----

----

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

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

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

|                            | Maryland |                                 |   |   | 26-0706826 |   |
|---------------------------------|----------|--------------------------------------|--------|--------|------------|--------|
| (State or other jurisdiction of |     | (I.R.S. Employer Identification No.) |
| incorporation or organization)  |     |                                 |   |   |

|   |                                                                    | 6611 Manlius Center Road, East Syracuse, New York |              |   | 13057 |   |
|--------|-------------------------------------------------------------------------|---------------------------------------------------|-------------------|--------|-------|--------|
|   | (Address of principal executive office)                                 |                                              |   (Zip Code) |
|   |                                                                    |                                              |              |
|   | Registrant’s telephone number, including area code (315) 433-0111 |                                              |              |

| Class                                   |   | Outstanding May 3, 2011 |   |
|-----------------------------------------|--------|-------------------------|--------|
| Common Stock, par value $0.01 per share |   | 6,380,203               |   |
|                                    |   |                    |   |

----

|                                 |                                                                                        |     |   |
|--------------------------------------|---------------------------------------------------------------------------------------------|----------|--------|
|                                 |                                                                                        | PAGE NO. |
| PART I – FINANCIAL INFORMATION |                                                                                        |     |
|                                 |                                                                                        |     |   |
| Item 1.                              | Financial Statements (Unaudited)                                                            | 3        |   |
|                                 |                                                                                        |     |   |
|                                 | Consolidated Balance Sheets                                                                 | 3        |   |
|                                 |                                                                                        |     |   |
|                                 | Consolidated Statements of Operations                                                       | 4        |   |
|                                 |                                                                                        |     |   |
|                                 | Consolidated Statements of Changes in Stockholders’ Equity                            | 5        |   |
|                                 |                                                                                        |     |   |
|                                 | Consolidated Statements of Comprehensive Income                                             | 6        |   |
|                                 |                                                                                        |     |   |
|                                 | Consolidated Statements of Cash Flows                                                       | 7        |   |
|                                 |                                                                                        |     |   |
|                                 | Notes to Consolidated Financial Statements                                                  | 9        |   |
|                                 |                                                                                        |     |   |
| Item 2.                              | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 36       |   |
|                                 |                                                                                        |     |   |
| Item 3.                              | Quantitative and Qualitative Disclosures About Market Risk                                  | 44       |   |
|                                 |                                                                                        |     |   |
| Item 4. Controls and Procedures      | 44                                                                                          |     |
|                                 |                                                                                        |     |   |
| PART II – OTHER INFORMATION    |                                                                                        |     |
|                                 |                                                                                        |     |   |
| Item 1.                              | Legal Proceedings                                                                           | 45       |   |
|                                 |                                                                                        |     |   |
| Item 1A.                             | Risk Factors                                                                                | 45       |   |
|                                 |                                                                                        |     |   |
| Item 2.                              | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 45       |   |
|                                 |                                                                                        |     |   |
| Item 3.                              | Defaults Upon Senior Securities                                                             | 45       |   |
|                                 |                                                                                        |     |   |
| Item 4.                              | (Removed and Reserved)                                                                      | 45       |   |
|                                 |                                                                                        |     |   |
| Item 5.                              | Other Information                                                                           | 45       |   |
|                                 |                                                                                        |     |   |
| Item 6.                              | Exhibits                                                                                    | 45       |   |
|                                 |                                                                                        |     |   |
| Signatures                           | 47                                                                                          |     |
|                                 |                                                                                        |     |   |
| Certifications                       |                                                                                        |     |

----

|                                                                                                                                    |   | March 31,   |      |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|--------------|--------|
|                                                                                                                                    |   | 2011        |      |   | 2010         |   |
|                                                                                                                                    |   | (Unaudited) |      |
| ASSETS                                                                                                                                  |   |        |      |   |         |   |
| Cash and cash equivalents - cash and due from financial institutions                                                                    |   | $           | 7,766     |   |         | $      | 12,439 |   |
| Securities available for sale                                                                                                           |   |        | 165,160   |   |         |   | 162,405 |   |
| Securities held to maturity (fair value of $9,424 and $10,543, respectively)                                                       |   |        | 9,150     |   |         |   | 10,321 |   |
| Loans held for sale                                                                                                                     |   |        | 618       |   |         |   | 2,692 |   |
| Loans, net of allowance for loan losses of $15,896 and $15,240, respectively                                                            |   |        | 800,564   |   |         |   | 792,553 |   |
| Federal Home Loan Bank (“FHLB”) of New York stock                                                                           |   |        | 9,785     |   |         |   | 9,954 |   |
| Premises and equipment, net                                                                                                             |   |        | 11,894    |   |         |   | 12,030 |   |
| Accrued interest receivable                                                                                                             |   |        | 3,473     |   |         |   | 3,528 |   |
| Foreclosed and repossessed assets                                                                                                       |   |        | 65        |   |         |   | 206 |   |
| Bank-owned life insurance (“BOLI”)                                                                                          |   |        | 10,727    |   |         |   | 10,639 |   |
| Other assets                                                                                                                            |   |        | 14,640    |   |         |   | 15,711 |   |
| Total assets                                                                                                                            |   | $           | 1,033,842 |   |         | $      | 1,032,478 |   |
|                                                                                                                                    |   |        |      |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                              |   |        |      |   |         |   |   |   |
|                                                                                                                                    |   |        |      |   |         |   |   |   |
| Deposits                                                                                                                                |   | $           | 681,099   |   |         | $      | 677,384 |   |
| Federal Home Loan Bank advances                                                                                                         |   |        | 159,027   |   |         |   | 163,427 |   |
| Securities sold under agreement to repurchase                                                                                           |   |        | 70,000    |   |         |   | 70,000 |   |
| Accrued interest payable and other liabilities                                                                                          |   |        | 4,632     |   |         |   | 4,218 |   |
| Capital lease obligation                                                                                                                |   |        | 7,740     |   |         |   | 7,739 |   |
| Total liabilities                                                                                                                       |   |        | 922,498   |   |         |   | 922,768 |   |
| Commitments and contingencies (Note 9)                                                                                                  |   |        |      |   |         |   |   |   |
| Preferred stock, $.01 par value, 50,000,000 shares authorized; none issued or outstanding                                               |   |        |      |   |         |   |   |   |
| Common stock, $.01 par value, 100,000,000 shares authorized; 7,652,816 issued; 6,413,128 and 6,432,922 shares outstanding, respectively |   |        | 76        |   |         |   | 76 |   |
| Additional paid-in capital                                                                                                              |   |        | 74,527    |   |         |   | 74,092 |   |
| Retained earnings-substantially restricted                                                                                              |   |        | 52,402    |   |         |   | 51,185 |   |
| Unearned Employee Stock Ownership Plan (“ESOP”) shares                                                                      |   |        | (3,109    | )      |         |   | (3,286 | ) |
| Accumulated other comprehensive loss, net                                                                                               |   |        | (1,778    | )      |         |   | (1,866 | ) |
| Treasury stock, 1,239,688 and 1,219,894 shares at cost, respectively                                                                    |   |        | (10,774   | )      |         |   | (10,491 | ) |
| Total stockholders’ equity                                                                                                        |   |        | 111,344   |   |         |   | 109,710 |   |
| Total liabilities and stockholders’ equity                                                                                        |   | $           | 1,033,842 |   |         | $      | 1,032,478 |   |

----

|                                                                            |   | Three Months Ended |   |
|---------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                            |   | March 31,          |   |
|                                                                            |   | 2011               |   |   | 2010 |   |
| Interest and dividend income:                                                   |   | (Unaudited)        |   |
| Loans, including fees                                                           |   | $                  | 10,887 |   |   | $ | 11,612 |   |
| Securities                                                                      |   |               | 1,478  |   |   |   | 1,967 |   |
| FHLB stock                                                                      |   |               | 150    |   |   |   | 167 |   |
| Federal funds sold and other                                                    |   |               | 3      |   |   |   | 5 |   |
| Total interest income                                                           |   |               | 12,518 |   |   |   | 13,751 |   |
| Interest expense:                                                               |   |               |   |   |   |   |   |   |
| Deposits                                                                        |   |               | 2,162  |   |   |   | 3,178 |   |
| FHLB advances                                                                   |   |               | 1,710  |   |   |   | 1,976 |   |
| Securities sold under agreement to repurchase                                   |   |               | 668    |   |   |   | 668 |   |
| Lease obligation                                                                |   |               | 196    |   |   |   | 196 |   |
| Total interest expense                                                          |   |               | 4,736  |   |   |   | 6,018 |   |
| Net interest income                                                             |   |               | 7,782  |   |   |   | 7,733 |   |
| Provision for loan losses                                                       |   |               | 979    |   |   |   | 1,780 |   |
| Net interest income after provision for loan losses                             |   |               | 6,803  |   |   |   | 5,953 |   |
| Noninterest income:                                                             |   |               |   |   |   |   |   |   |
| Service charges                                                                 |   |               | 936    |   |   |   | 796 |   |
| Commission and fee income                                                       |   |               | 207    |   |   |   | 167 |   |
| Change in cash surrender value of BOLI                                          |   |               | 88     |   |   |   | 13 |   |
| Gain on sale of loans                                                           |   |               | 70     |   |   |   | 113 |   |
| Other-than-temporary impairment (OTTI) credit loss on securities                |   |               | (111   | ) |   |   | (257 | ) |
| Other                                                                           |   |               | 312    |   |   |   | 285 |   |
| Total noninterest income                                                        |   |               | 1,502  |   |   |   | 1,117 |   |
| Noninterest expense:                                                            |   |               |   |   |   |   |   |   |
| Salaries and employee benefits                                                  |   |               | 3,089  |   |   |   | 2,622 |   |
| Occupancy and equipment                                                         |   |               | 698    |   |   |   | 592 |   |
| Advertising and marketing                                                       |   |               | 121    |   |   |   | 111 |   |
| Telephone, delivery and postage                                                 |   |               | 210    |   |   |   | 180 |   |
| Supplies                                                                        |   |               | 62     |   |   |   | 48 |   |
| Audit and examination                                                           |   |               | 169    |   |   |   | 200 |   |
| FDIC premium expense                                                            |   |               | 360    |   |   |   | 318 |   |
| Other                                                                           |   |               | 1,133  |   |   |   | 942 |   |
| Total noninterest expense                                                       |   |               | 5,842  |   |   |   | 5,013 |   |
| Income before income taxes                                                      |   |               | 2,463  |   |   |   | 2,057 |   |
| Income tax expense                                                              |   |               | 944    |   |   |   | 763 |   |
| Net income                                                                      |   | $                  | 1,519  |   |   | $ | 1,294 |   |
| Basic and diluted earnings per share                                            |   | $                  | 0.25   |   |   | $ | 0.21 |   |
|                                                                            |   |               |   |   |   |   |   |   |
| OTTI credit loss on securities:                                                 |   |               |   |   |   |   |   |   |
| Total OTTI loss on securities                                                   |   | $                  | 665    |   |   | $ | 271 |   |
| Portion of OTTI loss recognized in other comprehensive loss before income taxes |   |               | (554   | ) |   |   | (14 | ) |
| OTTI credit loss on securities                                                  |   | $                  | 111    |   |   | $ | 257 |   |

----

|                                   |   |              |      |   |       |   |   |    |   |   |                 |   |   |         |   |   |          |   |   |     |   |    |   |   |
|----------------------------------------|--------|-------------------|-----------|--------|------------|--------|--------|---------|--------|--------|----------------------|--------|--------|--------------|--------|--------|---------------|--------|--------|----------|--------|---------|--------|--------|
|                                   |   |              |      |   |       |   |   |    |   |   |                 |   |   | Accumulated  |   |   |          |   |   |     |   |
|                                   |   | Common Stock      |      |   | Additional |   |   |    |   |   | Unearned             |   |   | Other        |   |   |          |   |   |     |   |
|                                   |   | Shares            |      |   | Amount     |   |   | Paid-In |   |   | Retained   |   |   | ESOP         |   |   | Comprehensive |   |   | Treasury |   |    |   |   |
|                                   |   |  Outstanding |      |   | Issued     |   |   | Capital |   |   | Earnings             |   |   |  Shares |   |   | (Loss)/Income |   |   | Stock    |   |    | Total  |   |
| Balance at the beginning of the period |   |              | 6,432,922 |   |       | $      | 76     |    |   | $      | 74,092               |   |   | $            | 51,185 |   |          | $      | (3,286 | )        |   | $       | (1,866 | )      |   | $ | (10,491 | ) |   | $ | 109,710 |   |
| Net income                             |   |              |      |   |       |   |   |    |   |   |                 |   |   |         | 1,519  |   |          |   |   |     |   |    |   |   |   |   |   |   |   |   | 1,519 |   |
| Other comprehensive income, net of tax |   |              |      |   |       |   |   |    |   |   |                 |   |   |         |   |   |          |   |   |     |   |    | 88     |   |   |   |   |   |   |   | 88 |   |
| Earned ESOP shares                     |   |              |      |   |       |   |   |    |   |   | 50                   |   |   |         |   |   |          |   | 177    |     |   |    |   |   |   |   |   |   |   |   | 227 |   |
| Stock-based compensation               |   |              |      |   |       |   |   |    |   |   | 385                  |   |   |         |   |   |          |   |   |     |   |    |   |   |   |   |   |   |   |   | 385 |   |
| Cash dividends $0.20 per share         |   |              |      |   |       |   |   |    |   |   |                 |   |   |         | (302   | )      |          |   |   |     |   |    |   |   |   |   |   |   |   |   | (302 | ) |
| Repurchase of common stock             |   |              | (19,794   | )      |       |   |   |    |   |   |                 |   |   |         |   |   |          |   |   |     |   |    |   |   |   |   | (283 | ) |   |   | (283 | ) |
| Balance at March 31, 2011              |   |              | 6,413,128 |   |       | $      | 76     |    |   | $      | 74,527               |   |   | $            | 52,402 |   |          | $      | (3,109 | )        |   | $  | (1,778 | )      |   | $  | (10,774 | ) |   | $ | 111,344 |   |

----

|                                                                                                     |   | Three Months Ended |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                     |   | March 31,          |   |
|                                                                                                     |   | 2011               |   |   | 2010 |   |
|                                                                                                     |   | (Unaudited)        |   |
|                                                                                                     |   |               |   |   |   |   |
| Other comprehensive income (loss), before tax:                                                           |   |               |   |   |   |   |
| Net change in unrealized gains (losses) on available for sale securities                                 |   | $                  | 700    |   |   | $ | 2,270 |   |
| OTTI non-credit related loss on securities for which a portion of the OTTI has been recognized in income |   |               | (554   | ) |   |   | (14 | ) |
| Other comprehensive income before tax                                                                    |   |               | 146    |   |   |   | 2,256 |   |
| Income tax related to other comprehensive income (loss)                                                  |   |               | (58    | ) |   |   | (902 | ) |
| Other comprehensive income (loss), net of tax                                                            |   |               | 88     |   |   |   | 1,354 |   |
| Net Income                                                                                               |   |               | 1,519  |   |   |   | 1,294 |   |
| Comprehensive income                                                                                     |   | $                  | 1,607  |   |   | $ | 2,648 |   |

----

|                                                                              |   | Three Months Ended |    |
|-----------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                              |   | March 31,          |    |
|                                                                              |   | 2011               |    |   | 2010 |   |
|                                                                              |   | (Unaudited)        |    |
| Cash flows from operating activities:                                             |   |               |    |   |   |   |
| Net income                                                                        |   | $                  | 1,519   |   |   | $ | 1,294 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |               |    |   |   |   |   |   |
| Provision for loan losses                                                         |   |               | 979     |   |   |   | 1,780 |   |
| Change in fair value of servicing assets                                          |   |               | 102     |   |   |   | 130 |   |
| Depreciation and amortization                                                     |   |               | 380     |   |   |   | 345 |   |
| ESOP expense                                                                      |   |               | 227     |   |   |   | 160 |   |
| Amortization of stock-based compensation expense                                  |   |               | 385     |   |   |   | 207 |   |
| Amortization of net deferred loan costs                                           |   |               | 667     |   |   |   | 594 |   |
| Net amortization of premiums and discounts on securities                          |   |               | 318     |   |   |   | 74 |   |
| Gain on sale of loans                                                             |   |               | (70     | ) |   |   | (113 | ) |
| Other-than-temporary impairment credit loss on securities                         |   |               | 111     |   |   |   | 257 |   |
| Originations of loans held for sale                                               |   |               | (4,048  | ) |   |   | (7,637 | ) |
| Proceeds from loans held for sale                                                 |   |               | 6,192   |   |   |   | 8,218 |   |
| Increase in cash surrender value of BOLI                                          |   |               | (88     | ) |   |   | (13 | ) |
| Net change in:                                                                    |   |               |    |   |   |   |   |   |
| Accrued interest receivable                                                       |   |               | 55      |   |   |   | (16 | ) |
| Other assets                                                                      |   |               | 909     |   |   |   | 275 |   |
| Accrued interest payable and other liabilities                                    |   |               | 415     |   |   |   | (11 | ) |
| Net cash provided by operating activities                                         |   |               | 8,053   |   |   |   | 5,544 |   |
| Cash flows from investing activities:                                             |   |               |    |   |   |   |   |   |
| Purchase of FHLB stock                                                            |   |               | (1,686  | ) |   |   | (463 | ) |
| Redemption of FHLB stock                                                          |   |               | 1,855   |   |   |   | 591 |   |
| Securities held to maturity:                                                      |   |               |    |   |   |   |   |   |
| Maturities, prepayments and calls                                                 |   |               | 1,162   |   |   |   | 894 |   |
| Securities available for sale:                                                    |   |               |    |   |   |   |   |   |
| Purchases                                                                         |   |               | (15,347 | ) |   |   | (15,389 | ) |
| Proceeds from maturity or call                                                    |   |               | 12,320  |   |   |   | 17,945 |   |
| Loan originations and payments, net                                               |   |               | (9,773  | ) |   |   | (3,139 | ) |
| Purchase of premises and equipment                                                |   |               | (244    | ) |   |   | (165 | ) |
| Proceeds from sale of foreclosed and repossessed assets                           |   |               | 257     |   |   |   | 175 |   |
| Net cash (used for) provided by investing activities                              |   | $                  | (11,456 | ) |   | $ | 449 |   |

----

|                                                          |   | Three Months Ended |     |
|---------------------------------------------------------------|--------|--------------------|----------|
|                                                          |   | March 31,          |     |
|                                                          |   | 2011               |     |   | 2010 |   |
|                                                          |   | (Unaudited)        |     |
| Cash flows from financing activities:                         |   |               |     |   |   |   |
| Net change in deposits                                        |   | $                  | 3,715    |   |   | $ | 5,900 |   |
| Proceeds from FHLB advances                                   |   |               | 151,600  |   |   |   | 12,500 |   |
| Repayment of FHLB advances                                    |   |               | (156,000 | ) |   |   | (14,692 | ) |
| Cash dividends                                                |   |               | (302     | ) |   |   | (303 | ) |
| Repurchase of common stock                                    |   |               | (283     | ) |   |   | - |   |
| Net cash (used for) provided by financing activities          |   |               | (1,270   | ) |   |   | 3,405 |   |
| Net change in cash and cash equivalents                       |   |               | (4,673   | ) |   |   | 9,398 |   |
| Cash and cash equivalents at beginning of period              |   |               | 12,439   |   |   |   | 12,993 |   |
| Cash and cash equivalents at end of period                    |   | $                  | 7,766    |   |   | $ | 22,391 |   |
| Supplemental cash flow information:                           |   |               |     |   |   |   |   |   |
| Interest paid                                                 |   | $                  | 4,765    |   |   | $ | 6,012 |   |
| Income taxes paid                                             |   | $                  | 60       |   |   | $ | 544 |   |
| Real estate and repossessions acquired in settlement of loans |   | $                  | 116      |   |   | $ | 222 |   |

----

----

|   | (1) | specific allowances established for any impaired loans for which the carrying value of the loan exceeds the fair value of the collateral or the present value of expected future cash flows or loans otherwise adversely classified; and |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | general allowances for loan losses for each loan type based on the historical loan loss experience for the last four years, including qualitative adjustments to historical loss experience, maintained to cover uncertainties that affect our estimate of probable losses for each loan type. Portions of the general allowance may be allocated for specific credits; however, the entire allowance is available for any credit that in management’s judgment should be charged-off. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | changes in lending policies and procedures, including underwriting standards; |
|--------|---------|-------------------------------------------------------------------------------|

|   | ● | changes in collection, charge-off and recovery practices; |
|--------|---------|-----------------------------------------------------------|

|   | ● | changes in the nature and volume of the loan portfolio; |
|--------|---------|---------------------------------------------------------|

|   | ● | changes in the experience, ability, and depth of lending management; |
|--------|---------|----------------------------------------------------------------------|

|   | ● | changes in the volume and severity of past due loans, non-accrual loans, troubled debt restructurings, and adversely classified loans; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | changes in the value of underlying collateral for collateral-dependent loans; |
|--------|---------|-------------------------------------------------------------------------------|

|   | ● | the existence and effect of any concentrations of credit and changes in the level of such concentrations; |
|--------|---------|-----------------------------------------------------------------------------------------------------------|

|   | ● | changes in the quality of our loan review system and the degree of oversight by the Board of Directors; |
|--------|---------|---------------------------------------------------------------------------------------------------------|

|   | ● | changes in current, national and local economic and business conditions; and |
|--------|---------|------------------------------------------------------------------------------|

|   | ● | the effect of other external factors such as competition and legal and regulatory requirements. |
|--------|---------|-------------------------------------------------------------------------------------------------|

----

| ●   | Provides additional guidance on determining whether a creditor has granted a concession, including guidance on collection of all amounts due, receipt of additional collateral or guarantees from the debtor, and restructuring the debt at a below-market rate; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Includes factors and examples for creditors to determine whether an insignificant delay in payment is considered a concession; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ●   | Prohibits creditors from using the borrower’s effective rate test in ASC 470-50, Debt, Modifications and Extinguishment, to evaluate whether a concession has been granted to the borrower; |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Adds factors for creditors to use to determine whether the debtor is experiencing financial difficulties; and |
|---------------------|---------------------------------------------------------------------------------------------------------------|

| ●   | Ends the FASB’s deferral of the additional disclosures about TDR activities required by ASU 2010-20. |
|---------------------|------------------------------------------------------------------------------------------------------------|

----

|                                                                           |   |               |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------------------|--------|--------|--------|--------|
|                                                                           |   | Three Months Ended |   |
|                                                                           |   | March 31,          |   |
|                                                                           |   | 2011               |   |   | 2010   |   |
|                                                                           |   |               |   |   |   |   |
| Basic earnings per share:                                                      |   |               |   |   |   |   |
|                                                                           |   |               |   |   |   |   |
| Net income                                                                     |   | $                  | 1,519  |   |   | $      | 1,294 |   |
| Less dividends paid:                                                           |   |               |   |   |   |   |   |   |
| Common stock                                                                   |   |               | 298    |   |   |   | 295 |   |
| Participating securities                                                       |   |               | 4      |   |   |   | 8 |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Undistributed earnings                                                         |   | $                  | 1,217  |   |   | $      | 991 |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Weighted-average basic shares outstanding                                      |   |               | 6,038  |   |   |   | 5,987 |   |
| Add: weighted-average participating securities outstanding                     |   |               | 73     |   |   |   | 155 |   |
| Total weighted-average basic shares and participating securities outstanding   |   |               | 6,111  |   |   |   | 6,142 |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Distributed earnings per share                                                 |   | $                  | 0.05   |   |   | $      | 0.05 |   |
| Undistributed earnings per share                                               |   |               | 0.20   |   |   |   | 0.16 |   |
| Net income per share                                                           |   | $                  | 0.25   |   |   | $      | 0.21 |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Diluted earnings per share:                                                    |   |               |   |   |   |   |   |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Undistributed earnings                                                         |   | $                  | 1,217  |   |   | $      | 991 |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Total weighted-average basic shares and participating securities outstanding   |   |               | 6,111  |   |   |   | 6,142 |   |
| Add: Dilutive stock options                                                    |   |               | 108    |   |   |   | 14 |   |
| Total weighted-average diluted shares and participating securities outstanding |   |               | 6,219  |   |   |   | 6,156 |   |
|                                                                           |   |               |   |   |   |   |   |   |
|                                                                           |   |               |   |   |   |   |   |   |
| Distributed earnings per share                                                 |   | $                  | 0.05   |   |   | $      | 0.05 |   |
| Undistributed earnings per share                                               |   |               | 0.20   |   |   |   | 0.16 |   |
| Net income per share                                                           |   | $                  | 0.25   |   |   | $      | 0.21 |   |

----

|                                                    |   |      |    |   |       |   |   |       |   |   |   |   |
|---------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                                    |   |      |    |   | Gross      |   |   | Gross      |   |   |   |   |
|                                                    |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
| March 31, 2011                                          |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                                    |   |      |    |   |       |   |   |       |   |   |   |   |
| Held to maturity:                                       |   |      |    |   |       |   |   |       |   |   |   |   |
| Debt securities:                                        |   |      |    |   |       |   |   |       |   |   |   |   |
| Mortgage-backed securities - Residential                |   | $         | 3,499   |   |       | $      | 141    |       |   | $      | -      |   |   | $ | 3,640 |   |
| Collateralized mortgage obligations - Private issuer    |   |      | 3,476   |   |       |   | 50     |       |   |   | (64    | )      |   |   | 3,462 |   |
| Collateralized mortgage obligations - Government agency |   |      | 2,175   |   |       |   | 147    |       |   |   | -      |   |   |   | 2,322 |   |
| Total                                                   |   | $         | 9,150   |   |       | $      | 338    |       |   | $      | (64    | )      |   | $ | 9,424 |   |
|                                                    |   |      |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Available for sale:                                     |   |      |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Debt securities:                                        |   |      |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Treasuries                                              |   | $         | 100     |   |       | $      | -      |       |   | $      | (1     | )      |   | $ | 99 |   |
| Agencies                                                |   |      | 7,997   |   |       |   | 19     |       |   |   | (62    | )      |   |   | 7,954 |   |
| Pooled trust preferred securities                       |   |      | 11,500  |   |       |   | -      |       |   |   | (5,527 | )      |   |   | 5,973 |   |
| Mortgage-backed securities - Residential                |   |      | 43,163  |   |       |   | 1,538  |       |   |   | (293   | )      |   |   | 44,408 |   |
| Collateralized mortgage obligations - Private issuer    |   |      | 14,609  |   |       |   | 143    |       |   |   | (904   | )      |   |   | 13,848 |   |
| Collateralized mortgage obligations - Government agency |   |      | 90,653  |   |       |   | 2,243  |       |   |   | (18    | )      |   |   | 92,878 |   |
| Total                                                   |   | $         | 168,022 |   |       | $      | 3,943  |       |   | $      | (6,805 | )      |   | $ | 165,160 |   |

----

|                                                    |   |      |    |   |       |   |   |       |   |   |   |   |
|---------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                                    |   |      |    |   | Gross      |   |   | Gross      |   |   |   |   |
|                                                    |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
| December 31, 2010                                       |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                                    |   |      |    |   |       |   |   |       |   |   |   |   |
| Held to maturity:                                       |   |      |    |   |       |   |   |       |   |   |   |   |
| Debt securities:                                        |   |      |    |   |       |   |   |       |   |   |   |   |
| Mortgage-backed securities - Residential                |   | $         | 3,726   |   |       | $      | 139    |       |   | $      | -      |   |   | $ | 3,865 |   |
| Collateralized mortgage obligations - Private issuer    |   |      | 4,264   |   |       |   | 41     |       |   |   | (123   | )      |   |   | 4,182 |   |
| Collateralized mortgage obligations - Government agency |   |      | 2,331   |   |       |   | 165    |       |   |   | -      |   |   |   | 2,496 |   |
| Total                                                   |   | $         | 10,321  |   |       | $      | 345    |       |   | $      | (123   | )      |   | $ | 10,543 |   |
|                                                    |   |      |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Available for sale:                                     |   |      |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Debt securities:                                        |   |      |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Treasuries                                              |   | $         | 100     |   |       | $      | -      |       |   | $      | -      |   |   | $ | 100 |   |
| Agencies                                                |   |      | 7,997   |   |       |   | 45     |       |   |   | (55    | )      |   |   | 7,987 |   |
| Pooled trust preferred securities                       |   |      | 11,566  |   |       |   | -      |       |   |   | (6,120 | )      |   |   | 5,446 |   |
| Mortgage-backed securities - Residential                |   |      | 41,677  |   |       |   | 1,613  |       |   |   | (256   | )      |   |   | 43,034 |   |
| Collateralized mortgage obligations - Private issuer    |   |      | 15,547  |   |       |   | 442    |       |   |   | (1,010 | )      |   |   | 14,979 |   |
| Collateralized mortgage obligations - Government agency |   |      | 88,528  |   |       |   | 2,399  |       |   |   | (68    | )      |   |   | 90,859 |   |
| Total                                                   |   | $         | 165,415 |   |       | $      | 4,499  |       |   | $      | (7,509 | )      |   | $ | 162,405 |   |

|                                                    |   |             |   |   |               |   |   |          |   |   |      |   |
|---------------------------------------------------------|--------|------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|-----------|--------|
|                                                    |   | Held to Maturity |   |   | Available for Sale |   |
| March 31, 2011                                          |   | AmortizedCost    |   |   | FairValue          |   |   | AmortizedCost |   |   | FairValue |   |
|                                                    |   |             |   |   |               |   |   |          |   |   |      |   |
| Due within one year                                     |   | $                | -      |   |               | $      | -      |          |   | $      | -         |   |   | $ | - |   |
| Due after one through five years                        |   |             | -      |   |               |   | -      |          |   |   | 8,097     |   |   |   | 8,053 |   |
| Due after five through ten years                        |   |             | -      |   |               |   | -      |          |   |   | -         |   |   |   | - |   |
| Due after ten years                                     |   |             | -      |   |               |   | -      |          |   |   | 11,500    |   |   |   | 5,973 |   |
|                                                    |   |             | -      |   |               |   | -      |          |   |   | 19,597    |   |   |   | 14,026 |   |
| Mortgage-backed securities - Residential                |   |             | 3,499  |   |               |   | 3,640  |          |   |   | 43,163    |   |   |   | 44,408 |   |
| Collateralized mortgage obligations - Private issuer    |   |             | 3,476  |   |               |   | 3,462  |          |   |   | 14,609    |   |   |   | 13,848 |   |
| Collateralized mortgage obligations - Government agency |   |             | 2,175  |   |               |   | 2,322  |          |   |   | 90,653    |   |   |   | 92,878 |   |
|                                                    |   | $                | 9,150  |   |               | $      | 9,424  |          |   | $      | 168,022   |   |   | $ | 165,160 |   |

----

|                                          |   | Less than 12 Months |   |   | 12 Months or Longer |   |   | Total  |   |
|-----------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                                          |   | Fair                |   |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| March 31, 2011                                |   | Value               |   |   | loss                |   |   | Value  |   |   | loss |   |   | Value |   |   | loss |   |
|                                          |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasuries                                    |   | $                   | 99     |   |                | $      | (1     | )      |   | $ | - |   |   | $ | - |   |   | $ | 99 |   |   | $ | (1 | ) |
| Agencies                                      |   |                | 1,932  |   |                |   | (62    | )      |   |   | - |   |   |   | - |   |   |   | 1,932 |   |   |   | (62 | ) |
| Pooled trust preferred securities             |   |                | -      |   |                |   | -      |   |   |   | 5,973 |   |   |   | (5,527 | ) |   |   | 5,973 |   |   |   | (5,527 | ) |
| Mortgage backed securities - Residential |   |                | 12,992 |   |                |   | (293   | )      |   |   | - |   |   |   | - |   |   |   | 12,992 |   |   |   | (293 | ) |
| CMOs - Private issuer                         |   |                | 1,822  |   |                |   | (47    | )      |   |   | 9,031 |   |   |   | (921 | ) |   |   | 10,853 |   |   |   | (968 | ) |
| CMOs - Government Agency                      |   |                | 9,594  |   |                |   | (18    | )      |   |   | - |   |   |   | - |   |   |   | 9,594 |   |   |   | (18 | ) |
|                                          |   | $                   | 26,439 |   |                | $      | (421   | )      |   | $ | 15,004 |   |   | $ | (6,448 | ) |   | $ | 41,443 |   |   | $ | (6,869 | ) |
|                                          |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   | Less than 12 Months |   |   | 12 Months or Longer |   |   | Total  |   |
|                                          |   | Fair                |   |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| December 31, 2010                             |   | Value               |   |   | loss                |   |   | Value  |   |   | loss |   |   | Value |   |   | loss |   |
|                                          |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agencies                                      |   | $                   | 1,940  |   |                | $      | (55    | )      |   | $ | - |   |   | $ | - |   |   | $ | 1,940 |   |   | $ | (55 | ) |
| Pooled trust preferred securities             |   |                | -      |   |                |   | -      |   |   |   | 5,446 |   |   |   | (6,120 | ) |   |   | 5,446 |   |   |   | (6,120 | ) |
| Mortgage backed securities - Residential      |   |                | 13,620 |   |                |   | (256   | )      |   |   | - |   |   |   | - |   |   |   | 13,620 |   |   |   | (256 | ) |
| CMOs - Private issuer                         |   |                | -      |   |                |   | -      |   |   |   | 12,145 |   |   |   | (1,133 | ) |   |   | 12,145 |   |   |   | (1,133 | ) |
| CMOs - Government Agency                      |   |                | 9,357  |   |                |   | (68    | )      |   |   | - |   |   |   | - |   |   |   | 9,357 |   |   |   | (68 | ) |
|                                          |   | $                   | 24,917 |   |                | $      | (379   | )      |   | $ | 17,591 |   |   | $ | (7,253 | ) |   | $ | 42,508 |   |   | $ | (7,632 | ) |

----

----

| Description                     |   | Class  |   |   | Amortized Cost |   |   | Fair Value |   |   | Unrealized Loss |   |   | LowestCreditRating |   |
|---------------------------------|--------|--------|--------|--------|----------------|--------|--------|------------|--------|--------|-----------------|--------|--------|--------------------|--------|
| CMOs - Private Issuer:          |   |   |   |   |           |   |   |       |   |   |            |   |   |               |   |
| CWALT 2006-19CB                 |   |   | A14    |   |           | $      | 3,440  |       |   | $      | 3,177           |   |   | $                  | (263   | ) |   | CCC |   |
| First Horizon ALT 2006          |   |   | 1A1    |   |           |   | 1,924  |       |   |   | 1,710           |   |   |               | (214   | ) |   | Caa3 |   |
| JPMMT 2007-S3                   |   |   | 2A3    |   |           |   | 1,853  |       |   |   | 1,806           |   |   |               | (47    | ) |   | CC |   |
| ARMT 2005-3                     |   |   | 4A1    |   |           |   | 2,897  |       |   |   | 2,516           |   |   |               | (381   | ) |   | Caa1 |   |
|                            |   |   |   |   |           |   | 10,114 |       |   |   | 9,209           |   |   |               | (905   | ) |   |   |   |
|                            |   |   |   |   |           |   |   |       |   |   |            |   |   |               |   |   |   |   |   |
| Trust Preferred Securities:     |   |   |   |   |           |   |   |       |   |   |            |   |   |               |   |   |   |   |   |
| Alesco Preferred Funding Ltd    |   |   | A-1    |   |           |   | 2,094  |       |   |   | 1,386           |   |   |               | (708   | ) |   | CCC+ |   |
| Alesco Preferred Funding IV     |   |   | B-1    |   |           |   | 545    |       |   |   | 151             |   |   |               | (394   | ) |   |  C |   |
| MMCAPS Fund XVIII Ltd           |   |   | A-1    |   |           |   | 2,705  |       |   |   | 1,683           |   |   |               | (1,022 | ) |   | CCC- |   |
| US Capital Funding III 12/01/35 |   |   | A-2    |   |           |   | 2,966  |       |   |   | 960             |   |   |               | (2,006 | ) |   | CCC- |   |
| MM Community Funding IX         |   |   | A-1    |   |           |   | 2,638  |       |   |   | 1,673           |   |   |               | (965   | ) |   | CCC- |   |
| US Capital Funding I 05/01/34   |   |   | B-2    |   |           |   | 551    |       |   |   | 120             |   |   |               | (431   | ) |   | Caa1 |   |
|                            |   |   |   |   |           |   | 11,499 |       |   |   | 5,973           |   |   |               | (5,526 | ) |   |   |   |   |
|                            |   |   |   |   |           | $      | 21,613 |       |   | $      | 15,182          |   |   | $                  | (6,431 | ) |   |   |   |   |

----

----

|                                 |   |   |   |   |        |   |   |           |   |   |   |   |   |        |   |
|--------------------------------------|--------|--------|--------|--------|-------------|--------|--------|----------------|--------|--------|--------|--------|--------|-------------|--------|
|                                 |   |   |   |   | OTTI Credit |   |   | Non-Credit     |   |   | Lowest |   |   |        |   |
|                                 |   | Fair   |   |   | Loss During |   |   | Loss in AOCL   |   |   | Credit |   |   | Default /   |   |
| Description                          |   | Value  |   |   | the Quarter |   |   | March 31, 2011 |   |   | Rating |   |   | Delinquency |   |
| Trust preferred securities:          |   |   |   |   |        |   |   |           |   |   |   |   |   |        |   |
| US Capital Funding III 12/01/35      |   | $      | 960    |   |        | $      | -      |           |   | $      | 2,006  |   |   | CCC-        |   |   |   | 29.7 | % |
| Alesco Preferred Funding IV          |   |   | 229    |   |        |   | 33     |           |   |   | 317    |   |   |  C     |   |   |   | 44.7 | % |
| US Capital Funding I 05/01/34        |   |   | 120    |   |        |   | -      |           |   |   | 431    |   |   | Caa1        |   |   |   | 18.9 | % |
|                                 |   |   | 1,309  |   |        |   | 33     |           |   |   | 2,754  |   |   |        |   |   |   |   |   |   |
| Collateralized mortgage obligations: |   |   |   |   |        |   |   |           |   |   |   |   |   |        |   |   |   |   |   |   |
| CWALT 2006-19CB                      |   |   | 3,177  |   |        |   | 49     |           |   |   | 263    |   |   | CCC         |   |   |   | 32.6 | % |
| First Horizon Alt 2006               |   |   | 1,710  |   |        |   | 29     |           |   |   | 214    |   |   | Caa3        |   |   |   | 14.9 | % |
| JPMMT 2007-S3                        |   |   | 1,806  |   |        |   | -      |           |   |   | 47     |   |   | CC          |   |   |   | 22.4 | % |
|                                 |   |   | 6,693  |   |        |   | 78     |           |   |   | 524    |   |   |        |   |   |   |   |   |   |
|                                 |   | $      | 8,002  |   |        | $      | 111    |           |   | $      | 3,278  |   |   |        |   |   |   |   |   |   |

|   | 1) | The discount rate used in assessing OTTI is the purchased yield of a bond, which is constant. Therefore, changes in OTTI are purely a function of changes in the amount and timing of projected future cash flows, but are not influenced by the market’s required rate of return for these cash flows (their discount rate). Fair value measures, however, incorporate the market’s perception of the risk of a bond’s future cash flows. Given that the credit quality of PTPS collateral has deteriorated significantly since the onset of the credit crisis, the riskiness of all PTPS CDO bonds has increased, pushing the discount rates used to value them well above their coupon rates. This risk premium is the primary reason that the fair values of most PTPS CDOs are significantly below their amortized costs. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2) | During the height of the credit bubble in late 2007 and early 2008, there was tremendous demand for PTPS CDOs, and competition among dealers for PTPS compressed collateral credit spreads to artificially tight levels. When the credit bubble burst, demand for PTPS declined and PTPS credit spreads increased. This increase in credit spreads reduced the fair value of PTPS collateral, which by extension reduced the fair value of PTPS CDOs. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                        |   | Three Months Ended |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                        |   | March 31,          |   |
|                                                                                                        |   | 2011               |   |   | 2010 |   |
| Credit related impairments with a portion  recognized in other comprehensive loss:                |   |               |   |   |   |   |
| Beginning balance                                                                                           |   | $                  | 4,553  |   |   | $ | 3,293 |   |
| Credit related impairments on portions of OTTI previously recognized  in other comprehensive loss |   |               | 111    |   |   |   | 257 |   |
| Ending balance                                                                                              |   | $                  | 4,664  |   |   | $ | 3,550 |   |

----

|                                    |   | March 31, |    |   | December 31, |   |
|-----------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                    |   | 2011      |    |   | 2010         |   |
|                                    |   |      |    |   |         |   |
| Residential real estate:                |   |      |    |   |         |   |
| 1-4 family                              |   | $         | 180,063 |   |         | $      | 182,832 |   |
| Home equity                             |   |      | 155,560 |   |         |   | 157,629 |   |
| Total Residential real estate           |   |      | 335,623 |   |         |   | 340,461 |   |
| Commercial :                            |   |      |    |   |         |   |   |   |
| Commercial business                     |   |      | 87,260  |   |         |   | 85,960 |   |
| Commercial real estate                  |   |      | 156,585 |   |         |   | 146,433 |   |
| Multi-family real estate                |   |      | 26,213  |   |         |   | 26,944 |   |
| Commercial - 1-4 family real estate     |   |      | 10,728  |   |         |   | 10,024 |   |
| Construction                            |   |      | 23,153  |   |         |   | 22,030 |   |
| Total Commercial                        |   |      | 303,939 |   |         |   | 291,391 |   |
| Consumer:                               |   |      |    |   |         |   |   |   |
| Auto - indirect                         |   |      | 122,141 |   |         |   | 119,723 |   |
| Auto - direct                           |   |      | 23,863  |   |         |   | 25,459 |   |
| Other consumer - secured                |   |      | 19,325  |   |         |   | 18,669 |   |
| Other consumer - unsecured              |   |      | 7,000   |   |         |   | 7,495 |   |
| Total Consumer                          |   |      | 172,329 |   |         |   | 171,346 |   |
| Gross loans                             |   |      | 811,891 |   |         |   | 803,198 |   |
|                                    |   |      |    |   |         |   |   |   |
| Net deferred loan costs                 |   |      | 4,569   |   |         |   | 4,595 |   |
| Allowance for loan losses               |   |      | (15,896 | )      |         |   | (15,240 | ) |
| Loans, net of allowance for loan losses |   | $         | 800,564 |   |         | $      | 792,553 |   |

----

|                                               |   | Residential |    |   |       |   |    |     |   |   |        |   |   |   |   |
|----------------------------------------------------|--------|-------------|---------|--------|------------|--------|---------|----------|--------|--------|-------------|--------|--------|--------|--------|
|                                               |   | Real Estate |    |   | Commercial |   |    | Consumer |   |   | Unallocated |   |   | Total  |   |
| Allowance for loan losses:                         |   |        |    |   |       |   |    |     |   |   |        |   |   |   |   |
| Balance at December 31, 2010                       |   | $           | 1,288   |   |       | $      | 12,070  |     |   | $      | 1,844       |   |   | $      | 38     |   |   | $ | 15,240 |   |
| Provision for loan losses                          |   |        | 36      |   |       |   | 746     |     |   |   | 235         |   |   |   | (38    | ) |   |   | 979 |   |
| Charge-offs                                        |   |        | (61     | )      |       |   | (40     | )        |   |   | (335        | )      |   |   | -      |   |   |   | (436 | ) |
| Recoveries                                         |   |        | 1       |   |       |   | -       |     |   |   | 112         |   |   |   | -      |   |   |   | 113 |   |
| Balance at March 31, 2011                          |   | $           | 1,264   |   |       | $      | 12,776  |     |   | $      | 1,856       |   |   | $      | -      |   |   | $ | 15,896 |   |
|                                               |   |        |    |   |       |   |    |     |   |   |        |   |   |   |   |   |   |   |   |   |
| Period-end allowance balance attributed to loans:  |   |        |    |   |       |   |    |     |   |   |        |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment              |   | $           | 5       |   |       | $      | 3,666   |     |   | $      | -           |   |   | $      | -      |   |   | $ | 3,671 |   |
| Collectively evaluated for impairment              |   |        | 1,259   |   |       |   | 9,110   |     |   |   | 1,856       |   |   |   | -      |   |   |   | 12,225 |   |
|                                               |   |        |    |   |       |   |    |     |   |   |        |   |   |   |   |   |   |   |   |   |
| Loan balance individually evaluated for impairment |   | $           | 876     |   |       | $      | 10,358  |     |   | $      | -           |   |   |   |   |   |   | $ | 11,234 |   |
| Loan balance collectively evaluated for impairment |   |        | 334,747 |   |       |   | 293,581 |     |   |   | 172,329     |   |   |   |   |   |   |   | 800,657 |   |
|                                               |   | $           | 335,623 |   |       | $      | 303,939 |     |   | $      | 172,329     |   |   |   |   |   |   | $ | 811,891 |   |

----

|                                |   | March 31, |   |   | December 31, |   |
|-------------------------------------|--------|-----------|--------|--------|--------------|--------|
|                                |   | 2011      |   |   | 2010         |   |
| Residential real estate:            |   |      |   |   |         |   |
| 1-4 family                          |   | $         | 1,308  |   |         | $      | 1,059 |   |
| Home equity                         |   |      | 206    |   |         |   | 158 |   |
| Commercial :                        |   |      |   |   |         |   |   |   |
| Commercial business                 |   |      | 607    |   |         |   | 984 |   |
| Commercial real estate              |   |      | 5,295  |   |         |   | 4,633 |   |
| Multi-family real estate            |   |      | 2,459  |   |         |   | 3,200 |   |
| Commercial - 1-4 family real estate |   |      | 1,500  |   |         |   | - |   |
| Construction                        |   |      | -      |   |         |   | 314 |   |
|                                |   | $         | 11,375 |   |         | $      | 10,348 |   |

----

|                                |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    | Accruing Loans |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|--------|-------------|--------|--------|---------|--------|--------|--------|--------|---------|----------------|--------|
|                                |   | 30-59 Days |   |   | 60-89 Days |   |   | 90-119 Days |   |   | 120 Days    |   |   | Current |   |   | Total  |   |    | 90 or More     |   |
|                                |   | Past Due   |   |   | Past Due   |   |   | Past Due    |   |   | and Greater |   |   | Loans   |   |   | Loans  |   |    | Days Past Due  |   |
| Residential real estate:            |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    |           |   |
| 1-4 family                          |   | $          | 66     |   |       | $      | -      |        |   | $      | -           |   |   | $       | 1,308  |   |   | $      | 178,689 |           |   | $ | 180,063 |   |   | $ | - |   |
| Home equity                         |   |       | 550    |   |       |   | 159    |        |   |   | 127         |   |   |    | 206    |   |   |   | 154,518 |           |   |   | 155,560 |   |   |   | 127 |   |
| Commercial :                        |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    |           |   |   |   |   |   |   |   |   |
| Commercial business                 |   |       | 1,782  |   |       |   | 964    |        |   |   | 21          |   |   |    | 607    |   |   |   | 83,886  |           |   |   | 87,260 |   |   |   | 21 |   |
| Commercial real estate              |   |       | 2,424  |   |       |   | 502    |        |   |   | -           |   |   |    | 5,295  |   |   |   | 148,364 |           |   |   | 156,585 |   |   |   | - |   |
| Multi-family real estate            |   |       | -      |   |       |   | -      |        |   |   | -           |   |   |    | 2,459  |   |   |   | 23,754  |           |   |   | 26,213 |   |   |   | - |   |
| Commercial - 1-4 family real estate |   |       | -      |   |       |   | 53     |        |   |   | 95          |   |   |    | 1,500  |   |   |   | 9,080   |           |   |   | 10,728 |   |   |   | 95 |   |
| Construction                        |   |       | -      |   |       |   | -      |        |   |   | -           |   |   |    | -      |   |   |   | 23,153  |           |   |   | 23,153 |   |   |   | - |   |
| Consumer:                           |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    |           |   |   |   |   |   |   |   |   |
| Auto - indirect                     |   |       | 1,196  |   |       |   | 76     |        |   |   | -           |   |   |    | -      |   |   |   | 120,869 |           |   |   | 122,141 |   |   |   | - |   |
| Auto - direct                       |   |       | 61     |   |       |   | -      |        |   |   | 4           |   |   |    | -      |   |   |   | 23,798  |           |   |   | 23,863 |   |   |   | 4 |   |
| Other consumer - secured            |   |       | 93     |   |       |   | -      |        |   |   | -           |   |   |    | -      |   |   |   | 19,232  |           |   |   | 19,325 |   |   |   | - |   |
| Other consumer - unsecured          |   |       | 25     |   |       |   | 2      |        |   |   | -           |   |   |    | -      |   |   |   | 6,973   |           |   |   | 7,000 |   |   |   | - |   |
| Total                               |   | $          | 6,197  |   |       | $      | 1,756  |        |   | $      | 247         |   |   | $       | 11,375 |   |   | $      | 792,316 |           |   | $ | 811,891 |   |   | $ | 247 |   |

|                                |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    | Accruing Loans |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|--------|-------------|--------|--------|---------|--------|--------|--------|--------|---------|----------------|--------|
|                                |   | 30-59 Days |   |   | 60-89 Days |   |   | 90-119 Days |   |   | 120 Days    |   |   | Current |   |   | Total  |   |    | 90 or More     |   |
|                                |   | Past Due   |   |   | Past Due   |   |   | Past Due    |   |   | and Greater |   |   | Loans   |   |   | Loans  |   |    | Days Past Due  |   |
| Residential real estate:            |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    |           |   |
| 1-4 family                          |   | $          | 303    |   |       | $      | -      |        |   | $      | 345         |   |   | $       | 1,059  |   |   | $      | 181,125 |           |   | $ | 182,832 |   |   | $ | 345 |   |
| Home equity                         |   |       | 470    |   |       |   | 235    |        |   |   | 185         |   |   |    | 158    |   |   |   | 156,581 |           |   |   | 157,629 |   |   |   | 185 |   |
| Commercial :                        |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    |           |   |   |   |   |   |   |   |   |
| Commercial business                 |   |       | 2,276  |   |       |   | 555    |        |   |   | 543         |   |   |    | 984    |   |   |   | 81,602  |           |   |   | 85,960 |   |   |   | 543 |   |
| Commercial real estate              |   |       | 361    |   |       |   | 668    |        |   |   | -           |   |   |    | 4,633  |   |   |   | 140,771 |           |   |   | 146,433 |   |   |   | - |   |
| Multi-family real estate            |   |       | -      |   |       |   | -      |        |   |   | -           |   |   |    | 3,200  |   |   |   | 23,744  |           |   |   | 26,944 |   |   |   | - |   |
| Commercial - 1-4 family real estate |   |       | -      |   |       |   | -      |        |   |   | 1,500       |   |   |    | -      |   |   |   | 8,524   |           |   |   | 10,024 |   |   |   | 1,500 |   |
| Construction                        |   |       | -      |   |       |   | -      |        |   |   | -           |   |   |    | 314    |   |   |   | 21,716  |           |   |   | 22,030 |   |   |   | - |   |
| Consumer:                           |   |       |   |   |       |   |   |        |   |   |        |   |   |    |   |   |   |   |    |           |   |   |   |   |   |   |   |   |
| Auto - indirect                     |   |       | 1,750  |   |       |   | 33     |        |   |   | -           |   |   |    | -      |   |   |   | 117,940 |           |   |   | 119,723 |   |   |   | - |   |
| Auto - direct                       |   |       | 141    |   |       |   | 7      |        |   |   | -           |   |   |    | -      |   |   |   | 25,311  |           |   |   | 25,459 |   |   |   | - |   |
| Other consumer - secured            |   |       | 82     |   |       |   | -      |        |   |   | -           |   |   |    | -      |   |   |   | 18,587  |           |   |   | 18,669 |   |   |   | - |   |
| Other consumer - unsecured          |   |       | 28     |   |       |   | 6      |        |   |   | 2           |   |   |    | -      |   |   |   | 7,459   |           |   |   | 7,495 |   |   |   | 2 |   |
| Total                               |   | $          | 5,411  |   |       | $      | 1,504  |        |   | $      | 2,575       |   |   | $       | 10,348 |   |   | $      | 783,360 |           |   | $ | 803,198 |   |   | $ | 2,575 |   |

----

|                              |   | Unpaid      |   |   | Recorded   |   |   | Recorded   |   |   |       |   |   |      |   |   |       |   |   |       |   |
|-----------------------------------|--------|-------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
|                              |   | Contractual |   |   | Investment |   |   | Investment |   |   | Total      |   |   |      |   |   | Average    |   |   | Interest   |   |
|                              |   | Principal   |   |   | With No    |   |   | With       |   |   | Recorded   |   |   | Related   |   |   | Recorded   |   |   | Income     |   |
|                              |   | Balance     |   |   | Allowance  |   |   | Allowance  |   |   | Investment |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| March 31, 2011                    |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |
| Residential real estate:          |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |
| 1-4 family                        |   | $           | 876    |   |       | $      | -      |       |   | $      | 876        |   |   | $         | 876    |   |       | $      | 5      |       |   | $ | 877 |   |   | $ | 1 |   |
| Commercial :                      |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Commercial business               |   |        | 2,345  |   |       |   | 99     |       |   |   | 1,364      |   |   |      | 1,463  |   |       |   | 943    |       |   |   | 1,473 |   |   |   | 29 |   |
| Commercial real estate            |   |        | 7,261  |   |       |   | 2,385  |       |   |   | 2,242      |   |   |      | 4,627  |   |       |   | 1,308  |       |   |   | 4,604 |   |   |   | 2 |   |
| Multi-family real estate          |   |        | 4,653  |   |       |   | 775    |       |   |   | 1,684      |   |   |      | 2,459  |   |       |   | 785    |       |   |   | 2,459 |   |   |   | - |   |
| Commercial 1-4 family real estate |   |        | 1,500  |   |       |   | -      |       |   |   | 1,500      |   |   |      | 1,500  |   |       |   | 500    |       |   |   | 1,250 |   |   |   | - |   |
| Construction                      |   |        | 309    |   |       |   | -      |       |   |   | 309        |   |   |      | 309    |   |       |   | 130    |       |   |   | 310 |   |   |   | 5 |   |
| Total                             |   | $           | 16,944 |   |       | $      | 3,259  |       |   | $      | 7,975      |   |   | $         | 11,234 |   |       | $      | 3,671  |       |   | $ | 10,973 |   |   | $ | 37 |   |
|                              |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| December 31, 2010                 |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Residential real estate:          |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| 1-4 family                        |   | $           | 881    |   |       | $      | -      |       |   | $      | 881        |   |   | $         | 881    |   |       | $      | 5      |       |   | $ | 422 |   |   | $ | 15 |   |
| Commercial :                      |   |        |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Commercial business               |   |        | 4,225  |   |       |   | 245    |       |   |   | 2,593      |   |   |      | 2,838  |   |       |   | 1,333  |       |   |   | 2,376 |   |   |   | 18 |   |
| Commercial real estate            |   |        | 6,540  |   |       |   | 2,390  |       |   |   | 1,516      |   |   |      | 3,906  |   |       |   | 846    |       |   |   | 5,321 |   |   |   | 20 |   |
| Multi-family real estate          |   |        | 4,117  |   |       |   | 1,297  |       |   |   | 1,126      |   |   |      | 2,423  |   |       |   | 430    |       |   |   | 4,009 |   |   |   | 162 |   |
| Construction                      |   |        | 314    |   |       |   | -      |       |   |   | 314        |   |   |      | 314    |   |       |   | 130    |       |   |   | 37 |   |   |   | 1 |   |
| Total                             |   | $           | 16,077 |   |       | $      | 3,932  |       |   | $      | 6,430      |   |   | $         | 10,362 |   |       | $      | 2,744  |       |   | $ | 12,165 |   |   | $ | 216 |   |

----

|                                |   | March 31, 2011    |   |
|-------------------------------------|--------|-------------------|--------|
|                                |   | SpecialMention    |   |   | Substandard |   |   | Doubtful |   |
| Commercial business                 |   | $                 | 3,668  |   |   | $ | 6,390 |   |   | $ | 2,867 |   |
| Commercial real estate              |   |              | 2,905  |   |   |   | 16,135 |   |   |   | 1,838 |   |
| Multi-family real estate            |   |              | -      |   |   |   | 2,459 |   |   |   | - |   |
| Commercial - 1-4 family real estate |   |              | 282    |   |   |   | 1,500 |   |   |   | - |   |
| Construction                        |   |              | 467    |   |   |   | 1,300 |   |   |   | - |   |
|                                |   | $                 | 7,322  |   |   | $ | 27,784 |   |   | $ | 4,705 |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |
|                                |   | December 31, 2010 |   |
|                                |   | SpecialMention    |   |   | Substandard |   |   | Doubtful |   |
| Commercial business                 |   | $                 | 1,435  |   |   | $ | 7,793 |   |   | $ | 846 |   |
| Commercial real estate              |   |              | 2,903  |   |   |   | 11,477 |   |   |   | - |   |
| Multi-family real estate            |   |              | -      |   |   |   | 2,561 |   |   |   | 741 |   |
| Commercial - 1-4 family real estate |   |              | 285    |   |   |   | 1,500 |   |   |   | - |   |
| Construction                        |   |              | 1,269  |   |   |   | 314 |   |   |   | - |   |
|                                |   | $                 | 5,892  |   |   | $ | 23,645 |   |   | $ | 1,587 |   |

| Type of concession                                               |   | # of Loans |   |   | Unpaid principal balance |   |   | Allocated allowance |   |
|------------------------------------------------------------------|--------|------------|--------|--------|--------------------------|--------|--------|---------------------|--------|
|                                                             |   |       |   |   | (Dollars in thousands)   |   |
| Commercial loans - non collateral-dependent                      |   |       |   |   |                     |   |   |                |   |
| Interest-only for 6 to 12 months                                 |   |       | 9      |   |                     | $      | 1,739  |                |   | $ | 1,198 |   |
|                                                             |   |       |   |   |                     |   |   |                |   |   |   |   |
| Commercial loans - collateral-dependent                          |   |       |   |   |                     |   |   |                |   |   |   |   |
| Interest-only for 6 to 12 months                                 |   |       | 8      |   |                     | $      | 4,917  |                |   | $ | 1,087 |   |
| Interest-only for 24 months at a below-market interest rate      |   |       | 1      |   |                     |   | 1,501  |                |   |   | - |   |
| Term extended and interest rate reduced (reduced to market rate) |   |       | 2      |   |                     |   | 596    |                |   |   | 219 |   |
|                                                             |   |       |   |   |                     |   |   |                |   |   |   |   |
| Residential 1-4 family loan - non collateral-dependent           |   |       |   |   |                     |   |   |                |   |   |   |   |
| Term extended and interest rate reduced to below-market rate     |   |       | 1      |   |                     | $      | 876    |                |   | $ | 5 |   |

----

|                               |   | March 31, |    |   | December 31, |   |
|------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                               |   | 2011      |    |   | 2010         |   |
|                               |   |      |    |   |         |   |
| Noninterest-bearing checking       |   | $         | 42,606  |   |         | $      | 42,468 |   |
| Interest-bearing checking accounts |   |      | 61,836  |   |         |   | 62,757 |   |
| Savings accounts                   |   |      | 113,454 |   |         |   | 108,335 |   |
| Money market accounts              |   |      | 140,496 |   |         |   | 142,450 |   |
| Time accounts                      |   |      | 322,707 |   |         |   | 321,374 |   |
|                               |   | $         | 681,099 |   |         | $      | 677,384 |   |

----

|                            |   | March 31, 2011 |        |   | December 31, 2010 |   |
|---------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                            |   | Fixed          |        |   | Variable          |   |   | Fixed |   |   | Variable |   |
|                            |   | Rate           |        |   | Rate              |   |   | Rate |   |   | Rate |   |
| Commitments to make loans       |   | $              | 44,565      |   |              | $      | 9,358 |   |   | $ | 12,438 |   |   | $ | 31,019 |   |
| Unused lines of credit          |   | $              | 3,856       |   |              | $      | 55,364 |   |   | $ | 3,704 |   |   | $ | 56,828 |   |
| Range of fixed-rate commitments |   |           | 3.25%-15.00 | %      |              |   | - |   |   |   | 3.25%-15.00 | % |   |   | - |   |

|                                               |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                               |   | Contract       |   |   | Fair              |   |   | Contract |   |   | Fair |   |
|                                               |   | Amount         |   |   | Value             |   |   | Amount |   |   | Value |   |
| Standby letters of credit                          |   | $              | 3,176  |   |              | $      | - |   |   | $ | 1,191 |   |   | $ | - |   |
| Limited recourse obligations related to loans sold |   | $              | 1,664  |   |              | $      | - |   |   | $ | 1,664 |   |   | $ | - |   |

----

----

----

----

|                                                    |   | Quoted Prices in |   |   | Significant |   |    |         |   |   |   |   |
|---------------------------------------------------------|--------|------------------|--------|--------|-------------|--------|---------|--------------|--------|--------|--------|--------|
|                                                    |   | Active Markets   |   |   | Other       |   |    | Significant  |   |   |   |   |
|                                                    |   | for Identical    |   |   | Observable  |   |    | Unobservable |   |   | Total  |   |
|                                                    |   | Assets           |   |   | Inputs      |   |    | Inputs       |   |   | Fair   |   |
|  Assets                                            |   | (Level 1)        |   |   | (Level 2)   |   |    | (Level 3)    |   |   | Value  |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |
| Available for sale securities:                          |   |             |   |   |        |   |    |         |   |   |   |   |
| Debt securities:                                        |   |             |   |   |        |   |    |         |   |   |   |   |
| U.S. Treasury and agencies                              |   | $                | 99     |   |        | $      | 7,954   |         |   | $      | -      |   |   | $ | 8,053 |   |
| Pooled trust preferred securities                       |   |             | -      |   |        |   | -       |         |   |   | 5,973  |   |   |   | 5,973 |   |
| Mortgage-backed securities - Residential                |   |             | -      |   |        |   | 44,408  |         |   |   | -      |   |   |   | 44,408 |   |
| Collateralized mortgage obligations - Private issuer    |   |             | -      |   |        |   | 13,848  |         |   |   | -      |   |   |   | 13,848 |   |
| Collateralized mortgage obligations - Government agency |   |             | -      |   |        |   | 92,878  |         |   |   | -      |   |   |   | 92,878 |   |
|                                                    |   | $                | 99     |   |        | $      | 159,088 |         |   | $      | 5,973  |   |   | $ | 165,160 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Loans held for sale                                     |   | $                | -      |   |        | $      | 618     |         |   | $      | -      |   |   | $ | 618 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Mortgage servicing rights                               |   | $                | -      |   |        | $      | 976     |         |   | $      | -      |   |   | $ | 976 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Loan commitment derivatives                             |   | $                | -      |   |        | $      | 29      |         |   | $      | -      |   |   | $ | 29 |   |

----

|                                                    |   | Quoted Prices in |   |   | Significant |   |    |         |   |   |   |   |
|---------------------------------------------------------|--------|------------------|--------|--------|-------------|--------|---------|--------------|--------|--------|--------|--------|
|                                                    |   | Active Markets   |   |   | Other       |   |    | Significant  |   |   |   |   |
|                                                    |   | for Identical    |   |   | Observable  |   |    | Unobservable |   |   | Total  |   |
|                                                    |   | Assets           |   |   | Inputs      |   |    | Inputs       |   |   | Fair   |   |
|  Assets                                            |   | (Level 1)        |   |   | (Level 2)   |   |    | (Level 3)    |   |   | Value  |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |
| Securities available for sale:                          |   |             |   |   |        |   |    |         |   |   |   |   |
| Debt securities:                                        |   |             |   |   |        |   |    |         |   |   |   |   |
| U.S. Treasury and agencies                              |   | $                | 101    |   |        | $      | 25,972  |         |   | $      | -      |   |   | $ | 26,073 |   |
| Pooled trust preferred securities                       |   |             | -      |   |        |   | -       |         |   |   | 5,012  |   |   |   | 5,012 |   |
| Residential mortgage-backed securities                  |   |             | -      |   |        |   | 41,253  |         |   |   | -      |   |   |   | 41,253 |   |
| Collateralized mortgage obligations - Private issuer    |   |             | -      |   |        |   | 18,300  |         |   |   | -      |   |   |   | 18,300 |   |
| Collateralized mortgage obligations - Government agency |   |             | -      |   |        |   | 76,600  |         |   |   | -      |   |   |   | 76,600 |   |
|                                                    |   | $                | 101    |   |        | $      | 162,125 |         |   | $      | 5,012  |   |   | $ | 167,238 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Loans held for sale                                     |   | $                | -      |   |        | $      | 940     |         |   | $      | -      |   |   | $ | 940 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Mortgage servicing rights                               |   | $                | -      |   |        | $      | 900     |         |   | $      | -      |   |   | $ | 900 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Loan commitment derivatives                             |   | $                | -      |   |        | $      | 79      |         |   | $      | -      |   |   | $ | 79 |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Liabilities                                             |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
|                                                    |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Sales contract derivatives                              |   | $                | -      |   |        | $      | 17      |         |   | $      | -      |   |   | $ | 17 |   |

|                                        |   | Three Months Ended March 31, |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | 2011                         |   |   | 2010 |   |
|                                        |   |                         |   |   |   |   |
| Beginning balance                           |   | $                            | 5,446  |   |   | $ | 5,012 |   |
| Capitalized interest                        |   |                         | -      |   |   |   | 35 |   |
| Principal paydowns                          |   |                         | (32    | ) |   |   | (99 | ) |
| Total gains or losses (realized/unrealized) |   |                         |   |   |   |   |   |   |
| Included in earnings                        |   |                         | (34    | ) |   |   | (232 | ) |
| Included in other comprehensive income      |   |                         | 593    |   |   |   | 972 |   |
| Ending balance                              |   | $                            | 5,973  |   |   | $ | 5,688 |   |

----

|                                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                |   | Significant    |   |   |              |   |   | Significant |   |   |   |   |
|                                |   | Unobservable   |   |   |              |   |   | Unobservable |   |   |   |   |
|                                |   | Inputs         |   |   | Total             |   |   | Inputs |   |   | Total |   |
|                                |   | (Level 3)      |   |   | Fair Value        |   |   | (Level 3) |   |   | Fair Value |   |
|                                |   |           |   |   |              |   |   |   |   |   |   |   |
| Impaired loans:                     |   |           |   |   |              |   |   |   |   |   |   |   |
| Residential real estate             |   | $              | 876    |   |              | $      | 876 |   |   | $ | 881 |   |   | $ | 881 |   |
| Commercial business                 |   |           | 1,463  |   |              |   | 1,463 |   |   |   | 2,838 |   |   |   | 2,838 |   |
| Commercial real estate              |   |           | 4,627  |   |              |   | 4,627 |   |   |   | 3,906 |   |   |   | 3,906 |   |
| Multi-family real estate            |   |           | 2,459  |   |              |   | 2,459 |   |   |   | 2,423 |   |   |   | 2,423 |   |
| Commercial 1-4 family real estate   |   |           | 1,500  |   |              |   | 1,500 |   |   |   | - |   |   |   | - |   |
| Construction                        |   |           | 309    |   |              |   | 309 |   |   |   | 314 |   |   |   | 314 |   |
| Foreclosed and repossessed assets:  |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate             |   |           | 34     |   |              |   | 34 |   |   |   | 53 |   |   |   | 53 |   |
| Consumer - autos                    |   |           | 31     |   |              |   | 31 |   |   |   | 51 |   |   |   | 51 |   |
| Commercial multi-family real estate |   |           | -      |   |              |   | - |   |   |   | 102 |   |   |   | 102 |   |

| Balance at January 1, 2011 |   | $      | 2,744 |   |
|----------------------------|--------|--------|-------|--------|
| Provision for loan losses  |   |   | 1,171 |   |
| Loans charged off          |   |   | -     |   |
| Recoveries                 |   |   | (244  | )      |
| Balance at March 31, 2011  |   | $      | 3,671 |   |

----

|                                          |   | March 31, |    |   | December 31, |   |
|-----------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                          |   | 2011      |    |   | 2010         |   |
|                                          |   | Carrying  |    |   | Fair         |   |   | Carrying |   |   | Fair |   |
|                                          |   | Amount    |    |   | Value        |   |   | Amount |   |   | Value |   |
|                                          |   |      |    |   |         |   |   |   |   |   |   |   |
| Financial assets:                             |   |      |    |   |         |   |   |   |   |   |   |   |
| Cash and cash equivalents                     |   | $         | 7,766   |   |         | $      | 7,766 |   |   | $ | 12,439 |   |   | $ | 12,439 |   |
| Securities available for sale                 |   |      | 165,160 |   |         |   | 165,160 |   |   |   | 162,405 |   |   |   | 162,405 |   |
| Securities held to maturity                   |   |      | 9,150   |   |         |   | 9,424 |   |   |   | 10,321 |   |   |   | 10,543 |   |
| Loans held for sale                           |   |      | 618     |   |         |   | 618 |   |   |   | 2,692 |   |   |   | 2,692 |   |
| Loans, net                                    |   |      | 800,564 |   |         |   | 817,065 |   |   |   | 792,553 |   |   |   | 812,908 |   |
| FHLB stock                                    |   |      | 9,785   |   |         |   | N/A |   |   |   | 9,954 |   |   |   | N/A |   |
| Accrued interest receivable                   |   |      | 3,473   |   |         |   | 3,473 |   |   |   | 3,528 |   |   |   | 3,528 |   |
|                                          |   |      |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                        |   |      |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                      |   |      | 681,099 |   |         |   | 686,054 |   |   |   | 677,384 |   |   |   | 683,008 |   |
| Federal Home Loan Bank advances               |   |      | 159,027 |   |         |   | 166,310 |   |   |   | 163,427 |   |   |   | 172,049 |   |
| Securities sold under agreement to repurchase |   |      | 70,000  |   |         |   | 76,613 |   |   |   | 70,000 |   |   |   | 77,464 |   |
| Accrued interest payable                      |   |      | 1,463   |   |         |   | 1,463 |   |   |   | 1,492 |   |   |   | 1,492 |   |

----

----

----

----

----

----

|                                                               |   | For the Three Months Ended March 31, |      |
|--------------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                               |   | 2011                                 |      |   | 2010 |   |
|                                                               |   | AverageOutstandingBalance            |      |   | InterestEarned/Paid |   |   | Yield /Rate |   |   | AverageOutstandingBalance |   |   | InterestEarned/Paid |   |   | Yield /Rate |   |
|                                                               |   | (Dollars in thousands)               |      |
| Interest-earning assets:                                           |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                              |   | $                                    | 814,641   |   |   | $ | 10,887 |   |   |   | 5.42 | % |   | $ | 835,956 |   |   | $ | 11,612 |   |   |   | 5.63 | % |
| Securities                                                         |   |                                 | 172,732   |   |   |   | 1,478 |   |   |   | 3.47 |   |   |   | 180,939 |   |   |   | 1,967 |   |   |   | 4.41 |   |
| FHLB stock                                                         |   |                                 | 10,253    |   |   |   | 150 |   |   |   | 5.93 |   |   |   | 11,557 |   |   |   | 167 |   |   |   | 5.86 |   |
| Interest-earning deposits                                          |   |                                 | 221       |   |   |   | 3 |   |   |   | 5.51 |   |   |   | 8,420 |   |   |   | 5 |   |   |   | 0.24 |   |
| Total interest-earning assets                                      |   |                                 | 997,847   |   |   |   | 12,518 |   |   |   | 5.09 |   |   |   | 1,036,872 |   |   |   | 13,751 |   |   |   | 5.38 |   |
| Noninterest-earning assets                                         |   |                                 | 34,044    |   |   |   |   |   |   |   |   |   |   |   | 31,666 |   |   |   |   |   |   |   |   |   |
| Total assets                                                       |   | $                                    | 1,031,891 |   |   |   |   |   |   |   |   |   |   | $ | 1,068,538 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                      |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                            |   | $                                    | 110,012   |   |   | $ | 135 |   |   |   | 0.50 |   |   | $ | 60,153 |   |   | $ | 45 |   |   |   | 0.30 |   |
| Money market accounts                                              |   |                                 | 142,050   |   |   |   | 262 |   |   |   | 0.75 |   |   |   | 165,914 |   |   |   | 559 |   |   |   | 1.37 |   |
| Checking accounts                                                  |   |                                 | 60,928    |   |   |   | 132 |   |   |   | 0.88 |   |   |   | 48,887 |   |   |   | 74 |   |   |   | 0.61 |   |
| Time accounts                                                      |   |                                 | 321,242   |   |   |   | 1,633 |   |   |   | 2.06 |   |   |   | 384,986 |   |   |   | 2,500 |   |   |   | 2.63 |   |
| Total deposits                                                     |   |                                 | 634,232   |   |   |   | 2,162 |   |   |   | 1.38 |   |   |   | 659,940 |   |   |   | 3,178 |   |   |   | 1.95 |   |
| FHLB advances                                                      |   |                                 | 163,841   |   |   |   | 1,710 |   |   |   | 4.23 |   |   |   | 190,464 |   |   |   | 1,976 |   |   |   | 4.21 |   |
| Reverse repurchase agreements                                      |   |                                 | 70,000    |   |   |   | 668 |   |   |   | 3.87 |   |   |   | 70,000 |   |   |   | 668 |   |   |   | 3.87 |   |
| Lease obligation                                                   |   |                                 | 7,740     |   |   |   | 196 |   |   |   | 10.27 |   |   |   | 7,736 |   |   |   | 196 |   |   |   | 10.28 |   |
| Total interest-bearing liabilities                                 |   |                                 | 875,813   |   |   |   | 4,736 |   |   |   | 2.19 |   |   |   | 928,140 |   |   |   | 6,018 |   |   |   | 2.63 |   |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits                                       |   |                                 | 41,330    |   |   |   |   |   |   |   |   |   |   |   | 33,432 |   |   |   |   |   |   |   |   |   |
| Other noninterest-bearing liabilities                              |   |                                 | 5,370     |   |   |   |   |   |   |   |   |   |   |   | 4,835 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                  |   |                                 | 922,513   |   |   |   |   |   |   |   |   |   |   |   | 966,407 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                                         |   |                                 | 109,378   |   |   |   |   |   |   |   |   |   |   |   | 102,131 |   |   |   |   |   |   |   |   |   |
| Total liabilities and equity                                       |   | $                                    | 1,031,891 |   |   |   |   |   |   |   |   |   |   | $ | 1,068,538 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                |   |                                 |      |   |   | $ | 7,782 |   |   |   |   |   |   |   |   |   |   | $ | 7,733 |   |   |   |   |   |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest rate spread                                           |   |                                 |      |   |   |   |   |   |   |   | 2.89 | % |   |   |   |   |   |   |   |   |   |   | 2.75 | % |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning assets                                        |   | $                                    | 122,034   |   |   |   |   |   |   |   |   |   |   | $ | 108,732 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin                                                |   |                                 |      |   |   |   |   |   |   |   | 3.16 | % |   |   |   |   |   |   |   |   |   |   | 3.02 | % |
|                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average of interest-earning assets to interest-bearing liabilities |   |                                 |      |   |   |   |   |   |   |   | 113.93 | % |   |   |   |   |   |   |   |   |   |   | 111.72 | % |

----

----

|                                                      |   |   |    |   |              |   |   |              |   |   |              |   |              | To Be Well |   |
|-----------------------------------------------------------|--------|--------|---------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|-------------------|------------|--------|
|                                                      |   |   |    |   |              |   |   |              |   |   | Capitalized Under |   |
|                                                      |   |   |    |   | For Capital       |   |   | Prompt Corrective |   |
|                                                      |   | Actual |    |   | Adequacy Purposes |   |   | Action Provisions |   |
| March 31, 2011                                            |   | Amount |    |   | Ratio             |   |   | Amount            |   |   | Ratio             |   |              | Amount     |   |   | Ratio |   |
| Equity                                                    |   | $      | 99,476  |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |
| Disallowed deferred tax assets                            |   |   | (673    | )      |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |
| Unrealized loss on AFS securities                         |   |   | 1,777   |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |
| Tier 1 (Core) Capital and Tangible Capital                |   |   | 100,580 |   |              |   | 9.71   | %                 |   | $      | 15,540            |   |              |       | 1.50   | % |   |   |   |   |   |   |
| General valuation allowance  (1)                |   |   | 10,069  |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |
| Deduction for low-level recourse                          |   |   | (1,665  | )      |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |
| Total Capital to risk-weighted assets                     |   | $      | 108,984 |   |              |   | 13.53  | %                 |   | $      | 64,439            |   |              |       | 8.00   | % |   | $ | 80,549 |   |   |   | 10.00 | % |
| Tier 1 (Core) Capital to risk-weighted assets             |   | $      | 98,915  |   |              |   | 12.28  | %                 |   | $      | 32,219            |   |              |       | 4.00   | % |   | $ | 48,329 |   |   |   | 6.00 | % |
| Tier 1 (Core) Capital to adjusted total assets            |   | $      | 100,580 |   |              |   | 9.71   | %                 |   | $      | 41,440            |   |              |       | 4.00   | % |   | $ | 51,799 |   |   |   | 5.00 | % |
| (1)  Limited to 1.25% of risk-weighted assets.  |   |   |    |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |   |    |   |              |   |   |              |   |   |              |   |              |       |   |   |   | To Be Well |   |
|                                                      |   |   |    |   |              |   |   |              |   |   |              |   | Capitalized Under |       |
|                                                      |   |   |    |   | For Capital       |   |   | Prompt Corrective |   |
|                                                      |   | Actual |    |   | Adequacy Purposes |   |   | Action Provisions |   |
| December 31, 2010                                         |   | Amount |    |   | Ratio             |   |   | Amount            |   |   | Ratio             |   |              | Amount     |   |   | Ratio |   |
| Equity                                                    |   | $      | 97,165  |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Disallowed deferred tax assets                            |   |   | (192    | )      |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Unrealized loss on AFS securities                         |   |   | 1,866   |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Tier 1 (Core) Capital and Tangible Capital                |   |   | 98,839  |   |              |   | 9.55   | %                 |   | $      | 15,531            |   |              |       | 1.50   | % |   |   |   |   |   |   |   |   |
| General valuation allowance  (1)                |   |   | 9,981   |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Deduction for low-level recourse                          |   |   | (1,665  | )      |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Total Capital to risk-weighted assets                     |   | $      | 107,155 |   |              |   | 13.42  | %                 |   | $      | 63,877            |   |              |       | 8.00   | % |   | $ | 79,847 |   |   |   | 10.00 | % |
| Tier 1 (Core) Capital to risk-weighted assets             |   | $      | 97,174  |   |              |   | 12.17  | %                 |   | $      | 31,939            |   |              |       | 4.00   | % |   | $ | 47,908 |   |   |   | 6.00 | % |
| Tier 1 (Core) Capital to adjusted  total assets |   | $      | 98,839  |   |              |   | 9.55   | %                 |   | $      | 41,415            |   |              |       | 4.00   | % |   | $ | 51,768 |   |   |   | 5.00 | % |
| (1)  Limited to 1.25% of risk-weighted assets.  |   |   |    |   |              |   |   |              |   |   |              |   |              |       |   |   |   |   |   |   |   |   |   |   |

----

----

|                                       |   |         |   |   |          |   |   |              |   |   | (d)                 |   |
|--------------------------------------------|--------|--------------|--------|--------|---------------|--------|--------|-------------------|--------|--------|---------------------|--------|
|                                       |   |         |   |   |          |   |   | (c)               |   |   | Maximum Number      |   |
|                                       |   |         |   |   |          |   |   | Total Number of   |   |   | (or Approximate     |   |
|                                       |   | (a)          |   |   | (b)           |   |   | Shares (or Units) |   |   | Dollar Value) of    |   |
|                                       |   | Total Number |   |   | Average Price |   |   | Purchased as      |   |   | Shares (or Units)   |   |
|                                       |   | of Shares    |   |   | Paid per      |   |   | Part of Publicly  |   |   | That May Yet Be     |   |
|                                       |   | (or Units)   |   |   | Share         |   |   | Announced Plans   |   |   | Purchased Under the |   |
| Period                                     |   | Purchased    |   |   | (or Unit)     |   |   | or Programs       |   |   | Plans or Programs)  |   |
|                                       |   |         |   |   |          |   |   |              |   |   |                |   |
| January 1, 2011 through January 31, 2011   |   |         | -      |   |          | $      | -      |              |   |   | -                   |   |   |   | 245,460 |   |
| February 1, 2011 through February 28, 2011 |   |         | -      |   |          | $      | -      |              |   |   | -                   |   |   |   | 245,460 |   |
| March 1, 2011 through March 31, 2011       |   |         | 19,794 |   |          | $      | 14.28  |              |   |   | 19,794              |   |   |   | 225,666 |   |
| Total                                      |   |         | 19,794 |   |          | $      | 14.28  |              |   |   | 19,794              |   |   |   |   |   |

| 3.1 | Articles of Incorporation of Beacon Federal Bancorp, Inc. (1) |
|-----|---------------------------------------------------------------|

| 3.2 | Bylaws of Beacon Federal Bancorp, Inc. (1) |
|-----|--------------------------------------------|

| 4 | Form of Common Stock Certificate of Beacon Federal Bancorp, Inc. (1) |
|---|----------------------------------------------------------------------|

| 10.1 | Employee Stock Ownership Plan (1) |
|------|-----------------------------------|

| 10.2 | Employment Agreement with Ross J. Prossner (2) |
|------|------------------------------------------------|

----

| 10.3 | Employment Agreement with J. David Hammond (2) |
|------|------------------------------------------------|
| 10.4 | Employment Agreement with Darren T. Crossett (2) |
|------|--------------------------------------------------|
| 10.5 | Employment Agreement with Lisa M. Jones (3) |
|------|---------------------------------------------|
| 10.6 | Form of Change in Control Agreement (2) |
|------|-----------------------------------------|
| 10.7 | Beacon Federal Excess Benefit Plan (4) |
|------|----------------------------------------|
| 10.8 | Beacon Federal Annual Cash Incentive Plan (1) |
|------|-----------------------------------------------|
| 10.9 | Beacon Federal Supplemental Executive Retirement Plan (5) |
|------|-----------------------------------------------------------|
| 10.10 | Beacon Federal 2008 Equity Incentive Plan (6) |
|-------|-----------------------------------------------|
| 13 | Annual Report to Stockholders |
|----|-------------------------------|
| 21 | Subsidiaries of Registrant (1) |
|----|--------------------------------|
| 23 | Consent of Independent Registered Public Accounting Firm. |
|----|-----------------------------------------------------------|
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|----------------------------------------------------------------------------------------------------|
| 31.2  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------------|----------------------------------------------------------------------------------------------------|
| 32 | Statement of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|----|----------------------------------------------------------------------------------------------------------------------------|

----

| (1) | Incorporated by reference to the Registration Statement on Form S-1 of Beacon Federal Bancorp, Inc. (File No. 333-143522), originally filed with the Securities and Exchange Commission on June 5, 2007. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Filed with the Securities and Exchange Commission on October 4, 2007 on Form 8K. |
|-----|----------------------------------------------------------------------------------|

| (3) | Filed with the Securities and Exchange Commission on December 23, 2010 on Form 8K. |
|-----|------------------------------------------------------------------------------------|

| (4) | Filed with the Securities and Exchange Commission on October 31, 2008 on Form 8K. |
|-----|-----------------------------------------------------------------------------------|

| (5) | Filed with the Securities and Exchange Commission on December 28, 2007 on Form 8K. |
|-----|------------------------------------------------------------------------------------|

| (6) | Incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement for the Special Meeting of Stockholders (File No. 001-33713), as filed with the Securities and Exchange Commission on October 9, 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|               |                                                          |             |   |
|--------------------|---------------------------------------------------------------|------------------|--------|
| DATE: May 12, 2011 | BY:                                                           | Ross J. Prossner |   |
|               |  Ross J. Prossner, President and Chief Executive Officer |

|   | BY:                                                         | Lisa M. Jones |   |
|--------|------------------------------------------------------------------|---------------|--------|
|   | Lisa M. Jones, Senior Vice President and Chief Financial Officer |