding at beginning of year |  |         | 810,280 |   |                                    | $ | 11.45 |         |  |  | 891,002                            |   |  | $       | 10.45 |  |                                    |  | 948,150 |   |  | $ | 10.21 | 
|Granted                          |  |         | 126,630 |   |                                    |   | 14.90 |         |  |  | 124,730                            |   |  |         | 11.54 |  |                                    |  | 91,030  |   |  |   | 10.30 | 
|Exercised                        |  |         | (78,189 | ) |                                    |   | 9.12  |         |  |  | (145,628                           | ) |  |         | 7.15  |  |                                    |  | (51,285 | ) |  |   | 6.82  | 
|Forfeited                        |  |         | (24,400 | ) |                                    |   | 8.30  |         |  |  | (59,824                            | ) |  |         | 7.26  |  |                                    |  | (96,893 | ) |  |   | 9.93  | 
|                                 |  |         |         |   |                                    |   |       |         |  |  |                                    |   |  |         |       |  |                                    |  |         |   |  |   |       | 
|Outstanding at end of year       |  |         | 834,321 |   |                                    |   | 12.28 |         |  |  | 810,280                            |   |  |         | 11.45 |  |                                    |  | 891,002 |   |  |   | 10.45 | 
|                                 |  |         |         |   |                                    |   |       |         |  |  |                                    |   |  |         |       |  |                                    |  |         |   |  |   |       | 
|Exercisable at end of year       |  |         | 609,532 |   |                                    | $ | 12.10 |         |  |  | 552,448                            |   |  | $       | 11.75 |  |                                    |  | 730,596 |   |  | $ | 10.47 | 
|                                 |  |         |         |   |                                    |   |       |         |  |  |                                    |   |  |         |       |  |                                    |  |         |   |  |   |       | 
|                                 |  |         |         |   |                                    |   |       |         |  |  |                                    |   |  |         |       |  |                                    |  |         |   |  |   |       | 

The following table summarizes
certain characteristics of issued stock options as of December 31, 2010:



|            |  |                      |         |  |               |   |       |                                            |  |  |     | 
|----------- |  | -------------------- | ------- |  | ------------- | - | ----- | ------------------------------------------ |  |  | --- | 
|Year Issued |  | Options  Outstanding |         |  | ExercisePrice |   |       | AverageRemainingContractualLife (in years) | 
|2001        |  |                      | 21,556  |  |               | $ | 7.83  |                                            |  |  | 0.9 | 
|2002        |  |                      | 66,310  |  |               |   | 10.83 |                                            |  |  | 1.9 | 
|2003        |  |                      | 79,680  |  |               |   | 15.35 |                                            |  |  | 2.9 | 
|2004        |  |                      | 83,410  |  |               |   | 14.50 |                                            |  |  | 3.9 | 
|2005        |  |                      | 68,850  |  |               |   | 12.20 |                                            |  |  | 4.3 | 
|2005        |  |                      | 14,590  |  |               |   | 12.40 |                                            |  |  | 4.3 | 
|2006        |  |                      | 77,543  |  |               |   | 10.75 |                                            |  |  | 5.9 | 
|2007        |  |                      | 83,138  |  |               |   | 10.11 |                                            |  |  | 6.9 | 
|2008        |  |                      | 88,454  |  |               |   | 10.30 |                                            |  |  | 7.9 | 
|2009        |  |                      | 124,160 |  |               |   | 11.54 |                                            |  |  | 8.9 | 
|2010        |  |                      | 126,630 |  |               |   | 14.90 |                                            |  |  | 9.9 | 
|            |  |                      |         |  |               |   |       |                                            |  |  |     | 
|            |  |                      | 834,321 |  |               | $ | 12.28 |                                            |  |  | 6.2 | 
|            |  |                      |         |  |               |   |       |                                            |  |  |     | 
|            |  |                      |         |  |               |   |       |                                            |  |  |     | 

Management Recognition Plan

In connection with previous acquisitions, the Company acquired shares of stock held in trust for
potential future distribution to management and key employees for compensation purposes. As of December 31, 2010, there were 15,624 shares held in the Management Recognition Plan (MRP) trust.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 66 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|9. |  | Employee Benefit Plans(continued)
|-- |  | ---------------------------------



In May 2004, the Company awarded 31,450
shares to eligible individuals, 4,820 shares vested on the date of the grant, 20,725 shares subsequently vested and 3,280 shares have been forfeited and the remaining 2,625 shares will vest over a scheduled vesting period ending in 2011. The price
on the grant date was $12.81 and the fair value of the shares was approximately $403,000.

In May 2005, the
Company awarded 700 shares to eligible individuals, 75 shares vested on the date of the grant, 495 shares subsequently vested and the remaining 130 shares will vest over a scheduled vesting period ending in 2011. The price on the grant date was
$13.25 and the fair value of the shares was approximately $10,000.

Compensation expense recognized in 2010,
2009 and 2008 was $35,000, $35,000 and $37,000, respectively. The Company is expected to recognize compensation expense of $35,000 for the 2011.

The following is a summary of the changes in the stock for the MRP during the year ended December 31, 2010:



|                                                   |  |        |        |  
|-------------------------------------------------- |  | ------ | ------ | -
|                                                   |  | Shares |       
|Nonvested restricted stock as of January 1, 2008   |  |        | 12,875 |  
|Granted                                            |  |        | -      |  
|Vested                                             |  |        | (3,600 | )
|Forfeited and expired                              |  |        | (1,000 | )
|                                                   |  |        |        |  
|Nonvested restricted stock as of December 31, 2008 |  |        | 8,275  |  
|Granted                                            |  |        | -      |  
|Vested                                             |  |        | (2,760 | )
|Forfeited                                          |  |        | -      |  
|                                                   |  |        |        |  
|Nonvested restricted stock as of December 31, 2009 |  |        | 5,515  |  
|Granted                                            |  |        | -      |  
|Vested                                             |  |        | (2,760 | )
|Forfeited                                          |  |        | -      |  
|                                                   |  |        |        |  
|Nonvested restricted stock as of December 31, 2010 |  |        | 2,755  |  
|                                                   |  |        |        |  
|                                                   |  |        |        |  

Excess Benefit Plan

The Company has adopted an excess benefit plan for the purpose of permitting an executive officer and
any other employees of the Company who may be designated pursuant to the plan, to receive certain benefits that the executive officer and any other employees of the Company otherwise would be eligible to receive under the Companys retirement
and profit sharing plan and ESOP but for the limitations set forth in Section 401(a)(17), 402(g) and 415 of the Internal Revenue Code of 1986, as amended (the Code). Pursuant to the excess benefit plan, during any plan year the
Company shall make matching contributions on behalf of the participant in an amount equal to the amount of matching contributions that would have been made by the Company on behalf of the participant but for limitations in the Code, less the actual
amount of matching contributions actually made by the Company on behalf of the participant. Finally, the excess benefit plan generally provides that during any plan year a participant shall receive a supplemental ESOP allocation in an amount equal
to the amount which would have been allocated to the participant but for limitations in the Code, less the amount actually allocated to the participant pursuant to the ESOP. The supplemental benefits to be received by a participant pursuant to the
excess benefit plan shall be credited to an account maintained pursuant to the plan within 180 days after the end of each plan year. In connection with its adoption of the excess benefit plan, the Company established a trust which currently holds
52,542 shares of common stock to fund its obligation under the excess benefit plan.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 67 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|9. |  | Employee Benefit Plans(continued)
|-- |  | ---------------------------------



Supplemental Executive Retirement Plan
and Directors Retirement Plan

The Company has adopted a Supplemental Executive Benefit Plan
(SERP) in order to provide supplemental retirement and death benefits for certain key employees of the Company. Under the SERP, participants shall receive an annual retirement benefit following retirement at age 65 equal to 25% of the
participants final average pay multiplied by a target retirement benefit percentage. Final average pay is based upon the participants last three years compensation and the target benefit percentage is equal to the fraction
resulting from the participants years of credited service divided by 20, this targeted percentage is capped at 100%. Benefits under the plan are payable in ten equal annual payments and a lesser benefit is payable upon early retirement at age
50 with at least twelve years of service. If a participant dies prior to retirement, the participants estate will receive a lump sum payment equal to the net present value of future benefit payments under the plan. At December 31, 2010,
the participants in the plan had credited service under the SERP ranging from 20 to 32 years.

The Company and
the Bank have adopted the ESB Financial Corporation Directors Retirement Plan and entered into director retirement agreements with each director of the Company and the Bank. The plan provides that any retiring director with a minimum of five
or more years of service with the Company or the Bank and a minimum of 10 total years of service, including years of service with any bank acquired by

the Company or the Bank, that remains in continuous service as a board member until age 75 will be entitled to receive an annual retirement benefit equal to his or her directors fees earned during
the last full calendar year prior to his or her retirement date, multiplied by a ratio, ranging from 25% to 80%, based on the directors total years of service. The maximum ratio of 80% of fees requires 20 or more years of service and the
minimum ratio of 25% of fees requires 10 years of service. Retirement benefits may also be payable under the plan if a director retires from service as a director prior to attaining age 75. During 2010, three directors received monthly benefits
under the plan.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 68 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|9. |  | Employee Benefit Plans(continued)
|-- |  | ---------------------------------



The following table sets forth the obligation
and funded status as of December 31:



|                                                                              |  |                            |      |   |  |   |      |              |  |  |  |  |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------- |  | -------------------------- | ---- | - |  | - | ---- | ------------ |  |  |  |  |  | - | ------ | - |  | - | ------ | -
|(Dollar amounts in thousands)                                                 |  | Directors Retirement Plan |      |   |  |   |      | SERP         | 
|                                                                              |  | December 31,               |      |   |  |   |      | December 31, | 
|                                                                              |  |                            | 2010 |   |  |   | 2009 |              |  |  |  |  |  |   | 2010   |   |  |   | 2009   |  
|                                                                              |  |                            |      |   |  |   |      |              | 
|Change in benefit obligation                                                  |  |                            |      |   |  |   |      |              |  |  |  |  |  |   |        |   |  |   |        |  
|Benefit obligation at beginning of year                                       |  | $                          | 880  |   |  | $ | 865  |              |  |  |  |  |  | $ | 2,279  |   |  | $ | 1,946  |  
|Service Cost                                                                  |  |                            | 25   |   |  |   | 28   |              |  |  |  |  |  |   | 60     |   |  |   | 49     |  
|Interest Cost                                                                 |  |                            | 45   |   |  |   | 46   |              |  |  |  |  |  |   | 124    |   |  |   | 105    |  
|Amendments                                                                    |  |                            | -    |   |  |   | -    |              |  |  |  |  |  |   | -      |   |  |   | -      |  
|Actuarial losses (gains)                                                      |  |                            | 11   |   |  |   | (8   | )            |  |  |  |  |  |   | (13    | ) |  |   | 264    |  
|Benefits paid                                                                 |  |                            | (118 | ) |  |   | (51  | )            |  |  |  |  |  |   | (85    | ) |  |   | (85    | )
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|Benefit obligation at end of year                                             |  |                            | 843  |   |  |   | 880  |              |  |  |  |  |  |   | 2,365  |   |  |   | 2,279  |  
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|Change in plan assets                                                         |  |                            |      |   |  |   |      |              |  |  |  |  |  |   |        |   |  |   |        |  
|Fair value of plan assets at beginning of year                                |  |                            | -    |   |  |   | -    |              |  |  |  |  |  |   | -      |   |  |   | -      |  
|Employer contributions                                                        |  |                            | 118  |   |  |   | 51   |              |  |  |  |  |  |   | 85     |   |  |   | 85     |  
|Benefits paid                                                                 |  |                            | (118 | ) |  |   | (51  | )            |  |  |  |  |  |   | (85    | ) |  |   | (85    | )
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|Fair value of plan assets at end of year                                      |  |                            | -    |   |  |   | -    |              |  |  |  |  |  |   | -      |   |  |   | -      |  
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|Funded Status                                                                 |  | $                          | (843 | ) |  | $ | (880 | )            |  |  |  |  |  | $ | (2,365 | ) |  | $ | (2,279 | )
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|Amounts recognized in accumulated other comprehensive income, net consist of: |  |                            |      |   |  |   |      |              |  |  |  |  |  |   |        |   |  |   |        |  
|Net loss                                                                      |  | $                          | 25   |   |  | $ | 18   |              |  |  |  |  |  | $ | 307    |   |  | $ | 353    |  
|Prior service cost                                                            |  |                            | 79   |   |  |   | 137  |              |  |  |  |  |  |   | -      |   |  |   | -      |  
|Transition obligation                                                         |  |                            | -    |   |  |   | -    |              |  |  |  |  |  |   | 163    |   |  |   | 190    |  
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|Total                                                                         |  | $                          | 104  |   |  | $ | 155  |              |  |  |  |  |  | $ | 470    |   |  | $ | 543    |  
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 
|                                                                              |  |                            |      |   |  |   |      |              |  |  |  | 

The accumulated benefit obligation
for the directors retirement plan was $795 and $834 at December 31, 2010 and 2009, respectively and for the SERP were $2.1 million and $1.0 million at December 31, 2010 and 2009, respectively.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 69 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|9. |  | Employee Benefit Plans(continued)
|-- |  | ---------------------------------



The components of net periodic benefit cost
and other amounts recognized in OCI are as follows:



|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |   |  |  |  |  |  |   |      |   |  |   |      |   |  |   |      |  
|--------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---- | - |  | - | ---- | ------------ |  | - | ---- | - |  |  |  |  |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|(Dollar amounts in thousands)                                                                             |  | Directors Retirement Plan |      |   |  |   |      | SERP         | 
|                                                                                                          |  | December 31,               |      |   |  |   |      | December 31, | 
|                                                                                                          |  |                            | 2010 |   |  |   | 2009 |              |  |   | 2008 |   |  |  |  |  |  |   | 2010 |   |  |   | 2009 |   |  |   | 2008 |  
|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |  
|Net Periodic Pension Cost                                                                                 |  |                            |      |   |  |   |      |              |  |   |      |   |  |  |  |  |  |   |      |   |  |   |      |   |  |   |      |  
|Service cost                                                                                              |  | $                          | 25   |   |  | $ | 28   |              |  | $ | 34   |   |  |  |  |  |  | $ | 60   |   |  | $ | 49   |   |  | $ | 48   |  
|Interest cost                                                                                             |  |                            | 45   |   |  |   | 46   |              |  |   | 45   |   |  |  |  |  |  |   | 124  |   |  |   | 105  |   |  |   | 102  |  
|Amortization of transition obligation                                                                     |  |                            | -    |   |  |   | -    |              |  |   | -    |   |  |  |  |  |  |   | 41   |   |  |   | 41   |   |  |   | 65   |  
|Amortization of net loss                                                                                  |  |                            | -    |   |  |   | -    |              |  |   | -    |   |  |  |  |  |  |   | 57   |   |  |   | 30   |   |  |   | -    |  
|Amortization of prior service cost                                                                        |  |                            | 87   |   |  |   | 87   |              |  |   | 87   |   |  |  |  |  |  |   | -    |   |  |   | -    |   |  |   | -    |  
|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |  
|Net periodic pension cost                                                                                 |  | $                          | 157  |   |  | $ | 161  |              |  | $ | 166  |   |  |  |  |  |  | $ | 282  |   |  | $ | 225  |   |  | $ | 215  |  
|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |  
|Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive income |  |                            |      |   |  |   |      |              |  |   |      |   |  |  |  |  |  |   |      |   |  |   |      |   |  |   |      |  
|Net actuarial loss/ (gain)                                                                                |  |                            | 7    |   |  |   | (5   | )            |  |   | 12   |   |  |  |  |  |  |   | (46  | ) |  |   | 154  |   |  |   | 40   |  
|Amortization of transition obligation                                                                     |  |                            | -    |   |  |   | -    |              |  |   | -    |   |  |  |  |  |  |   | (27  | ) |  |   | (27  | ) |  |   | (43  | )
|Amortization of prior service cost                                                                        |  |                            | (57  | ) |  |   | (57  | )            |  |   | (57  | ) |  |  |  |  |  |   | -    |   |  |   | -    |   |  |   | -    |  
|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |  
|Total recognized in other comprehensive income                                                            |  | $                          | (50  | ) |  | $ | (62  | )            |  | $ | (45  | ) |  |  |  |  |  | $ | (73  | ) |  | $ | 127  |   |  | $ | (3   | )
|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |  
|                                                                                                          |  |                            |      |   |  |   |      |              |  |   |      |  

The estimated net loss and prior
service cost for the directors retirement plan and SERP plans that will be amortized from OCI into net periodic benefit cost over the next fiscal year are approximately $57,000 and $63,000, respectively.

The weighted average assumptions used to determine benefit obligations and net periodic pension cost at the measurement
dates were as follows:



|                              |  |                            |  |       |  |      |  |       |  |      
|----------------------------- |  | -------------------------- |  | ----- |  | ---- |  | ----- |  | -----
|                              |  | Directors Retirement Plan |  |       |  | SERP
|                              |  | 2010                       |  | 2009  |  |      |  | 2010  |  | 2009 
|                              |  |                            |  |       |  |     
|Discount rate                 |  | 5.50%                      |  | 5.50% |  |      |  | 5.50% |  | 5.50%
|Rate of compensation increase |  | 2.50%                      |  | 2.50% |  |      |  | 4.00% |  | 4.00%

At December 31, 2010, the projected benefit payments for the directors retirement plan were $125,000, $144,000, $118,000, $150,000, $117,000 and $153,000 for years 2011, 2012, 2013, 2014, 2015
and thereafter, respectively. At December 31, 2010, the projected benefit payments for the SERP were $85,000, $85,000, $85,000, $85,000, $85,000 and $4.9 million for years 2011, 2012, 2013, 2014, 2015 and thereafter. The projected payments were
calculated using the same assumptions as those used to calculate the benefit obligations listed above.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 70 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|10. |  | Other Comprehensive Income (loss)
|--- |  | ---------------------------------

The Company has developed the following table which includes the tax effects of the components of other comprehensive (loss) income. Other comprehensive (loss) income consists mainly of net unrealized
gain (loss) on securities available for sale and the net fair value adjustment on derivatives. Other comprehensive income and related tax effects for the years ended December 31 consists of:



|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|(Dollar amounts in thousands)                                                                                                               |  | 2010 |        |   | 2009 |   |        | 2008 | 
|Net income before noncontrolling interest:                                                                                                  |  | $    | 14,664 |   |      | $ | 11,665 |      |  | $ | 10,424 |  
|Other comprehensive income (loss)net of tax (benefit) expense                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Fair value adjustment on securities available for sale, net of tax (benefit) expense of ($3,010) in 2010, $8,180 in 2009 and
$2,875 in 2008 |  |      | (5,843 | ) |      |   | 15,878 |      |  |   | 5,581  |  
|Securities losses reclassified into earnings, net of tax expense of $421 in 2010, $126 in 2009 and $291 in 2008                             |  |      | 818    |   |      |   | 245    |      |  |   | 565    |  
|Noncredit related security losses, net of tax benefit of $204 in 2010                                                                       |  |      | (396   | ) |      |   | -      |      |  |   | -      |  
|Pension and postretirement amortization, net of tax expense of $63 in 2010                                                                  |  |      |        |   |      |   |        |      |  |   |        |  
|$54 in 2009 and $52 in 2008                                                                                                                 |  |      | 122    |   |      |   | 104    |      |  |   | 101    |  
|Adjustment to minimum pension liability of the SERP plan, net of tax expense (benefit) of $1 in 2010, ($87) in 2009 and ($26) in
2008.      |  |      | 1      |   |      |   | (169   | )    |  |   | (52    | )
|Fair value adjustment on derivatives, net of tax (benefit) expense ($1,044) in 2010 and $72 in 2009.                                        |  |      | (2,026 | ) |      |   | 141    |      |  |   | -      |  
|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|Other comprehensive (loss) income                                                                                                           |  |      | (7,324 | ) |      |   | 16,199 |      |  |   | 6,195  |  
|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|Comprehensive income                                                                                                                        |  | $    | 7,340  |   |      | $ | 27,864 |      |  | $ | 16,619 |  
|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |        |  

The components of accumulated OCI,
net of tax as of year-end were as follows:



|                                                                   |  |      |        |   |      |   |        |  
|------------------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|(Dollar amounts in thousands)                                      |  | 2010 |        |   | 2009 |  
|Net unrealized gain on securities available for sale               |  | $    | 17,794 |   |      | $ | 23,215 |  
|Accumulated (loss) gain on effective cash flow hedging derivatives |  |      | (1,886 | ) |      |   | 141    |  
|Net unrecognized pension cost                                      |  |      | (574   | ) |      |   | (698   | )
|                                                                   |  |      |        |   |      |   |        |  
|Total                                                              |  | $    | 15,334 |   |      | $ | 22,658 |  
|                                                                   |  |      |        |   |      |   |        |  
|                                                                   |  |      |        |   |      |   |        |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 71 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|11. |  | Commitments and Contingencies
|--- |  | -----------------------------

In the ordinary course of business, the Company has various outstanding commitments and contingent liabilities that are not reflected in the accompanying consolidated financial statements. In addition,
the Company is involved in certain claims and legal actions arising in the ordinary course of business. The outcome of these claims and actions are not presently determinable; however, in the opinion of the Companys management, after
consulting legal counsel, the ultimate disposition of these matters will not have a material adverse effect on the Companys financial position. The following table presents the notional amount of the Companys off-balance sheet financial
instruments as of December 31:



|                                  |  |      |         |  |      |   |        | 
|--------------------------------- |  | ---- | ------- |  | ---- | - | ------ | 
|(Dollar amounts in thousands)     |  | 2010 |         |  | 2009 |  
|Loans in process and commitments: |  |      |         |  |      |   |        | 
|Fixed interest rate               |  | $    | 14,472  |  |      | $ | 16,510 | 
|Variable interest rate            |  |      | 14,690  |  |      |   | 18,152 | 
|Lines of credit (unfunded):       |  |      |         |  |      |   |        | 
|Commercial                        |  |      | 20,783  |  |      |   | 22,443 | 
|Consumer                          |  |      | 51,373  |  |      |   | 50,061 | 
|Letters of credit:                |  |      |         |  |      |   |        | 
|Standby                           |  |      | 14,751  |  |      |   | 18,825 | 
|Interest Rate Cap Contracts       |  |      | 100,000 |  |      |   | 50,000 | 
|Interest Rate Swap Contracts      |  |      | 35,000  |  |      |   | 35,000 | 

Commitments to extend credit involve, to a varying degree, elements of credit and interest rate risk in excess of amounts recognized in the consolidated statement of financial condition. The
Companys exposure to credit loss in the event of non-performance by the other party for commitments to extend credit is represented by the contractual amount of these commitments, less any collateral value obtained. The Company uses the same
credit policies in making commitments as for on-balance sheet instruments.

The Companys distribution of
commitments to extend credit approximates the distribution of loans receivable outstanding. The fair value of the off balance sheet items approximated the carrying value of those items at those dates.



|12. |  | Fair Value
|--- |  | ----------

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels
defined by U.S. generally accepted accounting principles are as follows:



|           |  |                                                                                                                                                                                                                                                                                                                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level I:   |  | Quoted prices are available in the active markets for identical assets or liabilities as of the reported date.                                                                                                                                                                                                                                                                          
|           | 
|Level II:  |  | Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these
assets and liabilities include items for which quoted prices are available but traded less frequently and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
|           | 
|Level III: |  | Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using
managements best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.                                                                      





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 72 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|12. |  | Fair Value(continued)
|--- |  | ---------------------



The following tables present the assets and
liabilities reported on the consolidated statements of financial condition at their fair value on a recurring basis as of December 31, 2010 and 2009 by level within the fair value hierarchy. Financial assets and liabilities are classified in
their entirety based on the lowest level of input that is significant to the fair value measurement.



|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|----------------------------------- |  | ----------------------- | ----- |  | -------- | - | --------- | --------- |  | - | ------ |  |  | - | --------- | 
|(Dollar amounts in thousands)       |  | As of December 31, 2010 |      
|                                    |  | Level 1                 |       |  | Level II |   |           | Level III |  |   | Total  | 
|Assets:                             |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Securities available for sale       |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Trust preferred securities          |  | $                       | -     |  |          | $ | 1,615     |           |  | $ | 37,361 |  |  | $ | 38,976    | 
|Municipal securities                |  |                         | -     |  |          |   | 163,177   |           |  |   | -      |  |  |   | 163,177   | 
|Equity securities                   |  |                         | 1,850 |  |          |   | -         |           |  |   | -      |  |  |   | 1,850     | 
|Corporate bonds                     |  |                         | -     |  |          |   | 122,662   |           |  |   | -      |  |  |   | 122,662   | 
|Mortgage backed securities          |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|U.S. sponsored entities             |  |                         | -     |  |          |   | 738,262   |           |  |   | -      |  |  |   | 738,262   | 
|Private label                       |  |                         | -     |  |          |   | 12,745    |           |  |   | -      |  |  |   | 12,745    | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Subtotal mortgage-backed securities |  |                         | -     |  |          |   | 751,007   |           |  |   | -      |  |  |   | 751,007   | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Total securities available for sale |  | $                       | 1,850 |  |          | $ | 1,038,461 |           |  | $ | 37,361 |  |  | $ | 1,077,672 | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Other Assets                        |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Interest rate swaps                 |  | $                       | -     |  |          | $ | 725       |           |  | $ | -      |  |  | $ | 725       | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Total other assets                  |  | $                       | -     |  |          | $ | 725       |           |  | $ | -      |  |  | $ | 725       | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Liabilities:                        |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Other Liabilities                   |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Interest rate caps                  |  | $                       | -     |  |          | $ | 2,857     |           |  | $ | -      |  |  | $ | 2,857     | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|Total other liabilities             |  | $                       | -     |  |          | $ | 2,857     |           |  | $ | -      |  |  | $ | 2,857     | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 
|                                    |  |                         |       |  |          |   |           |           |  |   |        |  |  |   |           | 



|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|----------------------------------- |  | ----------------------- | --- |  | -------- | - | --------- | --------- |  | - | ------ |  |  | - | --------- | 
|(Dollar amounts in thousands)       |  | As of December 31, 2009 |    
|                                    |  | Level 1                 |     |  | Level II |   |           | Level III |  |   | Total  | 
|Assets:                             |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Securities available for sale       |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Trust preferred securities          |  | $                       | -   |  |          | $ | 1,574     |           |  | $ | 39,003 |  |  | $ | 40,577    | 
|Municipal securities                |  |                         | -   |  |          |   | 150,094   |           |  |   | -      |  |  |   | 150,094   | 
|Equity securities                   |  |                         | 907 |  |          |   | -         |           |  |   | -      |  |  |   | 907       | 
|Corporate bonds                     |  |                         | -   |  |          |   | 88,181    |           |  |   | -      |  |  |   | 88,181    | 
|Mortgage backed securities          |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|U.S. sponsored entities             |  |                         | -   |  |          |   | 812,018   |           |  |   | -      |  |  |   | 812,018   | 
|Private label                       |  |                         | -   |  |          |   | 15,133    |           |  |   | -      |  |  |   | 15,133    | 
|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Subtotal mortgage-backed securities |  |                         | -   |  |          |   | 827,151   |           |  |   | -      |  |  |   | 827,151   | 
|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Total securities available for sale |  | $                       | 907 |  |          | $ | 1,067,000 |           |  | $ | 39,003 |  |  | $ | 1,106,910 | 
|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Other Assets                        |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Interest rate caps                  |  | $                       | -   |  |          | $ | 466       |           |  | $ | -      |  |  | $ | 466       | 
|Interest rate swaps                 |  |                         | -   |  |          |   | 213       |           |  |   | -      |  |  |   | 213       | 
|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|Total other assets                  |  | $                       | -   |  |          | $ | 679       |           |  | $ | -      |  |  | $ | 679       | 
|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 
|                                    |  |                         |     |  |          |   |           |           |  |   |        |  |  |   |           | 

Due to recent uncertainties in the
credit markets broadly and the lack of both trading and new issuance of floating rate trust preferred securities, market price indications generally reflect the lack of liquidity in these





|                          |  |    |  |                   
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|ESB Financial Corporation |  | 73 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|12. |  | Fair Value(continued)
|--- |  | ---------------------



markets. Due to this lack of practical quoted prices, fair value for floating rate trust preferred securities has been determined using a discounted cash-flow technique. Cash flows are estimated
based upon the contractual terms of each instrument. Market rates have been calculated based upon the five year historical discount margin for these instruments from August 2002 through August 2007, when the market was more liquid. These market
rates were then adjusted for credit spreads and liquidity risk given the current markets. Credit spreads are based upon the Moodys rating for each bond and range from 35 to 100 basis points. Liquidity risk adjustments ranged from 25 to 65
basis points where the securities of the 10 largest banks in the United States are assigned 25 basis points and banks outside of the top 10 were given a higher liquidity risk adjustment. Approximately $18.9 million or 50.6% of the $37.4 million in
floating rate trust preferred securities represent investments in two of the four largest banks in the United States.

At December 31, 2010, the Company utilized an independent third party to determine the fair value on its CDO. The third partys methodology used market-based yield indicators as a baseline to
determine an appropriate discount rate, which was adjusted based on the credit and structural analysis of the Companys CDO.

The following table presents the changes in the Level III fair-value category for the years ended December 31, 2010 and 2009. The Company classifies financial instruments in Level III of the
fair-value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In

addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.

Fair value measurements using significant unobservable inputs (Level III):



|                                                   |      |                              |        |      |  |   |        |  
|-------------------------------------------------- | ---- | ---------------------------- | ------ | ---- |  | - | ------ | -
|                                                   |      | Securites available for sale |       
|                                                   | 2010 |                              |        | 2009 | 
|Beginning balance January 1,                       |      | $                            | 39,003 |      |  | $ | 38,211 |  
|Total net realized/unrealized gains (losses)       |      |                              |        |      |  |   |        |  
|Included in earnings:                              |      |                              |        |      |  |   |        |  
|Interest income on securities                      |      |                              | 14     |      |  |   | 14     |  
|Net realized loss on securities available for sale |      |                              | (810   | )    |  |   | (552   | )
|Included in other comprehensive income (loss)      |      |                              | (846   | )    |  |   | 1,330  |  
|Transfers in and/or out of Level III               |      |                              | -      |      |  |   | -      |  
|Purchases, issuances, sales and settlements        |      |                              |        |      |  |   |        |  
|Purchases                                          |      |                              | -      |      |  |   | -      |  
|Issuances                                          |      |                              | -      |      |  |   | -      |  
|Sales                                              |      |                              | -      |      |  |   | -      |  
|Settlements                                        |      |                              | -      |      |  |   | -      |  
|                                                   |      |                              |        |      |  |   |        |  
|Ending balance, December 31,                       |      | $                            | 37,361 |      |  | $ | 39,003 |  
|                                                   |      |                              |        |      |  |   |        |  
|                                                   |      |                              |        |      |  |   |        |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 74 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|12. |  | Fair Value(continued)
|--- |  | ---------------------



The following table summarizes changes in
unrealized gains and losses recorded in earnings for the year ended December 31, 2010 and December 31, 2009, for Level III assets and liabilities that were still held at December 31, 2010 and 2009.



|                                                   |      |                              |      |      |  |   |      |  
|-------------------------------------------------- | ---- | ---------------------------- | ---- | ---- |  | - | ---- | -
|                                                   |      | Securites available for sale |     
|                                                   | 2010 |                              |      | 2009 | 
|Interest income on securities                      |      | $                            | 14   |      |  | $ | 14   |  
|Net realized loss on securities available for sale |      |                              | (810 | )    |  |   | (552 | )
|                                                   |      |                              |      |     
|Total                                              |      | $                            | (796 | )    |  | $ | (538 | )
|                                                   |      |                              |      |     
|                                                   |      |                              |      |     

The following table presents the
assets and liabilities reported on the consolidated statements of financial condition at their fair value on a non-recurring basis as of December 31, 2010 and 2009 by level within the fair value hierarchy. As required by GAAP, financial assets
and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.



|                                         |  |                         |   |  |          |   |    |           |  |   |       |  |  |   |       | 
|---------------------------------------- |  | ----------------------- | - |  | -------- | - | -- | --------- |  | - | ----- |  |  | - | ----- | 
|(Dollar amounts in thousands)            |  | As of December 31, 2010 |  
|                                         |  | Level 1                 |   |  | Level II |   |    | Level III |  |   | Total | 
|Assets:                                  |  |                         |   |  |          |   |    |           |  |   |       |  |  |   |       | 
|Impaired Loans                           |  | $                       | - |  |          | $ | -  |           |  | $ | 8,066 |  |  | $ | 8,066 | 
|Loans held for sale                      |  |                         | - |  |          |   | 80 |           |  |   | -     |  |  |   | 80    | 
|Real estate acquired through foreclosure |  |                         | - |  |          |   | -  |           |  |   | 1,083 |  |  |   | 1,083 | 
|Servicing assets                         |  |                         | - |  |          |   | -  |           |  |   | 24    |  |  |   | 24    | 



|                                         |  |                         |   |  |          |   |     |           |  |   |       |  |  |   |       | 
|---------------------------------------- |  | ----------------------- | - |  | -------- | - | --- | --------- |  | - | ----- |  |  | - | ----- | 
|(Dollar amounts in thousands)            |  | As of December 31, 2009 |  
|                                         |  | Level 1                 |   |  | Level II |   |     | Level III |  |   | Total | 
|Assets:                                  |  |                         |   |  |          |   |     |           |  |   |       |  |  |   |       | 
|Impaired Loans                           |  | $                       | - |  |          | $ | -   |           |  | $ | 1,039 |  |  | $ | 1,039 | 
|Loans held for sale                      |  |                         | - |  |          |   | 201 |           |  |   | -     |  |  |   | 201   | 
|Real estate acquired through foreclosure |  |                         | - |  |          |   | -   |           |  |   | 725   |  |  |   | 725   | 
|Servicing assets                         |  |                         | - |  |          |   | -   |           |  |   | 29    |  |  |   | 29    | 



|13. |  | Financial Instruments
|--- |  | ---------------------

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments, consisting of commitments to extend credit, commitments under line of credit lending arrangements
and letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are received.

The following methods and assumptions were used in estimating fair values of financial instruments.

Cash and cash equivalents  The carrying amounts of cash equivalents approximate their fair values.

Securities  With the exception of floating rate trust preferred securities, fair values for
securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique which is widely used in the industry to value debt securities without relying
exclusively on quoted prices for the specific securities but rather by relying on the securities relationship to other benchmark quoted securities.

Securities receivable The carrying amount of securities receivable approximates their fair values.

Loans receivable and held for sale Fair values for loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for loans with similar terms to borrowers of





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|ESB Financial Corporation |  | 75 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|13. |  | Financial Instruments(continued)
|--- |  | --------------------------------



similar credit quality. Fair values of impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. The carrying amounts of loans held for
sale approximate their fair values.

Accrued interest receivable and payable  The carrying
amounts of accrued interest approximate their fair values.

FHLB stock FHLB stock is
restricted from trading purposes and thus, the carrying value approximates its fair value.

Bank owned
life insurance (BOLI)  The fair value of BOLI at December 31, 2010 and December 31, 2009 approximated the cash surrender value of the policies at those dates.

Interest rate cap and interest rate swap contracts Fair values of interest rate cap and interest
rate swap contracts are based on dealer quotes.

Deposits  The fair values disclosed
for demand deposits are, by definition, equal to the amount payable on demand at the reporting date. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies current market interest rates to a
schedule of aggregated expected monthly maturities.

Borrowed funds and subordinated debt 
For variable rate borrowings, fair values are based on carrying values. For fixed rate borrowings, fair values are based on the discounted value of contractual cash flows and on the Companys current incremental borrowing rates for similar
types of borrowing arrangements. Fair values of structured borrowings are based on dealer quotes.

Advance payments by borrowers for taxes and insurance The fair value of the advance payments by
borrowers for taxes and insurance approximated the carrying value of those commitments at those dates.

The
following table sets forth the carrying amount and fair value of the Companys financial instruments included in the consolidated statement of financial condition as of December 31:



|                                                     |  |                |           |  |           |   |           |                |  |   |           |  |  |   |           | 
|---------------------------------------------------- |  | -------------- | --------- |  | --------- | - | --------- | -------------- |  | - | --------- |  |  | - | --------- | 
|(Dollar amounts in thousands)                        |  | 2010           |           |  | 2009      |  
|                                                     |  |                |           |  |           |   |           |               
|                                                     |  | Carryingamount |           |  | Fairvalue |   |           | Carryingamount |  |   | Fairvalue | 
|Financial assets:                                    |  |                |           |  |           |   |           |                |  |   |           |  |  |   |           | 
|Cash and cash equivalents                            |  | $              | 35,707    |  |           | $ | 35,707    |                |  | $ | 16,300    |  |  | $ | 16,300    | 
|Securities                                           |  |                | 1,077,672 |  |           |   | 1,077,672 |                |  |   | 1,106,910 |  |  |   | 1,106,910 | 
|Securities receivable                                |  |                | 2,173     |  |           |   | 2,173     |                |  |   | 2,947     |  |  |   | 2,947     | 
|Loans receivable and held for sale                   |  |                | 640,967   |  |           |   | 658,989   |                |  |   | 671,588   |  |  |   | 690,024   | 
|Accrued interest receivable                          |  |                | 9,607     |  |           |   | 9,607     |                |  |   | 10,312    |  |  |   | 10,312    | 
|FHLB stock                                           |  |                | 26,097    |  |           |   | 26,097    |                |  |   | 27,470    |  |  |   | 27,470    | 
|Bank owned life insurance                            |  |                | 30,098    |  |           |   | 30,098    |                |  |   | 29,381    |  |  |   | 29,381    | 
|Interest rate cap contracts                          |  |                | 725       |  |           |   | 725       |                |  |   | 466       |  |  |   | 466       | 
|Interest rate swap contracts                         |  |                | -         |  |           |   | -         |                |  |   | 213       |  |  |   | 213       | 
|                                                     |  |                |           | 
|Financial liabilities:                               |  |                |           |  |           |   |           |                |  |   |           |  |  |   |           | 
|Deposits                                             |  |                | 1,012,645 |  |           |   | 1,023,877 |                |  |   | 944,347   |  |  |   | 954,568   | 
|Borrowed funds                                       |  |                | 669,063   |  |           |   | 701,969   |                |  |   | 783,248   |  |  |   | 808,984   | 
|Junior subordinated notes                            |  |                | 46,393    |  |           |   | 19,897    |                |  |   | 46,393    |  |  |   | 31,195    | 
|Advance payment by borrowers for taxes and insurance |  |                | 2,441     |  |           |   | 2,441     |                |  |   | 2,661     |  |  |   | 2,661     | 
|Accrued interest payable                             |  |                | 2,320     |  |           |   | 2,320     |                |  |   | 3,182     |  |  |   | 3,182     | 
|Interest rate swap contracts                         |  |                | 2,857     |  |           |   | 2,857     |                |  |   | -         |  |  |   | -         | 





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|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 76 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|14. |  | Regulatory Matters
|--- |  | ------------------

The Companys subsidiary bank, ESB Bank, is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could result
in certain mandatoryand possibly additional discretionaryactions by regulators that, if undertaken, could have a direct material effect on the Companys consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The
capital amounts and their related classification for the Bank are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy
requires the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital (as defined in the regulations), tier 1 leverage capital (as defined) and tier 1 risk-based capital (as defined). As of December 31, 2010,
the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2010 and
2009, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total, tier 1 leverage and
tier 1 risk-based capital ratios as set forth in the following table. As of December 31, 2010, there are no conditions or events since that notification that have changed the categorization.

Tier 1 leverage capital level in the following table is presented as a percentage of total adjusted assets (as defined in
the regulations); total capital and tier 1 risk based capital levels are shown as a percentage of risk-weighted assets (as defined).

The minimum required regulatory capital percentages to be well capitalized under prompt corrective action provisions is 5%, 6% and 10% for tier 1 leverage, tier I risk-based and total capital ratios,
respectively.

The following table sets forth certain information concerning regulatory capital of the Bank:



|                              |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|----------------------------- |  | ------ | ------- |  | ----------------------------- |  | ----- | -------------------------------------------------------------- |  | - | ------ |  |  | ------ | ---- | - | ----- | - | ------ |  |  |  | ----- | -
|(Dollar amounts in thousands) |  | Actual |         |  | For Capital AdequacyPurposes: |  |       | To Be WellCapitalized UnderPrompt CorrectiveAction
Provisions: | 
|                              |  | Amount |         |  | Ratio                         |  |       | Amount                                                         |  |   | Ratio  |  |  | Amount |      |   | Ratio |  
|                              |  |        |         |  |                               | 
|As of December 31, 2010:      |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Total Capital                 |  | $      | 156,046 |  |                               |  | 15.79 | %                                                              |  | $ | 79,052 |  |  |        | 8.00 | % |       | $ | 98,816 |  |  |  | 10.00 | %
|(to Risk Weighted Assets)     |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Tier 1 Leverage Capital       |  | $      | 149,464 |  |                               |  | 8.11  | %                                                              |  | $ | 73,680 |  |  |        | 4.00 | % |       | $ | 92,100 |  |  |  | 5.00  | %
|(to Adjusted Tangible Assets) |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Tier 1 Risk Based Capital     |  | $      | 149,464 |  |                               |  | 15.13 | %                                                              |  | $ | 39,526 |  |  |        | 4.00 | % |       | $ | 59,289 |  |  |  | 6.00  | %
|(to Risk Weighted Assets)     |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|                              |  |        |         |  |                               | 
|As of December 31, 2009:      |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Total Capital                 |  | $      | 147,394 |  |                               |  | 14.79 | %                                                              |  | $ | 79,741 |  |  |        | 8.00 | % |       | $ | 99,677 |  |  |  | 10.00 | %
|(to Risk Weighted Assets)     |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Tier 1 Leverage Capital       |  | $      | 141,367 |  |                               |  | 7.61  | %                                                              |  | $ | 74,290 |  |  |        | 4.00 | % |       | $ | 92,863 |  |  |  | 5.00  | %
|(to Adjusted Tangible Assets) |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Tier 1 Risk Based Capital     |  | $      | 141,367 |  |                               |  | 14.18 | %                                                              |  | $ | 39,871 |  |  |        | 4.00 | % |       | $ | 59,806 |  |  |  | 6.00  | %
|(to Risk Weighted Assets)     |  |        |         |  |                               |  |       |                                                                |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 77 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|15. |  | Quarterly Financial Data (unaudited)
|--- |  | ------------------------------------

Quarterly earnings per share data may vary from annual earnings due to rounding.



|                                                                    |  |                  |        |   |                   |   |        |                  |  |   |                   |   |  |   |        |  
|------------------------------------------------------------------- |  | ---------------- | ------ | - | ----------------- | - | ------ | ---------------- |  | - | ----------------- | - |  | - | ------ | -
|(Dollar amounts in thousands, except share data)                    |  | First    Quarter |        |   | Second    Quarter |   |        | Third    Quarter |  |   | Fourth    Quarter |  
|2010:                                                               |  |                  |        |   |                   |   |        |                  |  |   |                   |   |  |   |        |  
|Interest income                                                     |  | $                | 22,122 |   |                   | $ | 21,407 |                  |  | $ | 21,128            |   |  | $ | 20,207 |  
|Interest expense                                                    |  |                  | 11,326 |   |                   |   | 10,603 |                  |  |   | 10,164            |   |  |   | 9,804  |  
|                                                                    |  |                  |        |  
|Net interest income                                                 |  |                  | 10,796 |   |                   |   | 10,804 |                  |  |   | 10,964            |   |  |   | 10,403 |  
|Provision for loan losses                                           |  |                  | 354    |   |                   |   | 200    |                  |  |   | 550               |   |  |   | 300    |  
|                                                                    |  |                  |        |  
|Net interest income after provision for loan losses                 |  |                  | 10,442 |   |                   |   | 10,604 |                  |  |   | 10,414            |   |  |   | 10,103 |  
|Net realized loss on securities available for sale                  |  |                  | (309   | ) |                   |   | (272   | )                |  |   | (419              | ) |  |   | (239   | )
|Other noninterest income                                            |  |                  | 483    |   |                   |   | 1,857  |                  |  |   | 1,555             |   |  |   | 1,811  |  
|Noninterest expense                                                 |  |                  | 6,675  |   |                   |   | 6,713  |                  |  |   | 7,189             |   |  |   | 7,236  |  
|                                                                    |  |                  |        |  
|Income before provision for income taxes                            |  |                  | 3,941  |   |                   |   | 5,476  |                  |  |   | 4,361             |   |  |   | 4,439  |  
|Provision for income taxes                                          |  |                  | 820    |   |                   |   | 1,100  |                  |  |   | 695               |   |  |   | 938    |  
|                                                                    |  |                  |        |  
|Net income before noncontrolling interest                           |  |                  | 3,121  |   |                   |   | 4,376  |                  |  |   | 3,666             |   |  |   | 3,501  |  
|Less: net (loss) income attributable to the noncontrolling interest |  |                  | (259   | ) |                   |   | 407    |                  |  |   | 201               |   |  |   | 84     |  
|                                                                    |  |                  |        |  
|Net income attributable to ESB Financial Corporation                |  | $                | 3,380  |   |                   | $ | 3,969  |                  |  | $ | 3,465             |   |  | $ | 3,417  |  
|                                                                    |  |                  |        |  
|Net income per share                                                |  |                  |        |   |                   |   |        |                  |  |   |                   |   |  |   |        |  
|Basic                                                               |  | $                | 0.28   |   |                   | $ | 0.33   |                  |  | $ | 0.29              |   |  | $ | 0.29   |  
|Diluted                                                             |  | $                | 0.28   |   |                   | $ | 0.33   |                  |  | $ | 0.29              |   |  | $ | 0.28   |  
|2009:                                                               |  |                  |        |   |                   |   |        |                  |  |   |                   |   |  |   |        |  
|Interest income                                                     |  | $                | 23,692 |   |                   | $ | 23,202 |                  |  | $ | 22,898            |   |  | $ | 22,703 |  
|Interest expense                                                    |  |                  | 14,861 |   |                   |   | 13,917 |                  |  |   | 13,141            |   |  |   | 12,428 |  
|                                                                    |  |                  |        |  
|Net interest income                                                 |  |                  | 8,831  |   |                   |   | 9,285  |                  |  |   | 9,757             |   |  |   | 10,275 |  
|Provision for loan losses                                           |  |                  | 310    |   |                   |   | 206    |                  |  |   | 236               |   |  |   | 160    |  
|                                                                    |  |                  |        |  
|Net interest income after provision for loan losses                 |  |                  | 8,521  |   |                   |   | 9,079  |                  |  |   | 9,521             |   |  |   | 10,115 |  
|Net realized loss on securities available for sale                  |  |                  | -      |   |                   |   | (7     | )                |  |   | (210              | ) |  |   | (154   | )
|Other noninterest income (loss)                                     |  |                  | 1,362  |   |                   |   | 2,110  |                  |  |   | 1,531             |   |  |   | (1,037 | )
|Noninterest expense                                                 |  |                  | 6,249  |   |                   |   | 7,265  |                  |  |   | 6,414             |   |  |   | 6,856  |  
|                                                                    |  |                  |        |  
|Income before provision for income taxes                            |  |                  | 3,634  |   |                   |   | 3,917  |                  |  |   | 4,428             |   |  |   | 2,068  |  
|Provision for income taxes                                          |  |                  | 597    |   |                   |   | 697    |                  |  |   | 848               |   |  |   | 240    |  
|                                                                    |  |                  |        |  
|Net income before noncontrolling interest                           |  |                  | 3,037  |   |                   |   | 3,220  |                  |  |   | 3,580             |   |  |   | 1,828  |  
|Less: net income (loss) attributable to the noncontrolling interest |  |                  | 5      |   |                   |   | 94     |                  |  |   | 74                |   |  |   | (520   | )
|                                                                    |  |                  |        |  
|Net income attributable to ESB Financial Corporation                |  | $                | 3,032  |   |                   | $ | 3,126  |                  |  | $ | 3,506             |   |  | $ | 2,348  |  
|                                                                    |  |                  |        |  
|Net income per share                                                |  |                  |        |   |                   |   |        |                  |  |   |                   |   |  |   |        |  
|Basic                                                               |  | $                | 0.25   |   |                   | $ | 0.26   |                  |  | $ | 0.29              |   |  | $ | 0.20   |  
|Diluted                                                             |  | $                | 0.25   |   |                   | $ | 0.26   |                  |  | $ | 0.29              |   |  | $ | 0.20   |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 78 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)







|16. |  | ESB Financial Corporation  Condensed Financial Statements (Parent Company Only)
|--- |  | --------------------------------------------------------------------------------

Following are condensed financial statements for the parent company as of and for the years ended December 31:



|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | ------- | -
|Condensed Statements of Financial Condition                             |  |      |        |   |      |   |         |      | 
|(Dollar amounts in thousands)                                           |  |      |        |   | 2010 |   |         | 2009 | 
|Assets:                                                                 |  |      |        |   |      |   |         |      |  |   |         |  
|Interest-earning deposits                                               |  |      |        |   |      | $ | 2,647   |      |  | $ | 3,320   |  
|Securities available for sale                                           |  |      |        |   |      |   | 32,284  |      |  |   | 31,310  |  
|Equity in net assets of subsidiaries                                    |  |      |        |   |      |   | 207,940 |      |  |   | 205,275 |  
|Other assets                                                            |  |      |        |   |      |   | 5,265   |      |  |   | 4,697   |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Total assets                                                            |  |      |        |   |      | $ | 248,136 |      |  | $ | 244,602 |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Liabilities and stockholders equity:                                   |  |      |        |   |      |   |         |      |  |   |         |  
|Subordinated debt, net                                                  |  |      |        |   |      | $ | 46,393  |      |  | $ | 46,393  |  
|Accrued expenses and other liabilities                                  |  |      |        |   |      |   | 33,849  |      |  |   | 33,298  |  
|Stockholders equity                                                    |  |      |        |   |      |   | 167,894 |      |  |   | 164,911 |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Total liabilities and stockholders equity                              |  |      |        |   |      | $ | 248,136 |      |  | $ | 244,602 |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Condensed Statements of Operations                                      |  |      |        |   |      |   |         |      | 
|(Dollar amounts in thousands)                                           |  | 2010 |        |   | 2009 |   |         | 2008 | 
|Income:                                                                 |  |      |        |   |      |   |         |      |  |   |         |  
|Equity in undistributed earnings of subsidiaries                        |  | $    | 8,024  |   |      | $ | 6,871   |      |  | $ | (3,407  | )
|Dividends from subsidiaries                                             |  |      | 8,000  |   |      |   | 7,000   |      |  |   | 16,500  |  
|Management fee income, from subsidiaries                                |  |      | 36     |   |      |   | 24      |      |  |   | 24      |  
|Net realized gain on sale of securities available for sale              |  |      | -      |   |      |   | 246     |      |  |   | -       |  
|Other than temporary impairment losses on securities available for sale |  |      | (217   | ) |      |   | (66     | )    |  |   | (303    | )
|Interest and other income                                               |  |      | 1,432  |   |      |   | 833     |      |  |   | 175     |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Total income                                                            |  |      | 17,275 |   |      |   | 14,908  |      |  |   | 12,989  |  
|Expense:                                                                |  |      |        |   |      |   |         |      |  |   |         |  
|Interest expense, to subsidiary                                         |  |      | 3,326  |   |      |   | 3,526   |      |  |   | 4,017   |  
|Compensation and employee benefits                                      |  |      | 423    |   |      |   | 290     |      |  |   | 243     |  
|Other                                                                   |  |      | 376    |   |      |   | 336     |      |  |   | 335     |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Total expense                                                           |  |      | 4,125  |   |      |   | 4,152   |      |  |   | 4,595   |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Income before benefit from income taxes                                 |  |      | 13,150 |   |      |   | 10,756  |      |  |   | 8,394   |  
|Benefit from income taxes                                               |  |      | (1,081 | ) |      |   | (1,256  | )    |  |   | (1,821  | )
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|Net income                                                              |  | $    | 14,231 |   |      | $ | 12,012  |      |  | $ | 10,215  |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  
|                                                                        |  |      |        |   |      |   |         |      |  |   |         |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 79 |  | 2010 Annual Report



---

##### Table of Contents

Notes to Consolidated Financial Statements(continued)





|16. |  | ESB Financial Corporation  Condensed Financial Statements (Parent Company Only)(continued)
|--- |  | -------------------------------------------------------------------------------------------





|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|Condensed Statements of Cash Flows                                                |  |      |         |   |      |   |         |      | 
|(Dollar amounts in thousands)                                                     |  | 2010 |         |   | 2009 |   |         | 2008 | 
|                                                                                  |  |      |        
|Operating activities:                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|Net income                                                                        |  | $    | 14,231  |   |      | $ | 12,012  |      |  | $ | 10,215  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |         |   |      |   |         |      |  |   |         |  
|Equity in undistributed earnings of subsidiaries                                  |  |      | (8,024  | ) |      |   | (6,871  | )    |  |   | 3,407   |  
|Net realized gain on securities available for sale                                |  |      | -       |   |      |   | (246    | )    |  |   | -       |  
|Other than temporary impairment losses on securities available for sale           |  |      | 217     |   |      |   | 66      |      |  |   | 303     |  
|Compensation expense on ESOP and MRP                                              |  |      | 1,232   |   |      |   | 1,127   |      |  |   | 937     |  
|Other, net                                                                        |  |      | (1,835  | ) |      |   | 3,830   |      |  |   | (549    | )
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by operating activities                                         |  |      | 5,821   |   |      |   | 9,918   |      |  |   | 14,313  |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                                  |  |      |        
|Investing activities:                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|Purchases of securities                                                           |  |      | (10,178 | ) |      |   | (911    | )    |  |   | (184    | )
|Principal repayments of securities                                                |  |      | 9,217   |   |      |   | 2,750   |      |  |   | 388     |  
|Proceeds from the sale of securities available for sale                           |  |      | -       |   |      |   | 992     |      |  |   | -       |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash (used in) provided by investing activities                               |  |      | (961    | ) |      |   | 2,831   |      |  |   | 204     |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                                  |  |      |        
|Financing activities:                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|Repayment of loan to subsidiaries                                                 |  |      | -       |   |      |   | (4,150  | )    |  |   | (5,100  | )
|Amortization of deferred debt issuance costs                                      |  |      | -       |   |      |   | -       |      |  |   | 29      |  
|Redemption of junior subordinated notes                                           |  |      | -       |   |      |   | -       |      |  |   | (5,155  | )
|Proceeds from long term borrowings                                                |  |      | -       |   |      |   | -       |      |  |   | 5,000   |  
|Proceeds received from exercise of stock options                                  |  |      | 614     |   |      |   | 792     |      |  |   | 286     |  
|Dividends paid                                                                    |  |      | (4,815  | ) |      |   | (4,828  | )    |  |   | (4,926  | )
|Payments to acquire treasury stock                                                |  |      | (1,143  | ) |      |   | (2,932  | )    |  |   | (3,410  | )
|Stock purchased by ESOP                                                           |  |      | (189    | ) |      |   | (123    | )    |  |   | (76     | )
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash used in financing activities                                             |  |      | (5,533  | ) |      |   | (11,241 | )    |  |   | (13,352 | )
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|(Decrease) increase in cash equivalents                                           |  |      | (673    | ) |      |   | 1,508   |      |  |   | 1,165   |  
|Cash equivalents at beginning of period                                           |  |      | 3,320   |   |      |   | 1,812   |      |  |   | 647     |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Cash equivalents at end of period                                                 |  | $    | 2,647   |   |      | $ | 3,320   |      |  | $ | 1,812   |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 80 |  | 2010 Annual Report



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm



Board of Directors and
Shareholders

ESB Financial Corporation

We have audited ESB Financial Corporation and subsidiaries internal control over financial reporting as of December 31, 2010, based on criteria established in Internal
ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. ESB Financial Corporation management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Managements Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Companys internal control over financial reporting based on our audit.

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 effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, ESB Financial Corporation maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2010, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
statements of operations, changes in stockholders equity and cash flows for each of the three years in the period ended December 31, 2010, of ESB Financial Corporation, and our audit report dated March 10, 2011 expresses an unqualified
opinion.

LOGO

Wexford, Pennsylvania

March 10, 2011





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 81 |  | 2010 Annual Report



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



Board of Directors and Shareholders

ESB Financial Corporation

We have audited the accompanying consolidated statements of financial condition of ESB Financial Corporation (the Company) and subsidiaries as of December 31, 2010 and 2009 and the
related consolidated statements of operations, changes in stockholders equity and cash flows for each of the three years in the period ended December 31, 2010. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of ESB Financial Corporation and subsidiaries as of December 31, 2010 and 2009 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in
conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), ESB Financial Corporation and subsidiaries internal control over financial reporting as of December 31, 2010, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2011, expressed an unqualified opinion on the effectiveness of ESB Financial Corporations internal control over
financial reporting.

LOGO

Wexford, Pennsylvania

March 10, 2011





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 82 |  | 2010 Annual Report



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##### Table of Contents

Managements Reports to ESB Financial Corporation
Shareholders



Managements Report on Financial Statements and Practices

ESB Financial Corporation is responsible for the preparation, integrity and fair presentation of the consolidated financial statements
included in this annual report. The consolidated financial statements and notes included in this annual report have been prepared in conformity with United States generally accepted accounting principles and necessarily include some amounts that are
based on managements best estimates and judgments.

The system of internal control over financial reporting as it
relates to the financial statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified. Any system of internal
control, no matter how well designed, has inherent limitations, including the possibility that a control could be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in
conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

The Audit Committee, consisting entirely of independent directors, meets regularly with management, internal auditors and the independent
registered public accounting firm and reviews audit plans and results, as well as managements actions taken in discharging responsibilities for accounting, financial reporting and internal control. S.R. Snodgrass, independent registered public
accounting firm and the internal auditors have direct and confidential access to the Audit Committee at all times to discuss the results of their examinations.

Report on Managements Assessment of Internal Control Over Financial Reporting

We, as management of ESB Financial Corporation, are responsible for establishing and maintaining effective internal control over financial reporting that is designed to produce reliable financial
statements in conformity with United States generally accepted accounting principles. Management assessed the Corporations system of internal control over financial reporting as of December 31, 2010, in relation to criteria for effective
internal control over financial reporting as described in Internal ControlIntegrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as
of December 31, 2010, its system of internal control over financial reporting is effective and meets the criteria of the Internal ControlIntegrated Framework. S.R. Snodgrass, independent registered public accounting firm, has
issued an attestation report on managements assessment of the Corporations internal control over financial reporting.

LOGO

Charlotte A. Zuschlag

President and Chief Executive Officer

LOGO

Charles P. Evanoski

Group Senior Vice President and Chief Financial Officer

March 10, 2011





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 83 |  | 2010 Annual Report



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##### Table of Contents

Stock and Dividend Information



Listings and Markets

ESB Financial Corporation common stock is traded on the NASDAQ Global Select Stock Market under the symbol
ESBF. Some of the listed market makers for the Companys common stock include:



|                                |  |                             |  |     
|------------------------------- |  | --------------------------- |  | ----
|Keefe, Bruyette & Woods, Inc.   |  | Stifel Nicolaus & Co., Inc. |  | LOGO
|787 7thAvenue, 4thFlr           |  | 18 Columbia Turnpike        | 
|New York, NY 10019              |  | Florham Park NJ 07932       | 
|Telephone: (800) 966-1559       |  | Telephone: (800) 342-2325   | 
|UBS Financial
Services          |  |                             | 
|One North Wacker Drive, 35thFlr |  |                             | 
|Chicago, IL 60606               |  |                             | 
|Telephone: (800) 525-4313       |  |                             | 

Number of Stockholders and Shares Outstanding

As of December 31, 2010, there were 2,201 registered stockholders of record and 12,033,940 shares of common stock outstanding
entitled to vote, receive dividends and considered outstanding for financial reporting purposes. The number of stockholders of record does not include the number of persons or entities who hold their stock in nominee or street name.

Dividend Reinvestment Plan

Common stockholders may have cash dividends reinvested to purchase additional shares. Participants may also make optional cash purchases of common stock through the reinvestment plan and pay no brokerage
commissions or fees. To obtain a plan prospectus and authorization card call (800) 368-5948.

Registrar and Transfer
Agent

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

Stock Splits and Dividends

The Company has declared the following stock
splits or dividends since its inception:



|                   |  |                  |  |                 
|------------------ |  | ---------------- |  | ----------------
|Record Date        |  | Payment Date     |  | PercentageIssued
|May 1, 2003        |  | May 15, 2003     |  | 20%             
|September 30, 2002 |  | October 25, 2002 |  | 20%             
|May 18, 2001       |  | May 30, 2001     |  | 20%             
|May 17, 2000       |  | May 31, 2000     |  | 10%             
|May 15, 1998       |  | May 29, 1998     |  | 10%             
|July 31, 1997      |  | August 25, 1997  |  | 10%             
|December 31, 1994  |  | January 25, 1995 |  | 20%             
|December 31, 1993  |  | January 25, 1994 |  | 20%             
|May 12, 1993       |  | June 7, 1993     |  | 20%             
|December 31, 1992  |  | January 25, 1993 |  | 20%             
|June 30, 1992      |  | July 25, 1992    |  | 20%             
|December 31, 1991  |  | January 25, 1992 |  | 20%             





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 84 |  | 2010 Annual Report



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##### Table of Contents

Stock and Dividend Information(continued)





Stock Price Information and Cash Dividends

The following
table sets forth the high and low sale market prices of the Companys common stock as of and during the quarterly periods presented as well as the quarterly cash dividends. The Company has paid regular quarterly cash dividends since its
inception in June 1990:



|                   |  |              |       |  |                      |   |       |       |  |   |              |  |  |                         |                  |  |  |  |       | 
|------------------ |  | ------------ | ----- |  | -------------------- | - | ----- | ----- |  | - | ------------ |  |  | ----------------------- | ---------------- |  |  |  | ----- | 
|                   |  | Market Price |       |  | Dividend Information |  
|                   |  | High         |       |  | Low                  |   |       | Close |  |   | Payment Date |  |  | Cash Dividendsper Share |                 
|2010 Quarter Ended |  |              |       |  |                      |   |       |       |  |   |              |  |  |                         |                  |  |  |  |       | 
|December 31        |  | $            | 17.19 |  |                      | $ | 13.68 |       |  | $ | 16.24        |  |  |                         | January 25, 2011 |  |  |  | $0.10 | 
|September 30       |  |              | 14.65 |  |                      |   | 12.04 |       |  |   | 13.92        |  |  |                         | October 25, 2010 |  |  |  | 0.10  | 
|June 30            |  |              | 14.96 |  |                      |   | 12.27 |       |  |   | 13.05        |  |  |                         | July 23, 2010    |  |  |  | 0.10  | 
|March 31           |  |              | 14.02 |  |                      |   | 10.75 |       |  |   | 12.89        |  |  |                         | April 23, 2010   |  |  |  | 0.10  | 
|2009 Quarter Ended |  |              |       |  |                      |   |       |       |  |   |              |  |  |                         |                  |  |  |  |       | 
|December 31        |  | $            | 13.96 |  |                      | $ | 10.62 |       |  | $ | 13.22        |  |  |                         | January 25, 2010 |  |  |  | $0.10 | 
|September 30       |  |              | 15.00 |  |                      |   | 12.62 |       |  |   | 13.39        |  |  |                         | October 23, 2009 |  |  |  | 0.10  | 
|June 30            |  |              | 15.44 |  |                      |   | 10.08 |       |  |   | 13.12        |  |  |                         | July 24, 2009    |  |  |  | 0.10  | 
|March 31           |  |              | 12.38 |  |                      |   | 9.03  |       |  |   | 10.99        |  |  |                         | April 24, 2009   |  |  |  | 0.10  | 

The last sale price of the
Companys common stock was $13.92 as of February 28, 2011.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 85 |  | 2010 Annual Report



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##### Table of Contents

Stock and Dividend Information(continued)





Performance Graph

The following graph compared the
yearly cumulative total return on the common stock over a five-year measurement period with the yearly cumulative total return on the stocks included in (i) the NASDAQ  Total US companies and (ii) the SNL Securities All Banks and
Thrifts Index. All of these cumulative returns are computed assuming the reinvestment of dividends at the frequency with which dividends were paid during the applicable year.

LOGO

Performance Graph provided by SNL Financial.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 86 |  | 2010 Annual Report



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##### Table of Contents

Corporate Information



Annual Meeting

The annual meeting of the Companys stockholders will be held at 4:00 p.m., on Wednesday, April 20, 2011, at
the Connoquenessing Country Club, 1512 Mercer Road, Ellwood City, PA 16117.

Stockholder and Investor Information

Copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
related stockholder literature are available upon written request without charge to stockholders. Requests should be addressed to Frank D. Martz, Group Senior Vice President of Operations and Corporate Secretary, ESB Financial Corporation, 600
Lawrence Avenue, Ellwood City, PA 16117.

We make available on our website, www.esbbank.com,our annual report on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K, on the date which we electronically file these reports with the Securities and Exchange Commission, as well as our code of ethics. Investors are encouraged to access these reports and the other
information about our business and operations on our web site.

Equal Employment Opportunity

ESB Financial Corporation has adopted an affirmative action program to assure equal opportunity for every employee and
hires, trains, promotes, compensates and makes all other employment decisions without regard to race, color, religion, sex, age, national origin, disability or veteran status.

Corporate Headquarters

ESB Financial
Corporation

600 Lawrence Avenue

Ellwood City, PA 16117

Phone: (724) 758-5584

Subsidiary Companies



|                                      |  |                                         
|------------------------------------- |  | ----------------------------------------
|ESB Bank                              |  | ESB Capital Trust II                    
|ESB Financial Services, Inc.          |  | ESB Capital Trust III                   
|AMSCO, Inc.                           |  | ESB Statutory Trust IV                  
|AMS Ventures, LLC                     |  | THF, Inc d/b/a Elite Settlement Services
|Madison Woods Joint Venture           |  |                                         
|The Links at Deer Run Associates, LLC |  |                                         
|McCormick Farms, LLC                  |  |                                         
|Brandy One, LLC                       |  |                                         
|The Vineyards at Brandywine, LP       |  |                                         
|Cobblestone Village, LP               |  |                                         
|The Meadows at Hampton, LP            |  |                                         
|BelleVue Park                         |  |                                         
|MW 42                                 |  |                                         



|                                              |  |                                      
|--------------------------------------------- |  | -------------------------------------
|Independent Registered Public Accounting Firm |  | Special Counsel                      
|                                              | 
|S.R. Snodgrass, A.C.                          |  | Elias, Matz, Tiernan & Herrick L.L.P.
|2100 Corporate Drive, Suite 400               |  | 734 15thStreet, NW                   
|Wexford, PA 15090                             |  | Washington, DC 20005                 





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 87 |  | 2010 Annual Report



---

##### Table of Contents

Board of Directors



ESB FINANCIAL
CORPORATION



|                                                          |  |                                                     
|--------------------------------------------------------- |  | ----------------------------------------------------
|William B. Salsgiver                                      |  | Mario J. Manna                                      
|Chairman of the Board                                     |  | Retired Tax Collector - Borough of Coraopolis       
|A Principal - Perry Homes                                 |  |                                                     
|                                                          |  |                                                     
|Herbert S. Skuba                                          |  | James P. Wetzel, Jr.                                
|Vice Chairman of the Board                                |  | Retired President & CEO - PHSB Financial Corporation
|Retired Director, President & CEO - Ellwood City Hospital |  |                                                     
|                                                          |  |                                                     
|Charlotte A. Zuschlag                                     |  |                                                     
|President & Chief Executive Officer                       |  |                                                     

ESB BANK



|                                                          |  |                                                               
|--------------------------------------------------------- |  | --------------------------------------------------------------
|William B. Salsgiver                                      |  | Mario J. Manna                                                
|Chairman of the Board                                     |  | Retired Tax Collector - Borough of Coraopolis                 
|A Principal - Perry Homes                                 |  |                                                               
|                                                          | 
|Herbert S. Skuba                                          |  | Ronald W. Owen                                                
|Vice Chairman of the Board                                |  | Senior Relationship Executive - First American Title Insurance
|Retired Director, President & CEO - Ellwood City Hospital |  | Company                                                       
|                                                          | 
|Charlotte A. Zuschlag                                     |  | Joseph W. Snyder                                              
|President & Chief Executive Officer                       |  | Sourcing Agent - EQT Corporation                              
|                                                          | 
|Raymond K. Aiken                                          |  | Jefrey F. Wall                                                
|Retired President & COO - Lockhart Chemical Co.           |  | Business Manager, Penns Valley School District                
|                                                          | 
|Joseph D. Belas                                           |  | James P. Wetzel, Jr.                                          
|Retired Director - PHSB Financial Corporation             |  | Retired President & CEO - PHSB Financial Corporation          
|                                                          | 
|Johanna C. Guehl                                          |  |                                                               
|Owner - Law Offices of Johanna C. Guehl                   |  |                                                               
|Affiliate - Kathy L. Hess & Associates, CPAs             |  |                                                               





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 88 |  | 2010 Annual Report



---

##### Table of Contents

Board of Directors



LOGO

Board of Directors of ESB Bank are seated from left, William B. Salsgiver, Mario J. Manna, Joseph W. Snyder
and Raymond K. Aiken. Standing from the left are Johanna C. Guehl, Herbert S. Skuba, Charlotte A. Zuschlag, James P. Wetzel, Jefrey F. Wall, Ronald W. Owen and Joseph D. Belas.





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 89 |  | 2010 Annual Report



---

##### Table of Contents

In Memory.

LOGO



Lloyd L. Kildoo

1939 - 2010









|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 90 |  | 2010 Annual Report



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##### Table of Contents

Corporate Officers, Advisory Board and Bank Officers





|                                                      |  |                                   
|----------------------------------------------------- |  | ----------------------------------
|ESB FINANCIAL CORPORATION                             |  | ESB BANK, (continued)             
|William B. Salsgiver                                  |  | First Vice Presidents, (continued)
|Chairman of the Board                                 |  | Brian W. Hulme                    
|Charlotte A. Zuschlag                                 |  | Mary Ann Leonardo                 
|President & Chief Executive Officer                   |  | Sally A. Mannarino                
|                                                      |  | Larry Mastrean                    
|Group Senior Vice Presidents                          |  | Joseph R. Pollock, III            
|Charles P. Evanoski - Chief Financial Officer         |  | Pamela K. Zikeli                  
|Frank D. Martz- Operations & Corporate Secretary      |  |                                   
|Todd F. Palkovich - Lending                           |  |                                   
|                                                      |  |                                   
|Senior Vice Presidents                                |  | Vice Presidents                   
|Robert A. Ackerman- Audit, Compliance & Loan Review   |  | Charlotte M. Bolinger             
|Richard E. Canonge- Treasurer                         |  | Thomas E. Campbell                
|Robert J. Colalella- Marketing                        |  | Louis C. Frischkorn               
|John W. Donaldson II- Lending                         |  | Deborah S. Goehring               
|Teresa Krukenberg- Business Development               |  | Peter J. Greco                    
|Ronald J. Mannarino- Asset/Liability Management       |  | Paul F. Hoyson                    
|Mark A. Platz- Information Technology                 |  | Penny K. Koch                     
|Ronald E. Pompeani- Lending                           |  | Mary C. Magestro                  
|Marilyn Scripko- Lending & CRA Officer                |  | John J. Mottes                    
|John T. Stunda- Human Resources                       |  | Daniel J. Swartz                  
|Bonita L. Wadding- Controller                         |  |                                   
|                                                      |  | Assistant Vice Presidents         
|ESB BANK, ADVISORY BOARD                              |  | Theresa M. Adler                  
|Lewis N. Banks                                        |  | Susan B. Antolic                  
|Retired teacher Blackhawk School District             |  | Kelley J. Avena                   
|Joseph W. DeNardo                                     |  | Janet S. Barletta                 
|Retired Chief Meteorologist for WTAE-TV               |  | James D. Bish                     
|George C. Dorsch                                      |  | Matthew N. DAmico                
|Retired Engineer -                                    |  | Amy E. Dicks                      
|Dept. of Transportation, Commonwealth of Pennsylvania |  | Judy L. Diesing                   
|Dr. Allan Gastfriend                                  |  | Susan C. Fisher                   
|Retired Dentist                                       |  | Theresa A. Gerst                  
|Charles W. Hergenroeder                               |  | Norene Greer                      
|Partner- Hergenroeder, Rega, Sommer, LLC              |  | Margaret A. Haefele               
|Watson F. McGaughey, Jr.                              |  | Teri L. Huston                    
|Retired President - McGaughey Buses, Inc.             |  | David L. Kramer                   
|Martin L. Miller                                      |  | Kyle R. Krupa                     
|Consultant - Miller & Sons Chevrolet/Buick            |  | Barbara E. Martinelli             
|Craig E. Wynn                                         |  | Beth A. McClymonds                
|President - Herskowitz and Wynn, P.C.                 |  | Kristin E. McKelvey               
|                                                      |  | Marianne L. Mills                 
|ESB BANK                                              |  | Ann R. Nelson                     
|William B. Salsgiver                                  |  | Jonathan D. Newell                
|Chairman of the Board                                 |  | Madeline Orfitelli                
|Charlotte A. Zuschlag                                 |  | Janet H. Orr                      
|President & Chief Executive Officer                   |  | Deborah F. Pagley                 
|                                                      |  | James P. Perenovich               
|Group Senior Vice Presidents                          |  | Jason Petrella                    
|Charles P. Evanoski                                   |  | Thomas G. Pfeiffer                
|Frank D. Martz                                        |  | Keith R. Poleti                   
|Todd F. Palkovich                                     |  | Timothy S. Robinson               
|                                                      |  | Cynthia L. Scaramazza             
|Senior Vice Presidents                                |  | Jackie A. Smith                   
|Robert A. Ackerman                                    |  | Linda Smith                       
|Richard E. Canonge                                    |  | Kathy A. Smyth                    
|Robert J. Colalella                                   |  | Sharon L. Speicher                
|John W. Donaldson II                                  |  | Karla L. Spinelli                 
|Teresa Krukenberg                                     |  | Nancy Straley                     
|Ronald J. Mannarino                                   |  | Volynda Teets                     
|Mark A. Platz                                         |  | Janice L. Voynik                  
|Ronald E. Pompeani                                    |  | Alan P. Weber                     
|Marilyn Scripko                                       |  |                                   
|John T. Stunda                                        |  | Assistant Secretaries             
|Bonita L. Wadding                                     |  | Linda A. MacMurdo                 
|                                                      |  | Dana M. Martz                     
|First Vice Presidents                                 |  | Robin Scheffler                   
|Deborah A. Allen                                      |  |                                   
|Kathleen A. Bender                                    |  | THF, Inc.                         
|Nancy A. Glitsch                                      |  | Rocco Abbatangelo - President     





|                          |  |    |  |                   
|------------------------- |  | -- |  | ------------------
|ESB Financial Corporation |  | 91 |  | 2010 Annual Report



---

##### Table of Contents

LOGO

2010 Validations





|                                                                                                   |  |     
|-------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                   | 
|LOGO                                                                                               |  | LOGO
|                                                                                                  
|Not only did ESB Bank receive national recognition, but once again won acclaim at the local level.
|Customers in Beaver County, Elwood City and the New Castle areas voted ESB Bank                   
|Best of the Best in Banking for 2010.                                                           
|                                                                                                  
|LOGO                                                                                              
|                                                                                                  
|ESB Bank is a Five Star rated bankby BauerFinancial again in 2010                                 





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##### Table of Contents

|                       |  |                        |  |                        |  |                       
|---------------------- |  | ---------------------- |  | ---------------------- |  | ----------------------
|ESB Bank Branches      |  |                        |  |                        |  |                       
|                       |  |                        | 
|ELLWOOD CITY           |  | SHENANGO TWP.          |  | ZELIENOPLE             |  | FRANKLIN TWP.         
|Phone: 724-758-5584    |  | Phone: 724-654-7781    |  | Phone: 724-452-6500    |  | Phone: 724-752-2500   
|600 Lawrence Avenue    |  | 2731 Ellwood Road      |  | 527 South Main Street  |  | 1793 Mercer Road      
|Ellwood City, PA 16117 |  | New Castle, PA 16101   |  | Zelienople, PA 16063   |  | Ellwood City, PA 16117
|                       |  |                        | 
|NESHANNOCK TWP.        |  | AMBRIDGE               |  | ALIQUIPPA              |  | CENTER TWP.           
|Phone : 724-658-8825   |  | Phone: 724-266-5002    |  | Phone: 724-378-4436    |  | Phone: 724-774-0332   
|3360 Wilmington Road   |  | 506 Merchant Street    |  | 2301 Sheffield Road    |  | 3531 Brodhead Road    
|New Castle, PA 16105   |  | Ambridge, PA 15003     |  | Aliquippa, PA 15001    |  | Monaca, PA 15061      
|                       |  |                        | 
|TROY HILL              |  | WEXFORD                |  | NORTH SHORE            |  | BEECHVIEW             
|Phone: 412-231-8238    |  | Phone: 724-934-8989    |  | Phone: 412-231-7297    |  | Phone: 412-344-7211   
|1706 Lowrie Street     |  | 101 Wexford-Bayne Rd.  |  | 807 Middle Street      |  | 1550 Beechview Ave.   
|Pittsburgh, PA 15212   |  | Wexford, PA 15090      |  | Pittsburgh, PA 15212   |  | Pittsburgh, PA 15216  
|                       |  |                        | 
|BALDWIN                |  | BEAVER                 |  | BEAVER FALLS           |  | CHIPPEWA TWP.         
|Phone: 412-655-8670    |  | Phone: 724-775-1052    |  | Phone: 724-847-4004    |  | Phone: 724-846-6200   
|5035 Curry Road        |  | 701 Corporation Street |  | 1427 Seventh Avenue    |  | 2521 Darlington Road  
|Pittsburgh, PA 15236   |  | Beaver, PA 15009       |  | Beaver Falls, PA 15010 |  | Beaver Falls, PA 15010
|                       |  |                        | 
|HOPEWELL TWP.          |  | NEW BRIGHTON           |  | NORTHERN LIGHTS        |  | BUTLER                
|Phone: 724-378-0505    |  | Phone: 724-846-4920    |  | Phone: 724-869-2193    |  | Phone: 724-789-0057   
|2293 Brodhead Road     |  | 800 Third Avenue       |  | 1555 Beaver Road       |  | 831 Evans City Road   
|Aliquippa, PA 15001    |  | New Brighton, PA 15066 |  | Baden, PA 15005        |  | Renfrew, PA 16053     
|                       |  |                        | 
|FOX CHAPEL             |  | COROAPOLIS             |  | SPRING HILL            |  | DARLINGTON            
|Phone: 412-782-6500    |  | Phone: 412-264-8862    |  | Phone: 412-231-0819    |  | Phone: 724-827-8500   
|1060 Freeport Road     |  | 900 Fifth Avenue       |  | Itin & Rhine Streets   |  | 233 Second Street     
|Pittsburgh, PA 15238   |  | Coraopolis, PA 15108   |  | Pittsburgh, PA 15212   |  | Darlington, PA 16115  



|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|LOGO |  | Coming Fall 2011 Our Newest Community Office 2630 Rochester
Road Cranberry Twp, PA 16066

LOGO