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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



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FORM 10-K



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended: December 31, 2005



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

For the transition period from  to

Commission file number 0-19345



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ESB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Pennsylvania                                                   |  | 25-1659846                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|600 Lawrence Avenue, Ellwood City, PA                          |  | 16117                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

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



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

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

Common Stock, par value $.01 per share

(Title of class)



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

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

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

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

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

Large accelerated filer ̈.    Accelerated filer  x.    Non-accelerated filer ̈.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes ̈No  x.

As of June 30, 2005, the aggregate value of the 11,730,780 shares of Common Stock of the Registrant outstanding on such date, which excludes 1,616,338 shares held
by all directors and officers of the Registrant as a group, was approximately $154.3 million. This amount is based on the closing sales price of $13.15 per share of the Registrants Common Stock on June 30, 2005.

Number of shares of Common Stock outstanding as of March 3, 2006: 13,130,982

DOCUMENTS INCORPORATED BY REFERENCE



|                                                                                     |  |                   
|------------------------------------------------------------------------------------ |  | ------------------
|Documents                                                                            |  | Where Incorporated
|1. Portions of the 2005 Annual Report to Stockholders.                               |  | Part II           
|                                                                                     | 
|2. Portions of Proxy Statement for the April 19, 2006 Annual Meeting of Stockholders |  | Parts II and III  



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##### Table of Contents

ESB FINANCIAL CORPORATION

TABLE OF CONTENTS



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



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FORWARD-LOOKING STATEMENTS

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

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



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



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



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



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



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



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



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



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



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

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



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##### Table of Contents

PART I

Item 1. Business

General

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

As of December 31, 2005, the Company had consolidated total assets of $1.9 billion and stockholders equity of $126.9 million. For the year ended December 31, 2005, the Company realized consolidated net
income and diluted net income per share of $9.2 million and $0.71, respectively.

The Bank is a Pennsylvania chartered, Federal Deposit Insurance
Corporation (FDIC) insured stock savings bank, which conducts business through 23 offices, as of December 31, 2005, in Allegheny, Beaver, Butler and Lawrence counties, Pennsylvania. ESB operates two wholly-owned subsidiaries: (i) AMSCO,
Inc., which engages in the management of certain real estate development partnerships on behalf of the Company and (ii) ESB Financial Services, Inc., a Delaware corporation which holds loans and other investments.

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

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

On February 11, 2005, PHSB Financial Corporation (PHSB), the parent company of Peoples Home Savings Bank, was merged with and into the Company. Under the terms of
the agreement, each stockholder of PHSB had the right to elect to receive either $27.00 in cash or 1.966 shares of Company common stock for each share of PHSB common stock owned. The total merger consideration was payable 50% in Company common stock
and 50% cash.

Competition

The Company and its
subsidiaries face substantial competition for both loans and deposits. Numerous financial institutions, some larger and several of which are similar in size and resources to the Company, are competitors of the Company to varying degrees. Competition
for loans comes principally from commercial banks, credit unions, mortgage-banking companies and savings banks. The Company competes for loans principally through the interest rates and loan fees that are charged and the efficiency and quality of
services provided to borrowers, sellers, real estate brokers and attorneys. The most direct competition for deposits has historically come from commercial banks, credit unions and other depository institutions. The Company faces additional
competition for deposits from securities brokers, mutual funds and insurance companies. The Company competes for deposits through pricing, service, the branch network and by offering a wide variety of products and services. Internet banking, offered
by both established financial institutions and internet only banks, constitutes another



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form of competition for the Company. Competition may increase as a result of reduced restrictions on the interstate
operations of financial institutions and legislation authorizing the acquisition of savings institutions by bank holding companies. Finally, in addition to the competition for loans and deposits, the Company is affected by the actions of the Federal
Reserve Board as it affects interest rates in order to improve the economy.

Market Area

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

Lending Activities

General. As of December 31, 2005, the Companys net loans receivable amounted to $540.3 million or 29.2% of the Companys total assets. Loans secured by real estate amounted to $408.5 million or 71.9% of total loans
receivable. Consumer loans and commercial business loans amounted to $136.3 million or 24.0% and $23.5 million or 4.1%, respectively, of the Companys total loan portfolio.

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

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



|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|----------------------------- |  | ------------ | ------- | - | ---- | ----- | - | ------------ | - | ------- | ---- | ----- | ------------ | ---- | - | ------- |  | ------------ | - | - | - | ------- | ------------ | ----- | - |  | - | ------- |  | ----- | -
|                              |  | 2005         |         |   | 2004 |       |   | 2003         |   |         | 2002 |       |              | 2001 |  
|(Dollar amounts in thousands) |  | DollarAmount |         |   | %    |       |   | DollarAmount |   | %       |      |       | DollarAmount |      | % |         |  | DollarAmount |   | % |   |         | DollarAmount |       | % | 
|Real estate loans:            |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Residential - single family   |  | $            | 230,805 |   |      | 40.6  | % |              | $ | 155,971 |      | 41.8  | %            |      | $ | 142,244 |  | 41.0         | % |   | $ | 154,438 |              | 43.4  | % |  | $ | 335,838 |  | 62.1  | %
|Residential - multi family    |  |              | 36,401  |   |      | 6.4   | % |              |   | 35,565  |      | 9.6   | %            |      |   | 42,057  |  | 12.2         | % |   |   | 31,661  |              | 8.9   | % |  |   | 29,154  |  | 5.4   | %
|Commercial                    |  |              | 69,453  |   |      | 12.2  | % |              |   | 53,446  |      | 14.4  | %            |      |   | 46,502  |  | 13.4         | % |   |   | 51,495  |              | 14.5  | % |  |   | 48,869  |  | 9.0   | %
|Construction                  |  |              | 71,848  |   |      | 12.7  | % |              |   | 61,061  |      | 16.4  | %            |      |   | 46,072  |  | 13.3         | % |   |   | 40,778  |              | 11.5  | % |  |   | 46,072  |  | 8.5   | %
|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Total real estate loans       |  |              | 408,507 |   |      | 71.9  | % |              |   | 306,043 |      | 82.2  | %            |      |   | 276,875 |  | 79.8         | % |   |   | 278,372 |              | 78.3  | % |  |   | 459,933 |  | 85.0  | %
|                              |  |              |         |   |      |       |   |              |   |        
|Other loans:                  |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Consumer loans                |  |              | 136,296 |   |      | 24.0  | % |              |   | 58,066  |      | 15.6  | %            |      |   | 59,222  |  | 17.1         | % |   |   | 61,087  |              | 17.2  | % |  |   | 65,815  |  | 12.2  | %
|Commercial business loans     |  |              | 23,527  |   |      | 4.1   | % |              |   | 8,271   |      | 2.2   | %            |      |   | 10,802  |  | 3.1          | % |   |   | 16,080  |              | 4.5   | % |  |   | 15,264  |  | 2.8   | %
|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Total other loans             |  |              | 159,823 |   |      | 28.1  | % |              |   | 66,337  |      | 17.8  | %            |      |   | 70,024  |  | 20.2         | % |   |   | 77,167  |              | 21.7  | % |  |   | 81,079  |  | 15.0  | %
|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Total loans receivable        |  |              | 568,330 |   |      | 100.0 | % |              |   | 372,380 |      | 100.0 | %            |      |   | 346,899 |  | 100.0        | % |   |   | 355,539 |              | 100.0 | % |  |   | 541,012 |  | 100.0 | %
|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Less:                         |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Allowance for loan losses     |  |              | 4,864   |   |      |       |   |              |   | 3,940   |      |       |              |      |   | 4,062   |  |              |   |   |   | 4,237   |              |       |   |  |   | 5,147   |  |       |  
|Net deferred (costs) fees     |  |              | (2,715  | ) |      |       |   |              |   | 248     |      |       |              |      |   | 150     |  |              |   |   |   | 88      |              |       |   |  |   | 483     |  |       |  
|Loans in process              |  |              | 25,904  |   |      |       |   |              |   | 24,668  |      |       |              |      |   | 20,233  |  |              |   |   |   | 11,890  |              |       |   |  |   | 14,309  |  |       |  
|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  
|Net loans receivable          |  | $            | 540,277 |   |      |       |   |              | $ | 343,524 |      |       |              |      | $ | 322,454 |  |              |   |   | $ | 339,324 |              |       |   |  | $ | 521,073 |  |       |  
|                              |  |              |         |   |      |       |   |              |   |         |      |       |              |      |   |         |  |              |   |   |   |         |              |       |   |  |   |         |  |       |  



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The following table sets forth the scheduled contractual principal repayments of loans in the Companys portfolio at
December 31, 2005. Demand loans having no stated schedule of repayment and no stated maturity are reported as due within one year:



|                              |  |                        |        |                           |   |                           |  |                    |         |       |   |         |  |   |        
|----------------------------- |  | ---------------------- | ------ | ------------------------- | - | ------------------------- |  | ------------------ | ------- | ----- | - | ------- |  | - | -------
|(Dollar amounts in thousands) |  | Due in oneyear or less |        | Due from oneto five years |   | Due from fiveto ten years |  | Due afterten years |         | Total
|Real estate loans             |  | $                      | 32,556 |                           | $ | 72,065                    |  | $                  | 76,371  |       | $ | 227,515 |  | $ | 408,507
|Consumer loans                |  |                        | 30,350 |                           |   | 68,847                    |  |                    | 26,748  |       |   | 10,351  |  |   | 136,296
|Commercial business loans     |  |                        | 15,541 |                           |   | 5,974                     |  |                    | 1,610   |       |   | 402     |  |   | 23,527 
|                              |  |                        |        |                           |   |                           |  |                    |         |       |   |         |  |   |        
|                              |  | $                      | 78,447 |                           | $ | 146,886                   |  | $                  | 104,729 |       | $ | 238,268 |  | $ | 568,330
|                              |  |                        |        |                           |   |                           |  |                    |         |       |   |         |  |   |        

The following table sets forth the dollar amount of the Companys fixed and adjustable rate loans due after
one year as of December 31, 2005:



|                              |  |            |         |                 |   |        
|----------------------------- |  | ---------- | ------- | --------------- | - | -------
|(Dollar amounts in thousands) |  | Fixedrates |         | Adjustablerates
|Real estate loans             |  | $          | 292,108 |                 | $ | 83,843 
|Consumer loans                |  |            | 91,292  |                 |   | 14,654 
|Commercial business loans     |  |            | 6,363   |                 |   | 1,623  
|                              |  |            |         |                 |   |        
|                              |  | $          | 389,763 |                 | $ | 100,120
|                              |  |            |         |                 |   |        

Fixed and adjustable rate loans represented $450.9 million or 79.4% and $117.4 million or 20.6%, respectively, of
the Companys total loan portfolio as of December 31, 2005.

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

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

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

As of December 31, 2005, $6.4 million or 1.1% of the Companys
total loans receivable consisted of whole loans and participation interests in loans purchased from other financial institutions. These loans are secured by real estate properties located within the U.S. and most were acquired by the Company in
conjunction with the Companys five acquisitions of financial institutions. There were no loan participation purchased by the Company during year ended December 31, 2005.



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The Company requires that all purchased loans be underwritten in accordance with its underwriting guidelines and
standards. The Company reviews the loans, particularly scrutinizing the borrowers ability to repay the obligation, the appraisal and the loan-to-value ratio. Servicing of loans or loan participations purchased by the Company generally is
performed by the seller, with a portion of the interest being paid by the borrower retained by the seller to cover servicing costs. As of December 31, 2005, all of the Companys purchased loans were serviced by sellers.

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

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



|                                                      |  |      |          |   |      |   |          |      |  |   |          |  
|----------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|(Dollar amounts in thousands)                         |  | 2005 |          |   | 2004 |   |          | 2003 | 
|Net loans receivable at beginning of period           |  | $    | 343,524  |   |      | $ | 322,454  |      |  | $ | 339,324  |  
|                                                      |  |      |         
|Loans associated with acquisition of PHSB             |  |      | 147,957  |   |      |   |         |      |  |   |         |  
|                                                      |  |      |         
|Originations:                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Single-family residential real estate                 |  |      | 63,166   |   |      |   | 66,664   |      |  |   | 90,668   |  
|Multi-family residential and commercial real estate   |  |      | 28,049   |   |      |   | 21,608   |      |  |   | 33,441   |  
|Construction                                          |  |      | 27,315   |   |      |   | 35,935   |      |  |   | 22,235   |  
|Consumer                                              |  |      | 69,748   |   |      |   | 26,780   |      |  |   | 36,971   |  
|Commercial business                                   |  |      | 19,477   |   |      |   | 7,103    |      |  |   | 5,271    |  
|                                                      |  |      |          |   |      |   |          |      |  |   |          |  
|                                                      |  |      | 207,755  |   |      |   | 158,090  |      |  |   | 188,586  |  
|Repayments on loans                                   |  |      | (157,144 | ) |      |   | (136,307 | )    |  |   | (205,733 | )
|Transfers to real estate acquired through foreclosure |  |      | (118     | ) |      |   | (598     | )    |  |   | (275     | )
|Other changes                                         |  |      | (1,697   | ) |      |   | (115     | )    |  |   | 552      |  
|                                                      |  |      |          |   |      |   |          |      |  |   |          |  
|Net loans receivable at end of period                 |  | $    | 540,277  |   |      | $ | 343,524  |      |  | $ | 322,454  |  
|                                                      |  |      |          |   |      |   |          |      |  |   |          |  

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

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



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

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

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

Under applicable regulations, loans-to-one borrower may not exceed 15% of unimpaired capital and surplus. As of December 31, 2005, ESB was permitted to lend
approximately $19.5 million to any one borrower under this standard. Loans in an amount equal to an additional 10% of unimpaired capital and surplus also may be made to a borrower if the loans are fully secured by readily marketable securities.
Higher limits may be available in certain circumstances. The Company generally will limit its maximum exposure to any one borrower to $10.0 million. As of December 31, 2005, the Company did not have any lending relationships that exceeded the
Banks regulatory lending limit to one borrower at the time made or committed.

Residential Mortgage and Construction Lending. The Company
offers single-family residential mortgage loans with fixed and adjustable rates of interest. As of December 31, 2005, $230.8 million or 40.6% of the total loan portfolio consisted of single-family residential mortgage loans.

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

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



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The Company also grants loans to borrowers, including developers and construction contractors, for the construction of
speculative homes and owner-occupied single-family dwellings in the Companys primary market area. As of December 31, 2005, the Company had $71.8 million or 12.7% of the total loan portfolio outstanding in construction loans. Generally,
the loan-to-value ratio for construction loans does not exceed 80%, provided that with respect to construction/permanent loans to individual borrowers for their primary residences, the Company will lend up to 95% subject to private mortgage
insurance requirements or under the aforementioned 100% LTV home equity product. The interest rate on the permanent portion of the financing is set upon conversion to the permanent loan, based upon terms agreed to in the loan commitment, including
the index to be used, the interest rate margin and the frequency of the adjustment.

The Company finances the purchase of developed lots and pre-sold
residential dwellings and speculative homes with various contractors in the Companys primary market area. These loans do not have a permanent portion as they are short-term loans repaid via the proceeds from the sale of the lots or speculative
homes constructed with the loan proceeds. These projects are typically financed under acquisition and development loans or builder lines-of-credit. As of December 31, 2005, acquisition and development loans were extended on 18 projects with
$15.0 million outstanding under commitments approved in the aggregate amount of $29.2 million and builder lines-of-credit were extended to 23 builders with $16.1 million outstanding under lines approved in the aggregate amount of $39.6 million.

Commercial Real Estate and Multi-family Residential Mortgage Lending. The Company originates commercial real estate and multi-family residential
mortgage loans and has in its portfolio both whole loans and participation interests. As of December 31, 2005, the Company had $105.9 million, or 18.6% of the total loan portfolio, invested in mortgages secured by commercial real estate and
multi-family residential properties.

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

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

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

Consumer Lending. As of December 31, 2005, the Companys consumer loan portfolio totaled $136.3 million or 24.0% of its total loan portfolio. Under applicable regulations, the Company, through the
Bank, may make secured and unsecured consumer loans in an aggregate amount up to 30% of the respective institutions total assets. The 30% limitation does not include home equity loans (loans secured by the equity in the borrowers
residence but not necessarily for the purpose of improvement), home improvement loans or loans secured by deposit accounts. The Company offers consumer loans in order to provide a broader range of financial services to its customers and because the
shorter terms and normally higher interest rates on such loans help the Company maintain a profitable spread between its average loan yield and its cost of funds. The Company has increased its emphasis on the origination of consumer loans within its
primary market area during the past several years. Consumer lending originations were augmented through marketing techniques, including the targeting of specific customer profiles through the Companys branch office locations. The Company has
adopted underwriting standards for such lending designed to maintain asset quality. The Company offers a variety of consumer loans, including loans secured by deposit accounts, student education loans, automobile loans, home equity loans and secured
and unsecured personal loans. Additionally, through the acquisition of PHSB, the company acquired a significant portfolio of indirect automobile loans and a smaller portfolio of credit card loans in 2005 and continues to originate these types of
loans. On all consumer loans originated, the Companys underwriting standards include a determination of the applicants payment history on other debts and an assessment of the borrowers ability to meet existing obligations and
payment on the proposed loan.

As of December 31, 2005, the Companys largest group of consumer loans were home equity loans. The Company
originates both adjustable rate home equity lines-of-credit and fixed rate home equity loans with terms of up to 20 years. As of December 31, 2005, $64.2 million or 47.1% of the Companys consumer loan portfolio was made up of home equity



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loans. The Companys second largest group of consumer loans were indirect automobile and recreational vehicle loans.
These loans are made on terms up to six years on both new and used automobiles and are made on terms up to fifteen years on both new and used recreational vehicles. These loans are originated through a network of dealers and are underwritten in
accordance with Bank guidelines intended to access the applicants ability to repay and the adequacy of the financed vehicles collateral. As of December 31, 2005, $54.5 million or 40.0% of the Companys consumer loan portfolio was
made up of indirect automobile and RV loans.

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

Commercial Business Lending. Commercial business loans and lines-of-credit of both a secured and unsecured nature are made by the Company for business purposes to
incorporated and unincorporated businesses. Typically, these loans are made for the purchase of equipment, to finance accounts receivable and/or inventory, as well as other business purposes. As of December 31, 2005, commercial business loans
amounted to $23.5 million or 4.1% of the Companys total loan portfolio.

Loan Servicing. The Company services all loans it has originated for
its portfolio. In addition, fees are received for servicing loans which were originated by the Company and sold to third-party investors. As of December 31, 2005, the Company had $30.0 million in loans serviced for third-party investors. Loans
purchased are generally serviced by the company which originated the loans. Those companies collect a fee for servicing the loans.

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

Delinquencies and Classified Assets

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

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

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

As of December 31,
2005, the Companys non-performing assets, which include non-accrual loans, loans delinquent due to maturity, troubled debt restructuring and REO, amounted to $5.1 million or 0.27% of the Companys total assets.

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



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

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

The Company regularly reviews the problem loans and other assets in its portfolio to determine whether any require classification in accordance with the Companys
policy and applicable regulations. As of December 31, 2005, the Companys classified and criticized assets amounted to $15.3 million with $6.0 million classified as substandard, no assets classified as doubtful, $188,000 classified as loss
and $9.1 million identified as special mention.

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



|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|----------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|(Dollar amounts in thousands)                               |  | 2005 |       |   | 2004 |   |       | 2003 |  |   | 2002  |   |  | 2001 |      
|Non-accrual loans:                                          |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate loans                                           |  | $    | 1,547 |   |      | $ | 1,283 |      |  | $ | 1,471 |   |  | $    | 2,137 |   |  | $ | 1,344 |  
|Commercial business loans                                   |  | $    | 1,042 |   |      | $ |      |      |  | $ |      |   |  | $    | 10    |   |  | $ | 859   |  
|Consumer loans                                              |  |      | 1,058 |   |      |   | 187   |      |  |   | 309   |   |  |      | 395   |   |  |   | 299   |  
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-accrual loans                                     |  |      | 3,647 |   |      |   | 1,470 |      |  |   | 1,780 |   |  |      | 2,542 |   |  |   | 2,502 |  
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total as a percentage of total assets                       |  |      | 0.19  | % |      |   | 0.11  | %    |  |   | 0.13  | % |  |      | 0.19  | % |  |   | 0.20  | %
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate acquired through foreclosure                    |  |      | 1,245 |   |      |   | 1,303 |      |  |   | 1,164 |   |  |      | 1,092 |   |  |   | 1,590 |  
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total as a percentage of total assets                       |  |      | 0.07  | % |      |   | 0.09  | %    |  |   | 0.09  | % |  |      | 0.08  | % |  |   | 0.13  | %
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Troubled debt restructuring                                 |  |      | 175   |   |      |   | 915   |      |  |   |      |   |  |      |      |   |  |   |      |  
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total as a percentage of total assets                       |  |      | 0.01  | % |      |   | 0.07  | %    |  |   |      |   |  |      |      |   |  |   |      |  
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-performing assets                                 |  | $    | 5,067 |   |      | $ | 3,688 |      |  | $ | 2,944 |   |  | $    | 3,634 |   |  | $ | 4,092 |  
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-performing assets as a percentage of total assets |  |      | 0.27  | % |      |   | 0.26  | %    |  |   | 0.22  | % |  |      | 0.28  | % |  |   | 0.32  | %
|                                                            |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  

As of December 31, 2005, REO included a property valued at $1.1 million. This REO was originated as a
commercial mortgage loan on a medical office building. The loan began to experience payment problems in 1997 after the loss of a major tenant that occupied one-third of the building. In June of 1998, when the delinquencies began to permanently
exceed 90 days, the Bank initiated foreclosure proceedings. The borrower filed bankruptcy in September of 1998 and the Bank acquired the title to the property. An appraisal in June of 2000 indicated the value of the property to be approximately $1.7
million and the Bank wrote down the property to a value of approximately $1.5 million due to anticipated costs to carry and dispose of the property. An appraisal in January of 2002 indicated the value of the property to be approximately $1.3 million
and the Bank wrote down the property to a value of approximately $1.1 million. During 2003, the Bank was successful in leasing a portion of the building and is currently actively attempting to lease the remainder of the building to realize its
market value and enhance its marketability. An appraisal in September 2004 indicated the value of the property to be approximately $1.1 million, which is currently the value the Bank has on the property. The property was sold in February 2006 for
approximately $1.1 million.



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Allowance for Loan Losses. Management establishes reserves for estimated losses on loans based upon its evaluation
of the pertinent factors underlying the types and quality of loans; historical loss experience based on volume and types of loans; trend in portfolio volume and composition; level and trend in non-performing assets; detailed analysis of individual
loans for which full collectibility may not be assured; determination of the existence and realizable value of the collateral and guarantees securing such loans; and the current economic conditions affecting the collectibility of loans in the
portfolio. Loans that are delinquent 90 days and are placed on nonaccrual status are classified on an individual basis. Residential loans 60 days past due, which are still accruing interest are classified as substandard as per the Companys
asset classification policy. The remaining loans are evaluated and classified as a group. The Company allocates allowances based on the factors described above, which conform to the Companys asset classification policy. The Company analyzes
its loan portfolio each quarter to determine the appropriateness of its allowance for loan losses. Management believes that the Companys allowance for losses as of December 31, 2005 of $4.9 million is appropriate to cover inherent losses
in the portfolio.

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



|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|----------------------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|(Dollar amounts in thousands)                         |  | 2005 |        |   | 2004 |   |       | 2003 |  |   | 2002  |   |  | 2001 |      
|Balance at beginning of period                        |  | $    | 3,940  |   |      | $ | 4,062 |      |  | $ | 4,237 |   |  | $    | 5,147 |   |  | $ | 4,981 |  
|                                                      |  |      |        |   |     
|Allowance for loan losses of acquired companies       |  |      | 1,406  |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   | 154   |  
|                                                      |  |      |        |   |     
|Provision for (recovery of) loan losses               |  |      | 568    |   |      |   | 206   |      |  |   | (106  | ) |  |      | (410  | ) |  |   | 47    |  
|                                                      |  |      |        |   |     
|Charge-offs                                           |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate loans                                     |  |      | (401   | ) |      |   | (223  | )    |  |   |      |   |  |      | (15   | ) |  |   | (7    | )
|Commercial business loans                             |  |      | (78    | ) |      |   | (8    | )    |  |   | (10   | ) |  |      | (482  | ) |  |   | (9    | )
|Consumer loans                                        |  |      | (672   | ) |      |   | (153  | )    |  |   | (77   | ) |  |      | (45   | ) |  |   | (28   | )
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                      |  |      | (1,151 | ) |      |   | (384  | )    |  |   | (87   | ) |  |      | (542  | ) |  |   | (44   | )
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Recoveries                                            |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate loans                                     |  |      | 8      |   |      |   | 32    |      |  |   | 3     |   |  |      | 4     |   |  |   | 5     |  
|Commercial business loans                             |  |      |       |   |      |   |      |      |  |   |      |   |  |      | 27    |   |  |   |      |  
|Consumer loans                                        |  |      | 93     |   |      |   | 24    |      |  |   | 15    |   |  |      | 11    |   |  |   | 4     |  
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                      |  |      | 101    |   |      |   | 56    |      |  |   | 18    |   |  |      | 42    |   |  |   | 9     |  
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Balance at end of period                              |  | $    | 4,864  |   |      | $ | 3,940 |      |  | $ | 4,062 |   |  | $    | 4,237 |   |  | $ | 5,147 |  
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Ratio of net charge-offs to average loans outstanding |  |      | 0.21   | % |      |   | 0.11  | %    |  |   | 0.02  | % |  |      | 0.13  | % |  |   | 0.01  | %
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Ratio of allowance to total loans at end of period    |  |      | 0.86   | % |      |   | 1.06  | %    |  |   | 1.17  | % |  |      | 1.19  | % |  |   | 0.95  | %
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Balance at end of period applicable to:               |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate loans                                     |  | $    | 2,591  |   |      | $ | 3,003 |      |  | $ | 2,886 |   |  | $    | 3,031 |   |  | $ | 3,135 |  
|Commercial business loans                             |  | $    | 227    |   |      | $ | 180   |      |  | $ | 367   |   |  | $    | 340   |   |  | $ | 1,137 |  
|Consumer loans                                        |  |      | 2,046  |   |      |   | 757   |      |  |   | 809   |   |  |      | 866   |   |  |   | 875   |  
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Balance at end of period                              |  | $    | 4,864  |   |      | $ | 3,940 |      |  | $ | 4,062 |   |  | $    | 4,237 |   |  | $ | 5,147 |  
|                                                      |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  

Interest-Earning Deposits

The Company maintains daily interest-earning cash accounts at the FHLB of Pittsburgh. The accounts consist generally of excess funds, which are available to meet loan funding requirements, investment and
mortgage-backed securities purchases and withdrawal of deposit accounts. The accounts earn interest daily at a rate which approximates the rate on federal funds. Such funds are withdrawable upon demand and are not federally insured. Interest-earning
deposits at the FHLB of Pittsburgh totaled $14.3 million as of December 31, 2005.



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##### Table of Contents

Investment Activities

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

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

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



|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|----------------------------- |  | ------------- | ------- | --------------- | - | ---------------- |  | - | ---------- | - |  | - | -------
|(Dollar amounts in thousands) |  | Amortizedcost |         | Unrealizedgains |   | Unrealizedlosses |  |   | Fair value
|Available for sale:           |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|December 31, 2005:            |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|Trust Preferred securities    |  | $             | 500     |                 | $ |                 |  | $ | (57        | ) |  | $ | 443    
|Municipal securities          |  |               | 113,403 |                 |   | 5,273            |  |   | (11        | ) |  |   | 118,665
|Equity securities             |  |               | 1,554   |                 |   | 362              |  |   | (6         | ) |  |   | 1,910  
|Corporate Bonds               |  |               | 85,168  |                 |   | 372              |  |   | (1,575     | ) |  |   | 83,965 
|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                              |  | $             | 200,625 |                 | $ | 6,007            |  | $ | (1,649     | ) |  | $ | 204,983
|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|December 31, 2004:            |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|Trust Preferred securities    |  | $             | 500     |                 | $ |                 |  | $ | (18        | ) |  | $ | 482    
|U.S. Government securities    |  |               | 5,986   |                 |   | 487              |  |   |           |   |  |   | 6,473  
|Municipal securities          |  |               | 106,622 |                 |   | 6,012            |  |   | (193       | ) |  |   | 112,441
|Equity securities             |  |               | 973     |                 |   | 352              |  |   |           |   |  |   | 1,325  
|Corporate Bonds               |  |               | 99,290  |                 |   | 1,948            |  |   | (1,770     | ) |  |   | 99,468 
|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                              |  | $             | 213,371 |                 | $ | 8,799            |  | $ | (1,981     | ) |  | $ | 220,189
|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|December 31, 2003:            |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|Trust Preferred securities    |  | $             | 500     |                 | $ |                 |  | $ | (79        | ) |  | $ | 421    
|U.S. Government securities    |  |               | 5,982   |                 |   | 662              |  |   |           |   |  |   | 6,644  
|Municipal securities          |  |               | 93,857  |                 |   | 5,152            |  |   | (326       | ) |  |   | 98,683 
|Equity securities             |  |               | 1,013   |                 |   | 330              |  |   |           |   |  |   | 1,343  
|Corporate Bonds               |  |               | 112,067 |                 |   | 4,973            |  |   | (3,357     | ) |  |   | 113,683
|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                              |  | $             | 213,419 |                 | $ | 11,117           |  | $ | (3,762     | ) |  | $ | 220,774
|                              |  |               |         |                 |   |                  |  |   |            |   |  |   |        



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



|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|----------------------------------- |  | ------------- | ------- | --------------- | - | ---------------- |  | - | ---------- | - |  | - | -------
|(Dollar amounts in thousands)       |  | Amortizedcost |         | Unrealizedgains |   | Unrealizedlosses |  |   | Fair value
|Available for sale:                 |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                                    |  |               |         |                
|December 31, 2005                   |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|GNMA                                |  | $             | 29,041  |                 | $ | 656              |  | $ | (23        | ) |  | $ | 29,674 
|FNMA                                |  |               | 461,027 |                 |   | 747              |  |   | (7,794     | ) |  |   | 453,980
|FHLMC                               |  |               | 402,937 |                 |   | 987              |  |   | (5,127     | ) |  |   | 398,797
|Collateralized mortgage obligations |  |               | 30,467  |                 |   | 9                |  |   | (847       | ) |  |   | 29,629 
|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                                    |  | $             | 923,472 |                 | $ | 2,399            |  | $ | (13,791    | ) |  | $ | 912,080
|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|December 31, 2004                   |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|GNMA                                |  | $             | 40,881  |                 | $ | 1,319            |  | $ | (4         | ) |  | $ | 42,196 
|FNMA                                |  |               | 392,698 |                 |   | 1,938            |  |   | (2,965     | ) |  |   | 391,671
|FHLMC                               |  |               | 235,749 |                 |   | 2,928            |  |   | (569       | ) |  |   | 238,108
|Collateralized mortgage obligations |  |               | 37,744  |                 |   | 102              |  |   | (216       | ) |  |   | 37,630 
|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                                    |  | $             | 707,072 |                 | $ | 6,287            |  | $ | (3,754     | ) |  | $ | 709,605
|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|December 31, 2003                   |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|GNMA                                |  | $             | 66,304  |                 | $ | 2,410            |  | $ | (40        | ) |  | $ | 68,674 
|FNMA                                |  |               | 384,537 |                 |   | 3,012            |  |   | (2,426     | ) |  |   | 385,123
|FHLMC                               |  |               | 227,275 |                 |   | 4,410            |  |   | (276       | ) |  |   | 231,409
|Collateralized mortgage obligations |  |               | 22,924  |                 |   | 80               |  |   | (48        | ) |  |   | 22,956 
|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        
|                                    |  | $             | 701,040 |                 | $ | 9,912            |  | $ | (2,790     | ) |  | $ | 708,162
|                                    |  |               |         |                 |   |                  |  |   |            |   |  |   |        

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



|                                                                               |  |      |          |   |      |   |          |      |  |   |          |  
|------------------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|(Dollar amounts in thousands)                                                  |  | 2005 |          |   | 2004 |   |          | 2003 | 
|Mortgage-backed securities at the beginning of period                          |  | $    | 709,605  |   |      | $ | 708,162  |      |  | $ | 647,756  |  
|                                                                               |  |      |         
|Mortgage-backed securities acquired in connection with the acquisition of PHSB |  |      | 140,371  |   |      |   |         |      |  |   |         |  
|Purchases                                                                      |  |      | 470,401  |   |      |   | 214,330  |      |  |   | 462,467  |  
|Sales                                                                          |  |      | (189,644 | ) |      |   |         |      |  |   | (19,561  | )
|Repayments                                                                     |  |      | (202,184 | ) |      |   | (205,166 | )    |  |   | (367,859 | )
|Net (amortization) of premium and accretion of discount                        |  |      | (2,545   | ) |      |   | (3,133   | )    |  |   | (4,410   | )
|Change in unrealized gain on mortgage-backed securities available for sale     |  |      | (13,924  | ) |      |   | (4,588   | )    |  |   | (10,231  | )
|                                                                               |  |      |          |   |      |   |          |      |  |   |          |  
|Mortgage-backed securities at the end of period                                |  | $    | 912,080  |   |      | $ | 709,605  |      |  | $ | 708,162  |  
|                                                                               |  |      |          |   |      |   |          |      |  |   |          |  
|Weighted average yield at the end of the period                                |  |      | 4.82     | % |      |   | 4.04     | %    |  |   | 4.16     | %
|                                                                               |  |      |          |   |      |   |          |      |  |   |          |  



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##### Table of Contents

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

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

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

Sources of Funds

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

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

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



|                              |  |        |         |   |       |   |        |      |         |  |       |        |  |   |         |  |       |  
|----------------------------- |  | ------ | ------- | - | ----- | - | ------ | ---- | ------- |  | ----- | ------ |  | - | ------- |  | ----- | -
|(Dollar amounts in thousands) |  | 2005   |         |   | 2004  |   |        | 2003 |        
|Type of Account               |  | Amount |         | % |       |   | Amount |      | %       |  |       | Amount |  | % |        
|Noninterest-bearing deposits  |  | $      | 52,745  |   | 6.3   | % |        | $    | 23,563  |  | 4.1   | %      |  | $ | 21,252  |  | 3.5   | %
|NOW account deposits          |  |        | 84,134  |   | 10.1  | % |        |      | 58,553  |  | 10.1  | %      |  |   | 62,780  |  | 10.4  | %
|Money Market deposits         |  |        | 52,277  |   | 6.3   | % |        |      | 49,332  |  | 8.5   | %      |  |   | 57,681  |  | 9.6   | %
|Passbook account deposits     |  |        | 115,399 |   | 13.8  | % |        |      | 94,439  |  | 16.3  | %      |  |   | 100,749 |  | 16.7  | %
|Time deposits                 |  |        | 529,975 |   | 63.5  | % |        |      | 354,459 |  | 61.0  | %      |  |   | 360,584 |  | 59.8  | %
|                              |  |        |         |   |       |   |        |      |         |  |       |        |  |   |         |  |       |  
|                              |  | $      | 834,530 |   | 100.0 | % |        | $    | 580,346 |  | 100.0 | %      |  | $ | 603,046 |  | 100.0 | %
|                              |  |        |         |   |       |   |        |      |         |  |       |        |  |   |         |  |       |  

The Company had a total of $132.0 million, $70.5 million and $82.3 million in time deposits of $100,000 or more as
of December 31, 2005, 2004 and 2003, respectively.



13



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##### Table of Contents

The following table sets forth, by various rate categories, the amount of time deposits outstanding as of
December 31, 2005, which mature in the periods presented:



|                                             |  |               |         |                       |   |                       |  |                       |        |                       |   |               |  |       |       |  |   |       |  |   |        
|-------------------------------------------- |  | ------------- | ------- | --------------------- | - | --------------------- |  | --------------------- | ------ | --------------------- | - | ------------- |  | ----- | ----- |  | - | ----- |  | - | -------
|(Dollar amounts in thousands) Range of Rates |  | 1 to 12months |         | More than 1to 2 years |   | More than 2to 3 years |  | More than 3to 4 years |        | More than 4to 5 years |   | After 5 years |  | Total
|0.00% to 2.49%                               |  | $             | 46,991  |                       | $ | 4,301                 |  | $                     | 924    |                       | $ | 325           |  | $     |      |  | $ |      |  | $ | 52,541 
|2.50% to 4.49%                               |  |               | 249,692 |                       |   | 117,661               |  |                       | 31,982 |                       |   | 8,325         |  |       | 3,320 |  |   | 1,896 |  |   | 412,876
|4.50% to 6.49%                               |  |               | 41,986  |                       |   | 8,156                 |  |                       | 7,882  |                       |   | 1,253         |  |       | 2,390 |  |   | 2,465 |  |   | 64,132 
|6.50% to 8.49%                               |  |               | 426     |                       |   |                      |  |                       |       |                       |   |              |  |       |      |  |   |      |  |   | 426    
|                                             |  |               |         |                       |   |                       |  |                       |        |                       |   |               |  |       |       |  |   |       |  |   |        
|                                             |  | $             | 339,095 |                       | $ | 130,118               |  | $                     | 40,788 |                       | $ | 9,903         |  | $     | 5,710 |  | $ | 4,361 |  | $ | 529,975
|                                             |  |               |         |                       |   |                       |  |                       |        |                       |   |               |  |       |       |  |   |       |  |   |        

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



|                                             |  |      |         |      |   |         |  |   |        
|-------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|(Dollar amounts in thousands) Range of Rates |  | 2005 |         | 2004 |   | 2003   
|0.00% to 2.49%                               |  | $    | 52,541  |      | $ | 136,758 |  | $ | 165,715
|2.50% to 4.49%                               |  |      | 412,876 |      |   | 181,127 |  |   | 166,873
|4.50% to 6.49%                               |  |      | 64,132  |      |   | 33,145  |  |   | 23,732 
|6.50% to 8.49%                               |  |      | 426     |      |   | 3,429   |  |   | 4,264  
|                                             |  |      |         |      |   |         |  |   |        
|                                             |  | $    | 529,975 |      | $ | 354,459 |  | $ | 360,584
|                                             |  |      |         |      |   |         |  |   |        

As of December 31, 2005, the Company had certificates in amounts of $100,000
or more maturing as follows:



|                                    |  |        |        
|----------------------------------- |  | ------ | -------
|(Dollar amounts in thousands)       |  | Amount
|Three months or less                |  | $      | 72,693 
|More than three through six months  |  |        | 18,504 
|More than six through twelve months |  |        | 8,326  
|More than twelve months             |  |        | 32,432 
|                                    |  |        |        
|                                    |  | $      | 131,955
|                                    |  |        |        

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



|                                                             |  |      |         |   |      |   |         |      |  |   |        |  
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|(Dollar amounts in thousands)                                |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Increase (decrease) before interest credited and acquisition |  | $    | (6,922  | ) |      | $ | (33,616 | )    |  | $ | (12    | )
|Deposits assumed in connection with acquisition of PHSB      |  |      | 243,560 |   |      |   |        |      |  |   |       |  
|Interest credited                                            |  |      | 17,546  |   |      |   | 10,916  |      |  |   | 13,232 |  
|                                                             |  |      |         |   |      |   |         |      |  |   |        |  
|Net deposit increase (decrease)                              |  | $    | 254,184 |   |      | $ | (22,700 | )    |  | $ | 13,220 |  
|                                                             |  |      |         |   |      |   |         |      |  |   |        |  

Borrowings. While deposits are the preferred source of funds for the Companys lending and investment
activities and general business purposes, the Company also borrows funds from the FHLB of Pittsburgh and through repurchase agreements with third parties. In addition, the Company participates as an authorized depository for treasury, tax and loan
accounts on behalf of the Federal Reserve Bank of Cleveland (FRB of Cleveland). Advances from the FHLB of Pittsburgh are secured by the Companys stock in the FHLB, a portion of its first mortgage loans and certain investment securities.



14



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##### Table of Contents

The FHLB has a variety of different advance programs, each with different interest rates, provisions, maximum sizes and
maturities. As of December 31, 2005, the Company had outstanding advances with the FHLB of $693.9 million. The Company has entered into sales of securities under agreements to repurchase (repurchase agreements). Fixed coupon repurchase
agreements are treated as financings and the obligations to repurchase securities sold are reflected as a liability of the Company. The dollar amount of securities underlying the agreements remains as an asset of the Company. The securities
underlying the agreements are delivered to independent third party brokerage firms who arrange the transaction.

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



|                                   |  |      |         |      |   |         |  |   |        
|---------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|(Dollar amounts in thousands)      |  | 2005 |         | 2004 |   | 2003   
|FHLB advances                      |  | $    | 693,927 |      | $ | 601,242 |  | $ | 570,240
|Repurchase agreements              |  |      | 107,000 |      |   | 67,000  |  |   | 47,000 
|ESOP borrowings                    |  |      | 4,725   |      |   | 5,670   |  |   |       
|Corporate borrowings               |  |      | 12,000  |      |   | 13,500  |  |   |       
|Treasury tax and loan note payable |  |      | 221     |      |   | 150     |  |   | 62     
|                                   |  |      |         |      |   |         |  |   |        
|                                   |  | $    | 817,873 |      | $ | 687,562 |  | $ | 617,302
|                                   |  |      |         |      |   |         |  |   |        

Included in the $693.9 million of FHLB advances at December 31, 2005, is approximately $55.5 million of
convertible select advances. These advances reset to the 3-month London Interbank Offer Rate Index (LIBOR) and have various spreads and call dates. At the reset date, if the 3-month LIBOR plus the spread is lower than the contract rate on the
advance, the advance will remain at the contracted rate. The FHLB has the right to call any convertible select advance on its call date or quarterly thereafter. Should the advance be called, the Company has the right to pay off the advance without
penalty. It has historically been the Companys position to pay off the advance and replace it with fixed-rate funding.



15



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##### Table of Contents

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



|                                                            |  |      |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(Dollar amounts in thousands)                               |  | 2005 |         |   | 2004 |   |         | 2003 | 
|FHLB advances:                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Average balance outstanding for the year                    |  | $    | 259,288 |   |      | $ | 209,250 |      |  | $ | 197,395 |  
|Maximum amount outstanding at any month end during the year |  |      | 305,680 |   |      |   | 234,512 |      |  |   | 223,458 |  
|Balance outstanding at year end                             |  |      | 276,814 |   |      |   | 201,218 |      |  |   | 186,455 |  
|Weighted average interest rate during the year              |  |      | 3.63    | % |      |   | 3.01    | %    |  |   | 3.70    | %
|Weighted average interest rate at year end                  |  |      | 3.81    | % |      |   | 3.15    | %    |  |   | 2.92    | %
|                                                            |  |      |        
|Repurchase agreements:                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Average balance outstanding for the year                    |  | $    | 48,667  |   |      | $ | 41,083  |      |  | $ | 42,325  |  
|Maximum amount outstanding at any month end during the year |  |      | 67,000  |   |      |   | 57,000  |      |  |   | 77,000  |  
|Balance outstanding at year end                             |  |      | 37,000  |   |      |   | 57,000  |      |  |   | 37,000  |  
|Weighted average interest rate during the year              |  |      | 3.22    | % |      |   | 1.81    | %    |  |   | 2.64    | %
|Weighted average interest rate at year end                  |  |      | 4.11    | % |      |   | 2.14    | %    |  |   | 3.01    | %
|                                                            |  |      |        
|Treasury tax and loan note:                                 |  |      |         |   |      |   |         |      |  |   |         |  
|Average balance outstanding for the year                    |  | $    | 177     |   |      | $ | 100     |      |  | $ | 86      |  
|Maximum amount outstanding at any month end during the year |  |      | 226     |   |      |   | 181     |      |  |   | 181     |  
|Balance outstanding at year end                             |  |      | 221     |   |      |   | 150     |      |  |   | 62      |  
|Weighted average interest rate during the year              |  |      | 3.11    | % |      |   | 1.11    | %    |  |   | 0.96    | %
|Weighted average interest rate at year end                  |  |      | 4.25    | % |      |   | 2.03    | %    |  |   | 0.82    | %
|                                                            |  |      |        
|Total short term borrowings:                                |  |      |         |   |      |   |         |      |  |   |         |  
|Average balance outstanding for the year                    |  | $    | 308,132 |   |      | $ | 250,433 |      |  | $ | 239,806 |  
|Maximum amount outstanding at any month end during the year |  |      | 372,906 |   |      |   | 291,693 |      |  |   | 300,639 |  
|Balance outstanding at year end                             |  |      | 314,035 |   |      |   | 258,368 |      |  |   | 223,517 |  
|Weighted average interest rate during the year              |  |      | 3.57    | % |      |   | 2.82    | %    |  |   | 3.51    | %
|Weighted average interest rate at year end                  |  |      | 3.85    | % |      |   | 2.93    | %    |  |   | 2.93    | %

Junior Subordinated Notes.

On April 10, 2003, ESB Capital Trust II (Trust II), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $10.0 million variable rate preferred securities with a
stated value and liquidation preference of $1,000 per share. The Company purchased $310,000 of common securities of Trust II. The preferred securities reset quarterly to equal the London Interbank Offer Rate Index (LIBOR) plus 3.25%. Trust IIs
obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by the Trust II to invest in $10.3 million of
variable rate Subordinated Debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the
sole assets of the Trust II. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the Subordinated Debt prior to the maturity date of April 24, 2033, on or after
April 24, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully
defined in the Indenture dated April 10, 2003, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt
would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. Unamortized deferred debt issuance costs associated with
the preferred securities amounted to $135,000 and $195,000 at December 31, 2005 and 2004, respectively, and are amortized on a level yield basis.



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On December 17, 2003, ESB Statutory Trust III (Trust III), a statutory business trust established under Delaware law
that is a subsidiary of the Company, issued $5.0 million variable rate preferred securities with a stated value and liquidation preference of $1,000 per share. The Company purchased $155,000 of common securities of Trust III. The preferred
securities reset quarterly to equal the LIBOR Index plus 2.95%. Trust IIIs obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and
the common securities were utilized by Trust III to invest in $5.2 million of variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities
and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust III. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the
subordinated debt prior to the maturity date of December 17, 2033, on or after December 17, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events,
specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated December 17, 2003, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days
following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal
amount of the subordinated debt redeemed. Unamortized deferred debt issuance costs associated with the preferred securities amounted to $44,000 and $59,000 at December 31, 2005 and 2004, respectively, and are amortized on a level yield basis.

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

Subsidiaries

As of December 31, 2005, the Company had
investments in PennFirst Financial Services, Inc. (PFSI), ESB Capital Trust II (the Trust II), ESB Statutory Trust III (the Trust III), ESB Capital Trust IV (the Trust IV) and THF, Inc., totaling approximately $34.9 million. PFSI, a Delaware
corporation, is engaged in the management of certain investment activities on behalf of the Company. The Trust II, Trust III and Trust IV are Delaware statutory business trusts established to facilitate the issuance of trust preferred securities to
the public by the Company. THF, Inc. is a Pennsylvania corporation established as a title agency to provide residential and commercial loan closing services.

At December 31, 2005, as a Pennsylvania chartered, FDIC insured stock savings bank ESB was authorized under applicable regulations to have a maximum investment of $12.5 million in service corporations. On that date, ESB had a $8.1
million investment in AMSCO, Inc. (AMSCO), one of its two wholly owned subsidiaries.

AMSCO was incorporated in 1974 as a wholly owned subsidiary of ESB
and is engaged in real estate development and construction of 1-4 family residential units independently or in conjunction with its joint ventures. Four of the existing joint ventures are 51% owned by AMSCO and the Bank has provided all development
and construction financing. The four joint ventures have been included in the consolidated financial statements and their operations are reflected within other non-interest income or expense. The Banks loans to AMSCO and related interest have
been eliminated in consolidation. As of December 31, 2005, AMSCO had total assets, consisting primarily of investments in nine joint ventures, of $26.5 million.



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The first joint venture, ESB Bank Building Associates, consists of a 99% interest in a partnership with a businessman in
Wexford, PA, which owns a commercial office building partially utilized as a branch office and loan production office for ESB. ESB provided financing for the project. On January 19, 1999, the Company opened its newly constructed full service
branch office located in Wexford, Allegheny County, PA a quarter mile north of the former branch location. The Company also houses its settlement company THF, Inc. and its financial advisory segment in the Wexford office building. The office space
is leased from ESB Bank Building Associates. As of December 31, 2005, AMSCO had a $331,000 investment in ESB Bank Building Associates.

The second
joint venture, Madison Woods, consists of a 40% interest in a partnership with two local developers. Madison Woods purchased approximately 57 acres of undeveloped land in Moon Township, Allegheny County, PA in October 1998 and developed the land
into a 56-lot subdivision for the purpose of selling the lots for single-family residential construction. ESB provided Madison Woods the capital and financing for the project and Madison Woods has since repaid its loan to ESB. As of
December 31, 2005, 6 of the 56 lots remain unsold. On that date, AMSCO had a $179,000 investment in Madison Woods. The Company accounts for the operating results in Madison Woods using the equity method.

The third joint venture, The Links at Deer Run, consists of a 51% interest in a limited liability corporation (LLC) with a local developer/builder. The Links at Deer Run
purchased approximately 39 acres of undeveloped land adjacent to a golf course in West Deer Township, Allegheny County, PA in April 2001. The LLC has developed the land and began construction on a total of 80 quadplex, 28 duplex and 6 single-family
homes. ESB is providing both development and construction financing for the project. As of December 31, 2005, The Links at Deer Run had outstanding lines of credit with ESB in the amount of $2.8 million with outstanding balances of $1.5 million
and development costs of $3.3 million. As of December 31, 2005, 72 units were closed and 11 units remained in various stages of construction. On that date, AMSCO had a $1.5 million investment in The Links at Deer Run.

The fourth joint venture, McCormick Farms, consists of a 51% interest in a LLC with one of the local developers involved in Madison Woods. McCormick Farms purchased
approximately 147 acres in Moon Township, Allegheny County, PA, in May 2001 and developed the land into a 76-lot subdivision for the purpose of selling the lots for single-family residential construction. ESB is providing the financing for the
project. As of December 31, 2005, McCormick Farms had an outstanding loan balance with ESB in the amount of $407,000. As of December 31, 2005, 33 lots were closed and 43 developed lots are remaining. On that date, AMSCO had a $1.6 million
investment in McCormick Farms.

The fifth joint venture, Brandy One, consists of a 51% interest in a LLC with a local developer/builder. Brandy One
purchased approximately 35 acres of undeveloped land in Connoquenessing Township, Butler County, PA in October 2001. The LLC has begun development work for the purpose of constructing 112 quadplex homes. ESB is providing financing for the project.
As of December 31, 2005, Brandy One had outstanding loans with ESB in the amount of $2.9 million with an outstanding balance of $1.8 million. As of December 31, 2005, 92 units were closed and 20 remain in various stages of construction. On
that date, AMSCO had a $850,000 investment in Brandy One.

The sixth joint venture, The Vineyards at Brandywine, consists of a 51% interest in a limited
partnership (LP) with a local developer/builder. The Vineyards at Brandywine purchased a 100-acre site of undeveloped land adjacent to the Brandy One joint venture project in Connoquenessing Township, Butler County, PA in December 2004. The LP has
begun development work for the purpose of developing 75 single-family home lots in two phases, 48 in Phase I and 27 in Phase II, and constructing single-family detached homes thereon. ESB Bank is providing financing for the project in the form of a
$2.4 million development loan. As of December 31, 2005, The Vineyards at Brandywine had an outstanding loan with ESB of $1.6 million. As of December 31, 2005, there had been no sales activity. On that date, AMSCO had a $97,000 investment
in The Vineyards at Brandywine.

The seventh joint venture, Springfield Partners, consists of a 51% interest in a limited partnership (LP) with a local
developer. Springfield Partners purchased a 27 acre site in Cranberry Township, Butler County, in August 2005. The LP began to develop Springfield Manor into a 25 lot single family subdivision. Financing was provided by ESB Bank in the form of a
development loan in the amount of $1.5 million. There was an outstanding loan balance of $930,000 on December 31, 2005. There was no sales activity at year end, and AMSCO had an investment of $420,000 in the partnership.

The eighth joint venture, The Meadows at Hampton, consists of a 51% interest in a limited partnership (LP) with a local developer/contractor. The partnership purchased a
42 acre site in June 2005 in Hampton Township, Allegheny County. The partnership will develop the site into 32 duplex building lots and construct 64 duplex units. ESB Bank is providing the financing for the project in the form of two loans, a
development loan in the amount of $2.9 million and a line of credit in the amount of $2. million for the construction of the units. As of December 31, 2005 there had been no sales activity. The outstanding loan balance at year-end was $237,000
and AMSCO had an investment of $1.5 million.



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The ninth joint venture, Cobblestone Village, consists of a 51% interest in a limited partnership (LP) with a local
developer/builder. The partnership purchased a 33 acre site in June 2005 in Adams Township, Butler County. The partnership will develop the site into 25 quadplex building lots and construct 25 buildings containing a total of 100 units. ESB Bank is
providing financing in the form of two loans, a development loan in the amount of $4.8 million and a line of credit in the amount of $2.5 million for the construction of the buildings. As of December 31, 2005 there had been no sales activity.
The outstanding loan balance at year-end was $1.8 million and AMSCO had an investment of $969,000.

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

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

REGULATION

Set forth below is a brief description of certain laws and regulations, which relate to the regulation of the Company and the
Bank. The description of these laws and regulations, as well as descriptions of laws and regulations contained elsewhere herein does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations. Certain
federal banking laws have been recently amended.

Regulation of the Company

General. The Company is a registered savings and loan holding company pursuant to the Home Owners Loan Act, as amended (HOLA). As such, the Company is subject to OTS regulations, examinations, supervision
and reporting requirements. As a subsidiary of a savings and loan holding company, ESB is subject to certain restrictions in its dealings with the Company and affiliates thereof.

Activities Restrictions. There are generally no restrictions on the activities of a savings and loan holding company, which controlled only one subsidiary savings association on or before May 4, 1999 (a
grandfathered holding company). However, if the Director of the OTS determines that there is reasonable cause to believe that the continuation by a savings and loan holding company of an activity constitutes a serious risk to the
financial safety, soundness or stability of its subsidiary savings association, the Director may impose such restrictions as it deems necessary to address such risk, including limiting (i) payment of dividends by the savings association;
(ii) transactions between the savings association and its affiliates; and (iii) any activities of the savings association that might create a serious risk that the liabilities of the holding company and its affiliates may be imposed on the
savings association. Notwithstanding the above rules as to permissible business activities of unitary savings and loan holding companies, if the savings association subsidiary of such a holding company fails to meet the qualified thrift lender (QTL)
test, then such unitary holding company also shall become subject to the activities restrictions applicable to multiple savings and loan holding companies and, unless the savings association requalifies as a QTL within one year thereafter, shall
register as, and become subject to the restrictions applicable to, a bank holding company. As of December 31, 2005, the Company was a grandfathered holding company.

If a savings and loan holding company acquires control of a second savings association and holds it as a separate institution, the holding company becomes a multiple savings and loan holding company. As a general
rule, multiple savings and loan holding companies are subject to restrictions on their activities that are not imposed on a grandfathered holding company. They could not commence or continue any business activity other than: (i) those permitted
for a bank holding company under section 4(c) of the Bank Holding Company Act (unless the Director of the OTS by regulation prohibits or limits such 4(c) activities); (ii) furnishing or performing management services for a subsidiary savings
association; (iii) conducting an insurance agency or escrow business; (iv) holding, managing, or liquidating assets owned by or acquired from a subsidiary savings association; (v) holding or managing properties used or occupied by a
subsidiary savings association; (vi) acting as trustee under deeds of trust; or (vii) those activities authorized by regulation as of March 5, 1987, to be engaged in by multiple savings and loan holding companies.



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The HOLA requires every savings association subsidiary of a savings and loan holding company to give the OTS at least 30
days advance notice of any proposed dividends to be made on its guarantee, permanent or other non-withdrawable stock, or else such dividend will be invalid.

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

In addition, Sections 22(g) and (h) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal stockholders. Under Section 22(h), loans to a director, an executive officer and to a greater than 10% stockholder of a savings institution (a principal
stockholder), and certain affiliated interests of either, may not exceed, together with all other outstanding loans to such person and affiliated interests, the savings institutions loans to one borrower limit (generally equal to 15% of
the institutions unimpaired capital and surplus). Section 22(h) also requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other
persons unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees of the institution and (ii) does not give preference to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of the savings institution. Section 22(h) also requires prior board approval for certain loans. In addition, the aggregate amount of extensions of credit by a savings institution to
all insiders cannot exceed the institutions unimpaired capital and surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers. At December 31, 2005, the Bank was in compliance with the above
restrictions.

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

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

The Federal Reserve Board may approve an application by a bank holding company to acquire control of a savings association. A bank holding company that controls a
savings association may merge or consolidate the assets and liabilities of the savings association with, or transfer assets and liabilities to, any subsidiary bank, which is a member of the Bank Insurance Fund (BIF) with the approval of the
appropriate federal banking agency and the Federal Reserve Board. As a result of these provisions, there have been a number of acquisitions of savings associations by bank holding companies in recent years.



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No company may acquire control of a savings and loan holding company after May 4, 1999, unless the company is
engaged only in activities traditionally permitted to a multiple savings and loan holding company or permitted to a financial holding company under section 4(k) of the Bank Holding Company Act. Existing savings and loan holding companies and those
formed pursuant to an application filed with the OTS before May 4, 1999 (see Activities Restrictions and grandfathered holding companies above) may engage in any activity including non-financial or commercial activities
provided such companies control only one savings and loan association that meets the QTL test. Corporate reorganizations are permitted, but the transfer of grandfathered unitary thrift holding company status through acquisition is not permitted.

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

Regulation of the Bank

General. In January 2004, the
Bank converted from a federal chartered savings bank to a Pennsylvania chartered savings bank. As a Pennsylvania chartered savings bank, the Bank is subject to extensive regulation and examination by the Department and by the FDIC, which insures its
deposits to the maximum extent permitted by law. The federal and state laws and regulations which are applicable to banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, the timing of
the availability of deposited funds and the nature and amount of and collateral for certain loans. There are periodic examinations by the Department and the FDIC to test the Banks compliance with various regulatory requirements. This
regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory
authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for
regulatory purposes. Any change in such regulation, whether by the Department, the FDIC or the Congress could have a material adverse impact on the Bank and its operations. The Bank is also a member of the FHLB of Pittsburgh and is subject to
certain limited regulation by the Federal Reserve Board.

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

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

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



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

Insurance of
Accounts. The deposits of the Bank are insured up to $100,000 per insured member (as defined by law and regulation) by the SAIF, administered by the FDIC and are backed by the full faith and credit of the U.S. Government. As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the
FDIC.

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

Each FDIC-insured institution is assigned to one of three capital groups which are based solely on the level of an institutions capital
 well capitalized, adequately capitalized and undercapitalized- and are defined in the same manner as the regulations establishing the prompt corrective action system discussed below. These three groups are
then divided into three subgroups, which reflect varying levels of supervisory concern, from those which are considered to be healthy to those which are considered to be of substantial supervisory concern. The matrix so created results in nine
assessment risk classifications, with rates ranging from zero for well capitalized, healthy institutions, such as the Bank, to 27 basis points for undercapitalized institutions with substantial supervisory concerns.

In addition, all institutions with deposits insured by the FDIC are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation, a
mixed-ownership government corporation established to recapitalize the predecessor to the SAIF. The current assessment rate is .0132% of insured deposits and is adjusted quarterly. These assessments will continue until the Financing Corporation
bonds mature in 2019.

Capital Requirements.The FDIC has promulgated regulations and adopted a statement of policy regarding the capital adequacy
of state-chartered banks which, like the Bank, are not members of the Federal Reserve System. The FDICs capital regulations establish a minimum 3.0% Tier I leverage capital requirement for the most highly-rated state-chartered, non-member
banks, with an additional cushion of at least 100 to 200 basis points for all other state-chartered, non-member banks, which effectively will increase the minimum Tier I leverage ratio for such other banks to 4.0% to 5.0% or more. Under the
FDICs regulation, highest-rated banks are those that the FDIC determines are not anticipating or experiencing significant growth and have well diversified risk, including no undue interest rate risk exposure, excellent asset quality, high
liquidity, good earnings and, in general, which are considered a strong banking organization, rated composite 1 under the Uniform Financial Institutions Rating System. Leverage or core capital is defined as the sum of common stockholders
equity (including retained earnings), noncumulative perpetual preferred stock and related surplus, and minority interests in consolidated subsidiaries, minus all intangible assets other than certain qualifying supervisory goodwill, and certain
purchased mortgage servicing rights and purchased credit and relationships.

The FDIC also requires that savings banks meet a risk-based capital standard.
The risk-based capital standard for savings banks requires the maintenance of total capital which is defined as Tier I capital and supplementary (Tier 2 capital) to risk weighted assets of 8%. In determining the amount of risk-weighted assets, all
assets, plus certain off balance sheet assets, are multiplied by a risk-weight of 0% to 100%, based on the risks the FDIC believes are inherent in the type of asset or item.



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The components of Tier I capital are equivalent to those discussed above under the 3% leverage standard. The components
of supplementary (Tier 2) capital include certain perpetual preferred stock, certain mandatory convertible securities, certain subordinated debt and intermediate preferred stock and general allowances for loan losses. Allowance for loan losses
includable in supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted toward supplementary capital cannot exceed 100% of core capital. At December 31, 2005, the Bank met each of its
capital requirements.

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

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

Prompt Corrective Action. Under Section 38 of the FDIA, each federal banking agency is required to implement a system of prompt corrective action for
institutions which it regulates. The federal banking agencies (including the FDIC) have adopted substantially similar regulations to implement Section 38 of the FDIA. Under the regulations, a savings bank shall be deemed to be
(i) well capitalized if it has total risk-based capital of 10.0% or more, has a Tier 1 risk-based ratio of 6.0% or more, has a Tier 1 leverage capital ratio of 5.0% or more and is not subject to any order or final capital directive
to meet and maintain a specific capital level for any capital measure, (ii) adequately capitalized if it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 4.0% or more and a Tier 1 leverage
capital ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of well capitalized, (iii) undercapitalized if it has a total risk-based capital ratio that is less than 8.0%, a Tier 1
risk-based capital ratio that is less than 4.0% or a Tier 1 leverage capital ratio that is less than 4.0% (3.0% under certain circumstances), (iv) significantly undercapitalized if it has a total risk-based ratio that is less than
6.0%, a Tier 1 risk-based capital ratio that is less than 3.0% or a Tier 1 leverage capital ratio that is less than 3.0%, and (v) critically undercapitalized if it has a ratio of tangible equity to total assets that is equal to or
less than 2.0%. Section 38 of the FDIA and the regulations promulgated thereunder also specify circumstances under which the FDIC may reclassify a well capitalized savings bank as adequately capitalized and may require an adequately capitalized
savings bank or an undercapitalized savings bank to comply with supervisory actions as if it were in the next lower category (except that the FDIC may not reclassify a significantly undercapitalized savings bank as critically undercapitalized). At
December 31, 2005, the Bank was in the well capitalized category.

Loans-to-One Borrower Limitation. Under federal regulations,
with certain limited exceptions, a Pennsylvania chartered savings bank may lend to a single or related group of borrowers on an unsecured basis an amount equal to no greater than 15% of its unimpaired capital and surplus. An additional
amount may be lent, equal to no greater than 10% of unimpaired capital and surplus, if such loan is secured by readily marketable collateral, which is defined to include certain securities and bullion, but generally does not include real estate.

Activities and Investments of Insured State-Chartered Banks. Section 24 of the FDIA, as amended by the Federal Deposit Insurance Corporation
Improvement Act of 1991, generally limits the activities and equity investments of FDIC-insured, state-chartered banks to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank
generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank is not prohibited from, among other things, (i) acquiring or
retaining a majority interest in a subsidiary, (ii) investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing
project, provided that such limited partnership investments may not exceed 2% of the banks total assets, (iii) acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors, trustees and
officers liability insurance coverage or bankers blanket bond group insurance coverage for insured depository institutions, and (iv) acquiring or retaining the voting shares of a depository institution if certain requirements are
met.



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##### Table of Contents

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

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

Regulatory Enforcement Authority. Federal banking regulators have substantial enforcement authority over the financial
institutions that they regulate including, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated
parties, as defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or
untimely reports filed with regulatory authorities. Except under certain circumstances, federal law requires public disclosure of final enforcement actions by the federal banking agencies.

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

Major provisions in the legislation include: maintaining basic deposit and municipal account insurance coverage at $100,000 but providing for a new basic insurance
coverage for retirement accounts of $250,000. Insurance coverage for basic deposit and retirement accounts could be increased for inflation every five years in $10,000 increments beginning in 2011; providing the FDIC with the ability to set the
designated reserve ratio within a range of between 1.15 percent and 1.50 percent, rather than maintaining 1.25 percent at all times regardless of prevailing economic conditions; providing a one-time assessment credit of $4.7 billion to banks and
savings associations in existence on December 31, 1996. The institutions qualifying for the credit may use it to offset future premiums with certain limitations; requiring the payment of dividends of 100% of the amount that the insurance fund
exceeds 1.5% of the estimated insured deposits and the payment of 50% of the amount that the insurance fund exceeds 1.35% of the estimated insured deposits (when the reserve is greater than 1.35% but no more than 1.5%); the merger of the SAIF and
BIF must occur no later than July 1, 2006. Other provisions will become effective within 90 days of the publication date of the final FDIC regulations implementing the legislation.



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FEDERAL AND STATE TAXATION

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

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

Bad Debt Reserves. Prior to 1996, the Bank was permitted under the Code to
deduct an annual addition to a reserve for bad debts in determining taxable income, subject to certain limitations. Subsequent to 1995, the Banks bad debt deduction is based on actual net charge-offs. Bad debt deductions for income tax
purposes are included in taxable income of later years only if the Banks base year bad debt reserve is used subsequently for purposes other than to absorb bad debt losses. Because the Bank does not intend to use the reserve for purposes other
than to absorb losses, no deferred income taxes have been provided prior to 1987. Retained earnings at December 31, 2004 (the most recent date for which a tax return has been filed) include approximately $15.2 million and $ 2.5 million
that will be added on the 2005 return as a result of the PHSB acquisition, representing such bad debt deductions for which no deferred income taxes have been provided.

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

Minimum Tax. For taxable years beginning after December 31, 1986, the Code imposes an alternative minimum tax at a rate of 20%. The alternative minimum tax
generally will apply to a base of regular taxable income plus certain tax preferences (alternative minimum taxable income or AMTI) and will be payable to the extent such AMT tax is in excess of regular income tax. Items of tax preference that
constitute AMTI include (a) tax-exempt interest on newly issued (generally, issued on or after August 8, 1986) private activity bonds other than certain qualified bonds and (b) 75% of the excess (if any) of (i) adjusted current
earnings as defined in the Code, over (ii) AMTI (determined without regard to this preference and prior to reduction by net operating losses). Net operating losses can offset no more than 90% of AMTI. Certain payments of alternative minimum tax
may be used as credits against regular tax liabilities in future years. As of December 31, 2004, the Company has a minimum tax credit carry forward of $1,699,311.

Pennsylvania Taxation. The Company is subject to the Pennsylvania Corporate Net Income Tax and Capital Stock and Franchise Tax. The Corporate Net Income Tax rate is currently 9.99% and is imposed on the
Companys unconsolidated taxable income for federal purposes with certain adjustments. In general, the Capital Stock Tax is a property tax imposed at a rate of 0.699% of a corporations capital stock value, which is determined in
accordance with a fixed formula based on average net income and net worth.

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

Other Matters. The Company and its subsidiaries file a consolidated federal income tax return. Tax years 2002, 2003 and 2004 are open under the statute of
limitations and subject to review by the Internal Revenue Service.



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Personnel

As
of December 31, 2005, the Company had 221 full-time and 61 part-time employees, respectively. The employees are not represented by a collective bargaining unit, and the Company considers its relationship with its employees to be good.

Availability of Information

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



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##### Table of Contents

Item 1A. Risk Factors

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

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

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

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

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

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

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

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

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



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

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

We face strong competition which may adversely affect our
profitability.

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

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

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

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

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

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

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

Item 1B. Unresolved Staff Comments

Not Applicable



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Item 2. Properties

The following table sets forth certain information with respect to the offices and real property
of the Company as of December 31, 2005:



|                                                                     |  |                 |  |                       |  |                               |           |                           |      |  
|-------------------------------------------------------------------- |  | --------------- |  | --------------------- |  | ----------------------------- | --------- | ------------------------- | ---- | -
|Location                                                             |  | Owned or Leased |  | Lease Expiration Date |  | Net Book Value or Annual
Rent |           | Percent of Total Deposits |     
|Corporate Headquarters and ESB Main Office:                          |  |                 |  |                       |  |                               |           |                           |      |  
|Ellwood City Office 600 Lawrence Avenue, Ellwood City, PA 16117      |  | Owned           |  |                      |  | $                             | 1,601,060 |                           | 18.4 | %
|ESB Branch Offices:                                                  |  |                 |  |                       |  |                               |           |                           |      |  
|Aliquippa Office 2301 Sheffield Road, Aliquippa, PA 15001            |  | Owned           |  |                      |  | $                             | 57,176    |                           | 4.9  | %
|Ambridge Office 506 Merchant Street, Ambridge, PA 15003              |  | Owned           |  |                      |  | $                             | 75,535    |                           | 5.7  | %
|Baldwin Office 5035 Curry Road, Pittsburgh, PA 15236                 |  | Owned           |  |                      |  | $                             | 690,409   |                           | 4.1  | %
|Beaver Office 701 Corporation Street, Beaver, PA 15009               |  | Owned           |  |                      |  | $                             | 449,633   |                           | 4.6  | %
|Beaver Falls Office 1427 Seventh Avenue, Beaver Falls, PA 15010      |  | Owned           |  |                      |  | $                             | 199,279   |                           | 3.1  | %
|Beechview Office 1550 Beechview Avenue, Pittsburgh, PA 15216         |  | Leased          |  | 10/31/10              |  | $                             | 30,000    |                           | 2.1  | %
|Center Township Office 3531 Brodhead Road, Monaca, PA 15061          |  | Owned           |  |                      |  | $                             | 765,665   |                           | 3.6  | %
|Chippewa Office 2521 Darlington Road, Beaver Falls, PA 15010         |  | Owned           |  |                      |  | $                             | 646,747   |                           | 5.5  | %
|Coraopolis Office 900 Fifth Avenue, Coraopolis, PA 15108             |  | Owned           |  |                      |  | $                             | 65,198    |                           | 2.0  | %
|Darlington Office 233 Second Street, Darlington, PA 16115            |  | Owned           |  |                      |  | $                             | 221,344   |                           | 1.2  | %
|Fox Chapel Office 1060 Freeport Road, Pittsburgh, PA 15238           |  | Owned           |  |                      |  | $                             | 197,318   |                           | 5.4  | %
|Franklin Township Office 1793 Mercer Road, Ellwood City, PA 16117    |  | Owned           |  |                      |  | $                             | 507,913   |                           | 4.7  | %
|Hopewell Office 2293 Broadhead Road, Aliquippa, PA 15001             |  | Owned           |  |                      |  | $                             | 226,487   |                           | 3.2  | %
|Neshannock Office 3360 Wilmington Road, New Castle, PA 16105         |  | Owned           |  |                      |  | $                             | 1,381,503 |                           | 1.4  | %
|New Brighton Office 800 Third Avenue, New Brighton, PA 15066         |  | Owned           |  |                      |  | $                             | 39,852    |                           | 2.4  | %
|North Shore Office 807 Middle Street, Pittsburgh, PA 15212           |  | Owned           |  |                      |  | $                             | 40,407    |                           | 2.6  | %
|Northern Lights Office 1555 Beaver Road, Baden, PA 15005             |  | Leased          |  | 04/30/08              |  | $                             | 30,000    |                           | 2.8  | %
|Shenango Township Office 2656 Ellwood Road, New Castle, PA 16101     |  | Leased          |  | 04/30/07              |  | $                             | 50,160    |                           | 7.3  | %
|Spring Hill Office Itin & Rhine Streets, Pittsburgh, PA 15212        |  | Owned           |  |                      |  | $                             | 396,045   |                           | 2.7  | %
|Troy Hill Office 1706 Lowrie Street, Pittsburgh, PA 15212            |  | Owned           |  |                      |  | $                             | 371,342   |                           | 4.4  | %
|Wexford Office 101 Wexford Bayne Road, Wexford, PA 15090             |  | Owned           |  |                      |  | $                             | 1,209,273 |                           | 4.7  | %
|Zelienople Office 17 Northgate Plaza, Harmony, PA 16037              |  | Leased          |  | 11/30/07              |  | $                             | 18,000    |                           | 3.2  | %
|Other Properties:                                                    |  |                 |  |                       |  |                               |           |                           |      |  
|Drive-through Facility 618 Beaver Avenue, Ellwood City, PA 16117     |  | Owned           |  |                      |  | $                             | 23,518    |                           | NA   |  
|Parking Lot 611 Lawrence Avenue, Ellwood City, PA 16117              |  | Owned           |  |                      |  | $                             | 17,639    |                           | NA   |  
|Training Center 632 Lawrence Avenue, Ellwood City, PA 16117          |  | Owned           |  |                      |  | $                             | 85,816    |                           | NA   |  
|Findlay Township Property Route 30, Clinton, PA 15026                |  | Owned           |  |                      |  | $                             | 54,000    |                           | NA   |  
|North Shore Property One North Shore, Suite 120, Pittsburgh PA 15212 |  | Leased          |  | 02/28/10              |  | $                             | 71,622    |                           | NA   |  
|Springdale Office 849 Pittsburgh Street, Springdale, PA 15144        |  | Owned           |  |                      |  | $                             | 85,330    |                           | NA   |  
|Rochester Office 229 Brighton Avenue, Rochester, PA 15074            |  | Owned           |  |                      |  | $                             | 45,875    |                           | NA   |  



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Item 3. Legal Proceedings

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

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

Not Applicable



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##### Table of Contents

PART II

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

The information required herein is incorporated by reference from the section captioned Stock and Dividend Information of the Companys 2005 Annual Report to Stockholders included as Exhibit 13 hereto (2005 Annual Report).

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



|                    |  |                                  |  |                              |       |                                                                        |        |                                                                                    |        
|------------------- |  | -------------------------------- |  | ---------------------------- | ----- | ---------------------------------------------------------------------- | ------ | ---------------------------------------------------------------------------------- | -------
|Period              |  | Total Number of Shares Purchased |  | Average Price Paid per Share |       | Total Number of Shares as Part of Publicly Announced Plans or Programs |        | Maximum Number of Shares that May Yet Be Purchased
Under the Plans or Programs (1)
|October 1-31, 2005  |  | 2,593                            |  | $                            | 12.04 |                                                                        | 2,593  |                                                                                    | 213,295
|November 1-30, 2005 |  | 62,060                           |  |                              | 12.65 |                                                                        | 62,060 |                                                                                    | 151,235
|December 1-31, 2005 |  | 9,182                            |  |                              | 11.74 |                                                                        | 9,182  |                                                                                    | 142,053
|                    |  |                                  |  |                              |       |                                                                        |        |                                                                                    |        
|Totals              |  | 73,835                           |  | $                            | 12.52 |                                                                        | 73,835 |                                                                                    | 142,053
|                    |  |                                  |  |                              |       |                                                                        |        |                                                                                    |        

---

|(1) | On December 23, 2004, the Company announced its current program to repurchase up to 5% of the outstanding shares of common stock of the Company, or 533,700 shares. The program
does not have an expiration date and all shares are purchased in the open market or by privately negotiated transactions, as in the opinion of management, market conditions warrant.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 6. Selected Financial Data

The information required herein is incorporated by reference from the section
captioned Selected Consolidated Financial Data of the Companys 2005 Annual Report.

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

The
information required herein is incorporated by reference from the section captioned Managements Discussion and Analysis of Financial Condition and Results of Operations of the Companys 2005 Annual Report.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The information required herein is
incorporated by reference from the section captioned Managements Discussion and Analysis of Financial Condition and Results of Operations  Asset and Liability Management of the Companys 2005 Annual Report.

Item 8. Financial Statements and Supplementary Data

The information required herein is incorporated by reference
from the sections captioned Consolidated Financial Statements, Notes to Consolidated Financial Statements, Managements Responsibility for Financial Statements, Report on Managements Assessment of
Internal Controls Over Financial Reporting, Report of Independent Registered Public Accounting Firm (which report relates to managements assessment of internal controls), and the Report of S R Snodgrass, A.C.,
Independent Registered Public Accounting Firm of the Companys 2005 Annual Report.

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



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of ESB Financial Corporation

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

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

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



|                        
|------------------------
|/s/ Ernst & Young LLP   
|Pittsburgh, Pennsylvania
|March 8, 2005           

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

The information
required herein is incorporated by reference from the selection titled Ratification of Selection of Independent Registered Public Accounting Firm of the Companys Proxy Statement (Proxy Statement) for the Annual Meeting of
Stockholders to be held on April 19, 2006.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of December 31,
2005, an evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer and Chief Financial Officer, on the effectiveness of the design and operation of the
Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Companys management, including the Chief Executive Officer and Chief
Financial Officer, concluded that the Companys disclosure controls and procedures were effective as of December 31, 2005.

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

Management Report on Internal Control over Financial
Reporting.The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Managements assessment of
internal control over financial reporting for the fiscal year ended December 31, 2005 is included in Item 8.



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Accountants Report.Managements assessment of the effectiveness of the Companys internal control over
financial reporting as of December 31, 2005 has been audited by S R Snodgrass, A.C., an independent registered public accounting firm, as stated in its report included in Item 8.

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

Item 9B. Other Information

Not applicable

PART III

Item 10. Directors and Executive Officers of the Registrant

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

Item 11. Executive Compensation

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

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

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

The
following information sets forth certain information for all equity compensation plans and individual compensation agreements (whether with employees or non-employees, such as directors) in effect as of December 31, 2005.

Equity Compensation Plan Information



|                                                           |  |                                                                                                    |  |                                                                                    |      |                                                                                                                                                       |        
|---------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | -------
|Plan Category                                              |  | Number of securities to be issued upon exercise of outstanding
options, warrants and rights (1)(2) |  | Weighted-average exercise price of outstanding options,
warrants and rights (1)(2) |      | Number of securities remaining available for future
issuance under equity compensations plans (excluding securities reflected in the first column)(2)
|Equity compensation plans approved by security holders     |  | 876,698                                                                                            |  | $                                                                                  | 9.83 |                                                                                                                                                       | 647,360
|Equity compensation plans not approved by security holders |  |                                                                                                   |  |                                                                                    |     |                                                                                                                                                       |       
|                                                           |  |                                                                                                    |  |                                                                                    |      |                                                                                                                                                       |        
|Total                                                      |  | 876,698                                                                                            |  | $                                                                                  | 9.83 |                                                                                                                                                       | 647,360
|                                                           |  |                                                                                                    |  |                                                                                    |      |                                                                                                                                                       |        

---

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

|(2) | The table does not include information for equity compensation plans assumed by the Company in connection with acquisitions of the companies which originally established those
plans. As of December 31, 2005, a total of 44,703 shares of common stock were issuable with a weighted-average exercise price of $4.05 upon exercise of outstanding options and 20,755 shares of restricted stock were outstanding which had not yet
vested under those assumed plans. No additional options and 10,848 shares of restricted stock may be granted under the assumed plans.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Item 13. Certain Relationships and Related Transactions

The information required herein is incorporated by reference
from the subsection captioned Executive Compensation  Indebtedness of Management of the Proxy Statement.

Item 14. Principal Accountant Fees and Services

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



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PART IV

Item 15. Exhibits and Financial Statement Schedules



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



| | (1) | The following financial statements are incorporated by reference from Item 8 hereof (See Exhibit 13):
| | --- | -----------------------------------------------------------------------------------------------------

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Condition as of December 31, 2005 and 2004

Consolidated
Statements of Operations for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in Stockholders
Equity for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003

Notes to Consolidated Financial Statements



| | (2) | All schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because of the absence of conditions under which they are required or
because the required information is included in the Consolidated Financial Statements and related notes thereto.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) (a) | The following exhibits are filed as part of this Form 10-K, and this list includes the Exhibit Index.
| | ------- | -----------------------------------------------------------------------------------------------------



|      |  |                                                                                                                         
|----- |  | ------------------------------------------------------------------------------------------------------------------------
|No.   |  | Exhibits                                                                                                                
|3 (a) |  | Amended and Restated Articles of Incorporation (1)                                                                      
|      | 
|3 (b) |  | Bylaws(1)                                                                                                               
|      | 
|4     |  | Specimen Common Stock Certificate (2)                                                                                   
|      | 
|10(a) |  | 1990 Stock Option Plan (2)(8)                                                                                           
|      | 
|10(b) |  | Employee Stock Ownership Plan (2)(8)                                                                                    
|      | 
|10(c) |  | 1992 Stock Incentive Plan (3)(8)                                                                                        
|      | 
|10(d) |  | 1997 Stock Option Plan (4)(8)                                                                                           
|      | 
|10(e) |  | 2001 Stock Option Plan (5)(8)                                                                                           
|      | 
|10(f) |  | 2005 Stock Incentive Plan (8)(9)                                                                                        
|      | 
|10(g) |  | Amended Employment Agreement between the Company and Charlotte A. Zuschlag dated December 1, 2002 (6)(8)                
|      | 
|10(h) |  | Amended Employment Agreement between the Bank and Charlotte A. Zuschlag dated December 1, 2002 (6)(8)                   
|      | 
|10(i) |  | Amended Change in Control Agreement among the Company and the Bank and Charles P. Evanoski dated December 1, 2002 (6)(8)
|      | 
|10(j) |  | Amended Change in Control Agreement among the Company and the Bank and Frank D. Martz dated December 1, 2002 (6)(8)     
|      | 
|10(k) |  | Amended Change in Control Agreement among the Company and the Bank and Todd F. Palkovich dated December 1, 2002 (6)(8)  
|      | 
|10(l) |  | Amended Change in Control Agreement among the Company and the Bank and Thomas F. Angotti dated December 1, 2002 (6)(8)  
|      | 
|10(m) |  | Change in Control Agreement among the Company and the Bank and Bonita L. Wadding dated January 1, 2004 (10)(8)          
|      | 
|10(n) |  | Change in Control Agreement among the Company and the Bank and Richard E. Canonge dated February 11, 2005 (10)(8)       
|      | 
|10(o) |  | Supplemental Executive Retirement Plan (6)(8)                                                                           
|      | 
|10(p) |  | Excess Benefit Plan (6)(8)                                                                                              
|      | 
|10(q) |  | Directors Retirement Plan (6)(8)                                                                                       
|      | 
|10(r) |  | Workingmens Bank Restricted Stock Plan and Trust Agreement (11)(8)                                                      
|      | 
|10(s) |  | Troy Hill Bancorp Inc. Recognition and Retention Plan and Trust Agreement (12)(8)                                       
|      | 
|13    |  | 2005 Annual Report to Shareholders (7)                                                                                  
|      | 
|21    |  | Subsidiaries of the Registrant - Reference is made to Item 1. Business - Subsidiaries for the required information.   
|      | 
|23.1  |  | Consent of S R Snodgrass, A.C. (7)                                                                                      
|      | 
|23.2  |  | Consent of Ernst & Young LLP (7)                                                                                        



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|     |  |                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 (7)
|     | 
|31.2 |  | Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 (7)
|     | 
|32.1 |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (7)                                                                   
|     | 
|32.2 |  | Certification of the Chief Financial Officer Pursuant Section 906 of the Sarbanes-Oxley Act of 2002 (7)                                                                  

---

|(1) | Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on March 27, 1991.
|--- | ------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference from the Registration Statement on Form S-4 (Registration No. 33-39219) filed by the Company with the SEC on March 1, 1991.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on March 29, 1993.
|--- | ------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on March 30, 1998.
|--- | ------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference from the definitive Proxy Statement filed by the Company with the SEC on March 16, 2001.
|--- | ------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on March 27, 2003.
|--- | ------------------------------------------------------------------------------------------------------------------

|(7) | Filed herewith
|--- | --------------

|(8) | Management contract or compensatory plan or arrangement.
|--- | --------------------------------------------------------

|(9) | Incorporated by reference from the definitive Proxy Statement filed by the Company with the SEC on March 18, 2005.
|--- | ------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on March 16, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference from the definitive proxy statement filed by WSB Holding Company (File No. 0-22997) with the SEC on February 4, 1998.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Incorporated by reference from the Annual Report on Form 10-KSB for the year ended June 30, 1995 filed by Troy Hill Bancorp, Inc. (File No. 0-24350) with the SEC on September 28,
1995.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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



| | (c) | There are no other financial statements and financial statement schedules which were excluded from the 2005 Annual Report, which are required to be included herein.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |                           |  |                                      
|-------------------- |  | ------------------------- |  | -------------------------------------
|                     |  | ESB FINANCIAL CORPORATION
|                     |  |                          
|Date: March 13, 2006 |  | By:                       |  | /s/ Charlotte A. Zuschlag            
|                     |  |                           |  | Charlotte A. Zuschlag                
|                     |  |                           |  | President and Chief Executive Officer
|                     |  |                           |  | (Duly Authorized Representative)     

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



|    |  |                                                         |  |                     
|--- |  | ------------------------------------------------------- |  | --------------------
|By: |  | /s/ Charlotte A. Zuschlag                               |  | Date: March 13, 2006
|    |  | Charlotte A. Zuschlag                                   |  |                     
|    |  | President and Chief Executive Officer, Director         |  |                     
|    |  | (Principal Executive Officer)                           |  |                     
|    |  |                                                        
|By: |  | /s/ Charles P. Evanoski                                 |  | Date: March 13, 2006
|    |  | Charles P. Evanoski                                     |  |                     
|    |  | Group Senior Vice President and Chief Financial Officer |  |                     
|    |  | (Principal Financial and Accounting Officer)            |  |                     
|    |  |                                                        
|By: |  | /s/ William B. Salsgiver                                |  | Date: March 13, 2006
|    |  | William B. Salsgiver                                    |  |                     
|    |  | Chairman of the Board of Directors                      |  |                     
|    |  |                                                        
|By: |  | /s/ Herbert S. Skuba                                    |  | Date: March 13, 2006
|    |  | Herbert S. Skuba                                        |  |                     
|    |  | Vice Chairman of the Board of Directors                 |  |                     
|    |  |                                                        
|By: |  | /s/ Charles Delman                                      |  | Date: March 13, 2006
|    |  | Charles Delman- Director                                |  |                     
|    |  |                                                        
|By: |  | /s/ Lloyd L. Kildoo                                     |  | Date: March 13, 2006
|    |  | Lloyd L. Kildoo  Director                              |  |                     
|    |  |                                                        
|By: |  | /s/ Mario J. Manna                                      |  | Date: March 13, 2006
|    |  | Mario J. Manna  Director                               |  |                     
|    |  |                                                        
|By: |  | /s/ James P. Wetzel, Jr.                                |  | Date: March 13, 2006
|    |  | James P. Wetzel, Jr.  Director                         |  |                     



37