----

----

| 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  incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| 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 November 12, 2009 |   |   |
|-----------------------------------------------|-------------------------------|--------|--------|
|  Common Stock, par value $0.01 per share |  6,683,146               |   |   |

----

|  PART I - Financial Information.   |  PAGE NO.                                                                               |
|---------------------------------------------------|----------------------------------------------------------------------------------------------|
|                                              |                                                                                         |   |
| Item 1.                       | Financial Statements.                                                                   |  3 |
|                                              |                                                                                         |   |
|                                              | Consolidated Balance Sheets                                                             |  3 |
|                                              |                                                                                         |   |
|                                              | Consolidated Statements of Operations                                              |  4 |
|                                              |                                                                                         |   |
|                                              | Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)        |  5 |
|                                              |                                                                                         |   |
|                                              | Consolidated Statements of Cash Flows                                                   |  6 |
|                                              |                                                                                         |   |
|                                              | Notes to Consolidated Financial Statements                                         |  8 |
|                                              |                                                                                         |   |
| Item 2.                                 | Management's Discussion and Analysis of Financial Condition and Results of Operations.  |  27 |
|                                              |                                                                                         |   |
| Item 3.                                      | Quantitative and Qualitative Disclosures About Market Risk.                        |  46 |
|                                              |                                                                                         |   |
| Item 4T.                                     | Controls and Procedures.                                                           |  46 |
|                                              |                                                                                         |   |
| PART II - Other Information.                 |  47                                                                                     |
|                                              |                                                                                         |   |
| Item 1.                                 | Legal Proceedings.                                                                 |  47 |
|                                              |                                                                                         |   |
| Item 1A.                                | Risk Factors.                                                                      |  47 |
|                                              |                                                                                         |   |
| Item 2.                                 | Unregistered Sales of Equity Securities and Use of Proceeds.                       |  47 |
|                                              |                                                                                         |   |
| Item 3.                                 | Defaults Upon Senior Securities.                                                   |  47 |
|                                              |                                                                                         |   |
| Item 4.                                 | Submission of Matters to a Vote of Security Holders.                               |  47 |
|                                              |                                                                                         |   |
| Item 5.                                 | Other Information.                                                                 |  47 |
|                                              |                                                                                         |   |
| Item 6.                                 | Exhibits.                                                                          |  48 |
|                                              |                                                                                         |   |
| Signatures                                   |  49                                                                                     |
|                                              |                                                                                         |   |
| Certifications                          |                                                                                         |

----

|                                                                           |   | September 30, |      |   | December 31, |   |
|--------------------------------------------------------------------------------|--------|---------------|-----------|--------|--------------|--------|
| ASSETS                                                                         |   | 2009          |      |   | 2008         |   |
|                                                                           |   | (Unaudited)   |      |
| Cash and cash equivalents - cash and due from financial institutions           |   | $             | 11,482    |   |         |   | 18,297 |   |
| Interest-bearing deposits in other financial institutions                      |   |          | 341       |   |         |   | 536 |   |
| Trading account assets                                                         |   |          | -         |   |         |   | 23,337 |   |
| Securities held to maturity (fair value of $15,554 and $21,955, respectively)  |   |          | 15,682    |   |         |   | 23,315 |   |
| Securities available for sale                                                  |   |          | 177,272   |   |         |   | 139,803 |   |
| Loans held for sale                                                            |   |          | 1,764     |   |         |   | 1,536 |   |
| Loans, net of allowance for loan losses of $15,297 and $10,546, respectively   |   |          | 812,368   |   |         |   | 770,695 |   |
| Federal Home Loan Bank of New York stock                                       |   |          | 12,240    |   |         |   | 13,080 |   |
| Premises and equipment, net                                                    |   |          | 12,845    |   |         |   | 3,437 |   |
| Accrued interest receivable                                                    |   |          | 3,809     |   |         |   | 3,985 |   |
| Foreclosed and repossessed assets                                              |   |          | 311       |   |         |   | 149 |   |
| Bank-owned life insurance                                                      |   |          | 10,461    |   |         |   | 10,369 |   |
| Other assets                                                                   |   |          | 10,982    |   |         |   | 12,804 |   |
|       Total assets                               |   | $             | 1,069,557 |   |         | $      | 1,021,343 |   |
|                                                                           |   |          |      |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                           |   |          |      |   |         |   |   |   |
|                                                                           |   |          |      |   |         |   |   |   |
| Deposits                                                                       |   | $             | 681,030   |   |         | $      | 626,467 |   |
| Federal Home Loan Bank advances                                                |   |          | 206,094   |   |         |   | 218,641 |   |
| Securities sold under agreement to repurchase                                  |   |          | 70,000    |   |         |   | 70,000 |   |
| Accrued interest payable and other liabilities                                 |   |          | 3,987     |   |         |   | 4,150 |   |
| Capital lease obligation                                                       |   |          | 7,731     |   |         |   | - |   |
|       Total liabilities                          |   |          | 968,842   |   |         |   | 919,258 |   |
| Commitments and contingencies                                                  |   |          |      |   |         |   |   |   |
| Preferred stock, $.01 par value, 50,000,000 shares authorized;                 |   |          |      |   |         |   |   |   |
|   none issued or outstanding                                         |   |          |      |   |         |   |   |   |
| Common stock, $.01 par value, 100,000,000 shares                               |   |          |      |   |         |   |   |   |
|   authorized; 7,662,315 and 7,662,315 shares issued, respectively    |   |          | 74        |   |         |   | 74 |   |
| Additional paid-in capital                                                     |   |          | 72,940    |   |         |   | 72,160 |   |
| Retained earnings-substantially restricted                                     |   |          | 46,330    |   |         |   | 42,835 |   |
| Unearned Employee Stock Ownership Plan (ESOP) shares                           |   |          | (4,387    | )      |         |   | (4,733 | ) |
| Accumulated other comprehensive loss, net                                      |   |          | (6,008    | )      |         |   | (8,251 | ) |
| Treasury stock, 979,169 shares at September 30, 2009 at cost                   |   |          | (8,234    | )      |         |   | - |   |
|       Total stockholders' equity                 |   |          | 100,715   |   |         |   | 102,085 |   |
|       Total liabilities and stockholders' equity |   | $             | 1,069,557 |   |         | $      | 1,021,343 |   |
|                                                                           |   |          |      |   |         |   |   |   |
| See accompanying notes to consolidated financial statements.                   |   |          |      |   |         |   |   |   |

----

|                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|-------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                    |   | September 30,      |   |   | September 30,     |   |
|                                                                    |   | 2009               |   |   | 2008              |   |   | 2009 |   |   | 2008 |   |
| Interest and dividend income:                                           |   | (Unaudited)        |   |   | (Unaudited)       |   |
|    Loans, including fees                                 |   | $                  | 11,606 |   |              | $      | 11,610 |   |   | $ | 34,333 |   |   | $ | 34,330 |   |
|    Securities                                            |   |               | 2,178  |   |              |   | 2,653 |   |   |   | 6,612 |   |   |   | 6,797 |   |
|    FHLB stock                                            |   |               | 175    |   |              |   | 211 |   |   |   | 451 |   |   |   | 611 |   |
|    Federal funds sold and other                          |   |               | 8      |   |              |   | 37 |   |   |   | 36 |   |   |   | 342 |   |
|       Total interest income               |   |               | 13,967 |   |              |   | 14,511 |   |   |   | 41,432 |   |   |   | 42,080 |   |
| Interest expense:                                                       |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits                                              |   |               | 3,801  |   |              |   | 4,525 |   |   |   | 11,973 |   |   |   | 14,181 |   |
|    FHLB advances                                         |   |               | 2,244  |   |              |   | 2,771 |   |   |   | 6,774 |   |   |   | 8,336 |   |
|    Securities sold under agreement to repurchase         |   |               | 555    |   |              |   | 410 |   |   |   | 1,647 |   |   |   | 985 |   |
|    Lease obligation                                      |   |               | 186    |   |              |   | - |   |   |   | 186 |   |   |   | - |   |
|       Total interest expense              |   |               | 6,786  |   |              |   | 7,706 |   |   |   | 20,580 |   |   |   | 23,502 |   |
|       Net interest income                 |   |               | 7,181  |   |              |   | 6,805 |   |   |   | 20,852 |   |   |   | 18,578 |   |
| Provision for loan losses                                               |   |               | 1,300  |   |              |   | 3,427 |   |   |   | 5,770 |   |   |   | 5,857 |   |
|       Net interest income after provision |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|         for loan losses         |   |               | 5,881  |   |              |   | 3,378 |   |   |   | 15,082 |   |   |   | 12,721 |   |
| Noninterest income:                                                     |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Service charges                                       |   |               | 772    |   |              |   | 761 |   |   |   | 2,199 |   |   |   | 2,111 |   |
|    Commission and fee income                             |   |               | 261    |   |              |   | 306 |   |   |   | 548 |   |   |   | 573 |   |
|    Change in cash surrender value of BOLI                |   |               | 23     |   |              |   | 81 |   |   |   | 92 |   |   |   | 313 |   |
|    Gain on sale of loans                                 |   |               | 152    |   |              |   | - |   |   |   | 539 |   |   |   | 98 |   |
|    Gain on sale of securities available for sale         |   |               | -      |   |              |   | - |   |   |   | - |   |   |   | 129 |   |
|    Other                                                 |   |               | 227    |   |              |   | 74 |   |   |   | 634 |   |   |   | 242 |   |
|       Total noninterest income            |   |               | 1,435  |   |              |   | 1,222 |   |   |   | 4,012 |   |   |   | 3,466 |   |
| Noninterest expense:                                                    |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Salaries and employee benefits                        |   |               | 2,252  |   |              |   | 2,139 |   |   |   | 6,858 |   |   |   | 6,372 |   |
|    Occupancy and equipment                               |   |               | 531    |   |              |   | 336 |   |   |   | 1,225 |   |   |   | 983 |   |
|    Advertising and marketing                             |   |               | 143    |   |              |   | 97 |   |   |   | 360 |   |   |   | 308 |   |
|    Telephone, delivery and postage                       |   |               | 195    |   |              |   | 229 |   |   |   | 550 |   |   |   | 609 |   |
|    Supplies                                              |   |               | 59     |   |              |   | 80 |   |   |   | 190 |   |   |   | 194 |   |
|    Audit and examination                                 |   |               | 198    |   |              |   | 176 |   |   |   | 489 |   |   |   | 477 |   |
|    FDIC premium expense                                  |   |               | 378    |   |              |   | 94 |   |   |   | 1,388 |   |   |   | 279 |   |
|    Provision for loss on servicing asset                 |   |               | 116    |   |              |   | - |   |   |   | 150 |   |   |   | - |   |
|    Other-than-temporary impairment (OTTI) credit         |   |               |   |   |              |   |   |   |   |   |   |   |   |   | - |   |
|      loss on debt securities                   |   |               | 192    |   |              |   | 9,967 |   |   |   | 1,154 |   |   |   | 10,768 |   |
|    OTTI loss on cost-method equity investment            |   |               | 95     |   |              |   | - |   |   |   | 95 |   |   |   | - |   |
|    Prepayment penalty on FHLB advances                   |   |               | -      |   |              |   | - |   |   |   | 241 |   |   |   | - |   |
|    Other                                                 |   |               | 902    |   |              |   | 743 |   |   |   | 2,376 |   |   |   | 2,331 |   |
|       Total noninterest expense           |   |               | 5,061  |   |              |   | 13,861 |   |   |   | 15,076 |   |   |   | 22,321 |   |
| Income (loss) before income taxes                                       |   |               | 2,255  |   |              |   | (9,261 | ) |   |   | 4,018 |   |   |   | (6,134 | ) |
| Income tax expense (benefit)                                            |   |               | 856    |   |              |   | (817 | ) |   |   | 1,489 |   |   |   | 513 |   |
|       Net income (loss)                   |   | $                  | 1,399  |   |              | $      | (8,444 | ) |   | $ | 2,529 |   |   | $ | (6,647 | ) |
| Basic and diluted earnings (loss) per share                             |   | $                  | 0.22   |   |              | $      | (1.22 | ) |   | $ | 0.38 |   |   | $ | (0.97 | ) |
|                                                                    |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| OTTI credit loss on securities:                                         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total OTTI loss on securities                                           |   | $                  | 192    |   |              |   |   |   |   | $ | 1,174 |   |   |   |   |   |
| Portion of OTTI loss recognized in other                                |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   comprehensive loss before income taxes                      |   |               | -      |   |              |   |   |   |   |   | (20 | ) |   |   |   |   |
| OTTI credit loss on securities                                          |   | $                  | 192    |   |              |   |   |   |   | $ | 1,154 |   |   |   |   |   |
|                                                                    |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                |   | Three Months Ended |    |   | Nine Months Ended |   |
|-----------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                                                                |   | September 30,      |    |   | September 30,     |   |
|                                                                                                |   | 2009               |    |   | 2008              |   |   | 2009 |   |   | 2008 |   |
|                                                                                                |   | (Unaudited)        |    |   | (Unaudited)       |   |
| Common Stock                                                                                        |   | $                  | 74      |   |              | $      | 74 |   |   | $ | 74 |   |   | $ | 74 |   |
|                                                                                                |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Additional paid-in capital:                                                                         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at beginning of period                                                          |   |               | 72,646  |   |              |   | 72,095 |   |   |   | 72,160 |   |   |   | 72,080 |   |
|   Earned ESOP shares                                                                      |   |               | -       |   |              |   | (4 | ) |   |   | (55 | ) |   |   | 11 |   |
|   Amortization of stock-based compensation expense                                        |   |               | 294     |   |              |   | - |   |   |   | 835 |   |   |   | - |   |
|     Balance at end of period                                                    |   |               | 72,940  |   |              |   | 72,091 |   |   |   | 72,940 |   |   |   | 72,091 |   |
|                                                                                                |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Retained earnings:                                                                                  |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at beginning of period                                                          |   |               | 45,242  |   |              |   | 48,196 |   |   |   | 42,835 |   |   |   | 46,673 |   |
|   Adoption of FASB ASC 320-10                                                             |   |               | -       |   |              |   | - |   |   |   | 1,866 |   |   |   | - |   |
|   Balance at beginning of period, as adjusted                                             |   |               | 45,242  |   |              |   | 48,196 |   |   |   | 44,701 |   |   |   | 46,673 |   |
|   Net income (loss)                                                                       |   |               | 1,399   |   |              |   | (8,444 | ) |   |   | 2,529 |   |   |   | (6,647 | ) |
|   Cash dividends, $.05, $.04, $.14 and $.08 per share, respectively                       |   |               | (311    | )      |              |   | (275 | ) |   |   | (900 | ) |   |   | (549 | ) |
|     Balance at end of period                                                    |   |               | 46,330  |   |              |   | 39,477 |   |   |   | 46,330 |   |   |   | 39,477 |   |
|                                                                                                |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Unearned ESOP shares:                                                                               |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at beginning of period                                                          |   |               | (4,387  | )      |              |   | (5,030 | ) |   |   | (4,733 | ) |   |   | (5,325 | ) |
|   Earned ESOP shares                                                                      |   |               | -       |   |              |   | 148 |   |   |   | 346 |   |   |   | 443 |   |
|     Balance at end of period                                                    |   |               | (4,387  | )      |              |   | (4,882 | ) |   |   | (4,387 | ) |   |   | (4,882 | ) |
|                                                                                                |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive loss, net:                                                          |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at beginning of period                                                          |   |               | (9,206  | )      |              |   | (5,635 | ) |   |   | (8,251 | ) |   |   | (328 | ) |
|   Adoption of FASB ASC 320-10, net of taxes of $1,144                                     |   |               | -       |   |              |   | - |   |   |   | (1,866 | ) |   |   | - |   |
|   Balance at beginning of period, as adjusted                                             |   |               | (9,206  | )      |              |   | (5,635 | ) |   |   | (10,117 | ) |   |   | (328 | ) |
|   Net change in unrealized gains (losses) on available for sale                           |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     securities, net of taxes of $2,132, $2,179, $2,747 and $5,661, respectively |   |               | 3,198   |   |              |   | (8,636 | ) |   |   | 4,121 |   |   |   | (14,667 | ) |
|   Reclass for gain on sale of securities, net of tax of $52                               |   |               | -       |   |              |   | - |   |   |   | - |   |   |   | (77 | ) |
|   Reclass for impairment writedown on securities, net                                     |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     of tax benefit of $1,839 and $1,839, respectively                           |   |               | -       |   |              |   | 8,128 |   |   |   | - |   |   |   | 8,929 |   |
|   OTTI non-credit related loss on securities for which a                                  |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     portion of the OTTI has been recognized in income,                          |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|       net of taxes of $8                                              |   |               | -       |   |              |   | - |   |   |   | (12 | ) |   |   | - |   |
|       Balance at end of period                                        |   |               | (6,008  | )      |              |   | (6,143 | ) |   |   | (6,008 | ) |   |   | (6,143 | ) |
| Treasury stock:                                                                                     |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at beginning of period                                                          |   |               | (7,314  | )      |              |   | - |   |   |   | - |   |   |   | - |   |
|   Repurchase of common stock, 98,135 and 979,169 shares, respectively                     |   |               | (920    | )      |              |   | - |   |   |   | (8,234 | ) |   |   | - |   |
|     Balance at end of period                                                    |   |               | (8,234  | )      |              |   | - |   |   |   | (8,234 | ) |   |   | - |   |
| Total stockholders' equity                                                                          |   | $                  | 100,715 |   |              | $      | 100,617 |   |   | $ | 100,715 |   |   | $ | 100,617 |   |
|                                                                                                |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss):                                                                        |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Net income (loss)                                                                       |   | $                  | 1,399   |   |              | $      | (8,444 | ) |   | $ | 2,529 |   |   | $ | (6,647 | ) |
|   Net change in unrealized gains (losses) on available for sale                           |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     securities, net of taxes of $2,132, $2,179, $2,747 and $5,661, respectively |   |               | 3,198   |   |              |   | (8,636 | ) |   |   | 4,121 |   |   |   | (14,667 | ) |
|   Reclass for gain on sale of securities, net of tax of $52                               |   |               | -       |   |              |   | - |   |   |   | - |   |   |   | (77 | ) |
|   Reclass for impairment writedown on securities, net                                     |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     of tax benefit of $1,839 and $1,839, respectively                           |   |               | -       |   |              |   | 8,128 |   |   |   | - |   |   |   | 8,929 |   |
|   OTTI non-credit related loss on securities for which a                                  |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     portion of the OTTI has been recognized in income,                          |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|       net of taxes of $8                                              |   |               | -       |   |              |   | - |   |   |   | (12 | ) |   |   | - |   |
| Comprehensive income (loss)                                                                         |   | $                  | 4,597   |   |              | $      | (8,952 | ) |   | $ | 6,638 |   |   | $ | (12,462 | ) |
|                                                                                                |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                                        |

----

|                                                                                                                         |   | Nine Months Ended |    |
|------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                         |   | September 30,     |    |
|                                                                                                                         |   | 2009              |    |   | 2008 |   |
| Cash flows from operating activities:                                                                                        |   | (Unaudited)       |    |
|    Net income (loss)                                                                                          |   | $                 | 2,529   |   |   | $ | (6,647 | ) |
|    Adjustments to reconcile net income (loss) to net                                                          |   |              |    |   |   |   |   |   |
|       cash provided by (used for) operating activities:                                        |   |              |    |   |   |   |   |   |
|          Provision for loan losses                                              |   |              | 5,770   |   |   |   | 5,857 |   |
|          Provision for loss on servicing assets                                 |   |              | 150     |   |   |   | - |   |
|          Depreciation and amortization                                          |   |              | 616     |   |   |   | 361 |   |
|          ESOP expense                                                           |   |              | 291     |   |   |   | 454 |   |
|          Amortization of stock-based compensation expense                       |   |              | 835     |   |   |   | - |   |
|          Amortization of net deferred loan costs                                |   |              | 1,875   |   |   |   | 1,161 |   |
|          Net (accretion) amortization on securities                             |   |              | 4       |   |   |   | 15 |   |
|          Gain on sale of loans                                                  |   |              | (539    | ) |   |   | (98 | ) |
|          Gain on sale of securities available for sale                          |   |              | -       |   |   |   | (129 | ) |
|          Other-than-temporary impairment credit loss on debt securities         |   |              | 1,154   |   |   |   | 10,768 |   |
|          OTTI loss on cost method equity investment                             |   |              | 95      |   |   |   | - |   |
|          Originations of loans held for sale                                    |   |              | (84,366 | ) |   |   | (25,965 | ) |
|          Proceeds from loans held for sale                                      |   |              | 84,677  |   |   |   | 24,859 |   |
|          Proceeds from sale of trading account assets                           |   |              | 23,337  |   |   |   | - |   |
|          Increase in cash surrender value of BOLI                               |   |              | (92     | ) |   |   | (313 | ) |
|          Net change in:                                                         |   |              |    |   |   |   |   |   |
|              Accrued interest receivable                    |   |              | 176     |   |   |   | (560 | ) |
|              Other assets                                   |   |              | (1,066  | ) |   |   | (2,169 | ) |
|              Accrued interest payable and other liabilities |   |              | (163    | ) |   |   | 971 |   |
|             Net cash provided by operating activities            |   |              | 35,283  |   |   |   | 8,565 |   |
| Cash flows from investing activities:                                                                                        |   |              |    |   |   |   |   |   |
|    Purchase of FHLB stock                                                                                     |   |              | (644    | ) |   |   | (5,723 | ) |
|    Redemption of FHLB stock                                                                                   |   |              | 1,484   |   |   |   | 3,219 |   |
|    Maturities of interest-bearing deposits                                                                    |   |              | 100     |   |   |   | 1,101 |   |
|    Securities held to maturity:                                                                               |   |              |    |   |   |   |   |   |
|       Maturities, prepayments and calls                                                        |   |              | 7,598   |   |   |   | 5,428 |   |
|    Securities available for sale:                                                                             |   |              |    |   |   |   |   |   |
|       Purchases                                                                                |   |              | (65,544 | ) |   |   | (122,236 | ) |
|       Proceeds from maturity or call                                                           |   |              | 33,799  |   |   |   | 33,243 |   |
|       Proceeds from sale                                                                       |   |              | -       |   |   |   | 129 |   |
|    Loan originations and payments, net                                                                        |   |              | (50,607 | ) |   |   | (60,136 | ) |
|    Purchase of premises and equipment                                                                         |   |              | (2,224  | ) |   |   | (361 | ) |
|    Proceeds from sale of foreclosed and repossessed assets                                                    |   |              | 1,127   |   |   |   | 198 |   |
|            Net cash used for investing activities                     |   | $                 | (74,911 | ) |   | $ | (145,138 | ) |

----

|                                                                                            |   | Nine Months Ended |    |
|-------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                            |   | September 30,     |    |
|                                                                                            |   | 2009              |    |   | 2008 |   |
| Cash flows from financing activities:                                                           |   | (Unaudited)       |    |
|    Net change in deposits                                                        |   | $                 | 54,563  |   |   | $ | 76,922 |   |
|    Proceeds from FHLB advances                                                   |   |              | 18,000  |   |   |   | 291,749 |   |
|    Repayment of FHLB advances                                                    |   |              | (30,547 | ) |   |   | (276,750 | ) |
|    Proceeds from securities sold under agreement to repurchase                   |   |              | -       |   |   |   | 50,000 |   |
|    Repayment of lease obligation                                                 |   |              | (69     | ) |   |   | - |   |
|    Cash dividends                                                                |   |              | (900    | ) |   |   | - |   |
|    Repurchase of common stock                                                    |   |              | (8,234  | ) |   |   | (549 | ) |
|          Net cash provided by financing activities |   |              | 32,813  |   |   |   | 141,372 |   |
| Net change in cash and cash equivalents                                                         |   |              | (6,815  | ) |   |   | 4,799 |   |
| Cash and cash equivalents at beginning of period                                                |   |              | 18,297  |   |   |   | 14,148 |   |
| Cash and cash equivalents at end of period                                                      |   | $                 | 11,482  |   |   | $ | 18,947 |   |
| Supplemental cash flow information:                                                             |   |              |    |   |   |   |   |   |
|    Interest paid                                                                 |   | $                 | 21,164  |   |   | $ | 23,418 |   |
|    Income taxes paid                                                             |   | $                 | 3,129   |   |   | $ | 2,183 |   |
|    Real estate and repossessions acquired in settlement of loans                 |   | $                 | 1,289   |   |   | $ | 413 |   |
|    Loans originated to finance the sale of foreclosed real estate                |   | $                 | -       |   |   | $ | 395 |   |
| Supplemental schedule of non-cash investing and financing                                       |   |              |    |   |   |   |   |   |
|    activities:                                                                   |   |              |    |   |   |   |   |   |
|      Building acquired with capital lease obligation                   |   | $                 | 7,800   |   |   | $ | - |   |
|                                                                                            |   |              |    |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                                    |   |              |    |   |   |   |   |   |

----

----

| NOTE 3 – EARNINGS (LOSS) PER SHARE |
|------------------------------------------|

|                                            |   | Three Months Ended |   |   | Nine Months Ended |   |
|-------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                            |   | September 30,      |   |   | September 30,     |   |
|                                            |   | 2009               |   |   | 2008              |   |   | 2009 |   |   | 2008 |   |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |
| Basic earnings (loss) per share:                |   |               |   |   |              |   |   |   |   |   |   |   |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |
| Net income (loss)                               |   | $                  | 1,399  |   |              | $      | (8,444 | ) |   |   | 2,529 |   |   |   | (6,647 | ) |
| Less dividends paid:                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Common stock                        |   |               | 298    |   |              |   | 264 |   |   |   | 863 |   |   |   | 528 |   |
|   Participating securities            |   |               | 13     |   |              |   | 11 |   |   |   | 37 |   |   |   | 21 |   |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Undistributed earnings (loss)                   |   | $                  | 1,088  |   |              | $      | (8,719 | ) |   |   | 1,629 |   |   |   | (7,196 | ) |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average basic shares outstanding       |   |               | 6,031  |   |              |   | 6,635 |   |   |   | 6,336 |   |   |   | 6,620 |   |
| Add: weighted-average participating             |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| securities outstanding                          |   |               | 266    |   |              |   | 266 |   |   |   | 266 |   |   |   | 266 |   |
| Total weighted-average basic shares             |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   and participating securities        |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     outstanding             |   |               | 6,297  |   |              |   | 6,901 |   |   |   | 6,602 |   |   |   | 6,886 |   |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Distributed earnings per share                  |   | $                  | 0.05   |   |              | $      | 0.04 |   |   |   | 0.14 |   |   |   | 0.08 |   |
| Undistributed earnings (loss) per share         |   |               | 0.17   |   |              |   | (1.26 | ) |   |   | 0.24 |   |   |   | (1.05 | ) |
| Net income (loss) per share                     |   | $                  | 0.22   |   |              | $      | (1.22 | ) |   |   | 0.38 |   |   |   | (0.97 | ) |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings (loss) per share:              |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Undistributed earnings (loss)                   |   | $                  | 1,088  |   |              | $      | (8,719 | ) |   |   | 1,629 |   |   |   | (7,196 | ) |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total weighted-average basic shares             |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   and participating securities        |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     outstanding             |   |               | 6,297  |   |              |   | 6,901 |   |   |   | 6,602 |   |   |   | 6,886 |   |
| Add: Dilutive stock options                     |   |               | 3      |   |              |   | - |   |   |   | - |   |   |   | - |   |
| Total weighted-average diluted                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   shares and participating securities |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     outstanding             |   |               | 6,300  |   |              |   | 6,901 |   |   |   | 6,602 |   |   |   | 6,886 |   |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Distributed earnings per share                  |   | $                  | 0.05   |   |              | $      | 0.04 |   |   |   | 0.14 |   |   |   | 0.08 |   |
| Undistributed earnings (loss) per share         |   |               | 0.17   |   |              |   | (1.26 | ) |   |   | 0.24 |   |   |   | (1.05 | ) |
| Net income (loss) per share                     |   | $                  | 0.22   |   |              | $      | (1.22 | ) |   |   | 0.38 |   |   |   | (0.97 | ) |
|                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Anti-dilutive option shares                     |   |               | -      |   |              |   | - |   |   |   | 13 |   |   |   | - |   |

----

|                                                                          |   |      |    |   | Gross      |   |   | Gross      |   |   |    |   |
|-------------------------------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|---------|--------|
|                                                                          |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair    |   |
| September 30, 2009                                                            |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Value   |   |
|                                                                          |   |      |    |   |       |   |   |       |   |   |    |   |
|      Held to maturity:                               |   |      |    |   |       |   |   |       |   |   |    |   |
|      Debt securities:                                |   |      |    |   |       |   |   |       |   |   |    |   |
|        Mortgage-backed securities          |   | $         | 5,160   |   |       | $      | 126    |       |   | $      | (17     | )      |   | $ | 5,269 |   |
|        Collateralized mortgage obligations |   |      | 10,522  |   |       |   | 154    |       |   |   | (391    | )      |   |   | 10,285 |   |
|         Total                         |   | $         | 15,682  |   |       | $      | 280    |       |   | $      | (408    | )      |   | $ | 15,554 |   |
|                                                                          |   |      |    |   |       |   |   |       |   |   |    |   |   |   |   |   |
|      Available for sale:                             |   |      |    |   |       |   |   |       |   |   |    |   |   |   |   |   |
|      Debt securities:                                |   |      |    |   |       |   |   |       |   |   |    |   |   |   |   |   |
|        Treasuries                          |   | $         | 100     |   |       | $      | 2      |       |   | $      | -       |   |   | $ | 102 |   |
|        Agencies                            |   |      | 25,971  |   |       |   | 50     |       |   |   | (2      | )      |   |   | 26,019 |   |
|        Pooled trust preferred securities   |   |      | 13,135  |   |       |   | -      |       |   |   | (8,590  | )      |   |   | 4,545 |   |
|        Mortgage-backed securities          |   |      | 42,038  |   |       |   | 1,962  |       |   |   | -       |   |   |   | 44,000 |   |
|        Collateralized mortgage obligations |   |      | 105,943 |   |       |   | 2,221  |       |   |   | (5,558  | )      |   |   | 102,606 |   |
|         Total                         |   | $         | 187,187 |   |       | $      | 4,235  |       |   | $      | (14,150 | )      |   | $ | 177,272 |   |

|                                |   | Held to Maturity |   |   | Available for Sale |   |
|-------------------------------------|--------|------------------|--------|--------|--------------------|--------|
|                                |   | Amortized        |   |   | Fair               |   |   | Amortized |   |   | Fair |   |
|                                |   | Cost             |   |   | Value              |   |   | Cost |   |   | Value |   |
|                                |   |             |   |   |               |   |   |   |   |   |   |   |
| Due within one year                 |   | $                | -      |   |               | $      | - |   |   | $ | 100 |   |   | $ | 102 |   |
| Due after one through five years    |   |             | -      |   |               |   | - |   |   |   | 10,973 |   |   |   | 11,013 |   |
| Due after five through ten years    |   |             | -      |   |               |   | - |   |   |   | 9,998 |   |   |   | 10,000 |   |
| Due after ten years                 |   |             | -      |   |               |   | - |   |   |   | 18,135 |   |   |   | 9,551 |   |
|                                |   |             | -      |   |               |   | - |   |   |   | 39,206 |   |   |   | 30,666 |   |
| Mortgage-backed securities          |   |             | 5,160  |   |               |   | 5,269 |   |   |   | 42,038 |   |   |   | 44,000 |   |
| Collateralized mortgage obligations |   |             | 10,522 |   |               |   | 10,285 |   |   |   | 105,943 |   |   |   | 102,606 |   |
|                                |   | $                | 15,682 |   |               | $      | 15,554 |   |   | $ | 187,187 |   |   | $ | 177,272 |   |

----

|                                                                          |   |      |    |   | Gross      |   |   | Gross      |   |   |    |   |
|-------------------------------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|---------|--------|
|                                                                          |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair    |   |
| December 31, 2008                                                             |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Value   |   |
|                                                                          |   |      |    |   |       |   |   |       |   |   |    |   |
|      Held to maturity:                               |   |      |    |   |       |   |   |       |   |   |    |   |
|      Debt securities:                                |   |      |    |   |       |   |   |       |   |   |    |   |
|        Mortgage-backed securities          |   | $         | 6,291   |   |       | $      | 67     |       |   | $      | (61     | )      |   | $ | 6,297 |   |
|        Collateralized mortgage obligations |   |      | 17,024  |   |       |   | 77     |       |   |   | (1,443  | )      |   |   | 15,658 |   |
|         Total                         |   | $         | 23,315  |   |       | $      | 144    |       |   | $      | (1,504  | )      |   | $ | 21,955 |   |
|                                                                          |   |      |    |   |       |   |   |       |   |   |    |   |   |   |   |   |
|      Available for sale:                             |   |      |    |   |       |   |   |       |   |   |    |   |   |   |   |   |
|      Debt securities:                                |   |      |    |   |       |   |   |       |   |   |    |   |   |   |   |   |
|        Treasuries                          |   | $         | 100     |   |       | $      | 3      |       |   | $      | -       |   |   | $ | 103 |   |
|        Agencies                            |   |      | 3,000   |   |       |   | 3      |       |   |   | -       |   |   |   | 3,003 |   |
|        Pooled trust preferred securities   |   |      | 12,318  |   |       |   | -      |       |   |   | (7,535  | )      |   |   | 4,783 |   |
|        Mortgage-backed securities          |   |      | 47,508  |   |       |   | 1,144  |       |   |   | (10     | )      |   |   | 48,642 |   |
|        Collateralized mortgage obligations |   |      | 90,627  |   |       |   | 1,222  |       |   |   | (8,577  | )      |   |   | 83,272 |   |
|         Total                         |   | $         | 153,553 |   |       | $      | 2,372  |       |   | $      | (16,122 | )      |   | $ | 139,803 |   |

----

|                             |   | Less than 12 Months |   |   | 12 Months or Longer |   |   | Total  |   |
|----------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                             |   | Fair                |   |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| September 30, 2009               |   | Value               |   |   | loss                |   |   | Value  |   |   | loss |   |   | Value |   |   | loss |   |
|                             |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agencies                         |   | $                   | 4,995  |   |                | $      | (2     | )      |   | $ | - |   |   | $ | - |   |   | $ | 4,995 |   |   | $ | (2 | ) |
| Pooled trust                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   preferred securities |   |                | -      |   |                |   | -      |   |   |   | 4,545 |   |   |   | (8,590 | ) |   |   | 4,545 |   |   |   | (8,590 | ) |
| Mortgage-backed                  |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   securities           |   |                | 1,556  |   |                |   | (12    | )      |   |   | 557 |   |   |   | (5 | ) |   |   | 2,113 |   |   |   | (17 | ) |
| Collateralized                   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| mortgage obligations             |   |                | 604    |   |                |   | (29    | )      |   |   | 20,955 |   |   |   | (5,920 | ) |   |   | 21,559 |   |   |   | (5,949 | ) |
|                             |   | $                   | 7,155  |   |                | $      | (43    | )      |   | $ | 26,057 |   |   | $ | (14,515 | ) |   | $ | 33,212 |   |   | $ | (14,558 | ) |

|                             |   | Less than 12 Months |   |   | 12 Months or Longer |   |    | Total  |   |
|----------------------------------|--------|---------------------|--------|--------|---------------------|--------|---------|--------|--------|
|                             |   | Fair                |   |   | Unrealized          |   |    | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| December 31, 2008                |   | Value               |   |   | loss                |   |    | Value  |   |   | loss |   |   | Value |   |   | loss |   |
|                             |   |                |   |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Pooled trust                     |   |                |   |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |
|   preferred securities |   | $                   | 4,783  |   |                | $      | (7,535  | )      |   | $ | - |   |   | $ | - |   |   | $ | 4,783 |   |   | $ | (7,535 | ) |
| Mortgage-backed                  |   |                |   |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   securities           |   |                | 6,276  |   |                |   | (32     | )      |   |   | 1,616 |   |   |   | (39 | ) |   |   | 7,892 |   |   |   | (71 | ) |
| Collateralized                   |   |                |   |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| mortgage obligations             |   |                | 21,029 |   |                |   | (5,612  | )      |   |   | 9,087 |   |   |   | (4,408 | ) |   |   | 30,116 |   |   |   | (10,020 | ) |
|                             |   | $                   | 32,088 |   |                | $      | (13,179 | )      |   | $ | 10,703 |   |   | $ | (4,447 | ) |   | $ | 42,791 |   |   | $ | (17,626 | ) |

----

|                                          |   |   |   |   |   |   |   |   | OTTI Credit Loss   |   |   | Non-Credit   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------------------|--------|--------|--------------|--------|
|                                          |   |   |   |   |   | Fair   |   |   | September 30, 2009 |   |   | Loss in AOCL |   |
| Description/Rating                            |   |   | Number |   |   | Value  |   |   | QTD                |   |   | YTD          |   |   | September 30, 2009 |   |
| Trust preferred securities:                   |   |   |   |   |   |   |   |   |               |   |   |         |   |   |   |   |
| Ca                                            |   |   |   | 1      |   |   | $      | 200    |               |   | $      | -            |   |   | $ | 635 |   |   | $ | 1,166 |   |
| Caa1                                          |   |   |   | 1      |   |   |   | 20     |               |   |   | -            |   |   |   | 72 |   |   |   | 667 |   |
|                                          |   |   |   | 2      |   |   |   | 220    |               |   |   | -            |   |   |   | 707 |   |   |   | 1,833 |   |
| Collateralized mortgage                       |   |   |   |   |   |   |   |   |               |   |   |         |   |   |   |   |   |   |   |   |   |
| obligations:                                  |   |   |   |   |   |   |   |   |               |   |   |         |   |   |   |   |   |   |   |   |   |
| Caa2                                          |   |   |   | 1      |   |   |   | 2,986  |               |   |   | -            |   |   |   | 207 |   |   |   | 156 |   |
|         B3 |   |   |   | 1      |   |   |   | 1,448  |               |   |   | 145          |   |   |   | 193 |   |   |   | 2,357 |   |
| CCC                                           |   |   |   | 1      |   |   |   | 2,996  |               |   |   | 47           |   |   |   | 47 |   |   |   | 269 |   |
|                                          |   |   |   | 3      |   |   |   | 7,430  |               |   |   | 192          |   |   |   | 447 |   |   |   | 2,782 |   |
|                                          |   |   |   | 5      |   |   | $      | 7,650  |               |   | $      | 192          |   |   | $ | 1,154 |   |   | $ | 4,615 |   |

----

| Credit related impairments with a portion                             |   |   |   |
|-----------------------------------------------------------------------|--------|--------|--------|
|   recognized in other comprehensive                         |   |   |   |
|     loss:                                         |   |   |   |
|   Balance at January 1, 2009                                |   | $      | -      |   |
|   Cumulative effect adjustment:                             |   |   |   |   |
|     Total OTTI credit related losses              |   |   |   |   |
|       at January 1, 2009                |   |   | 4,596  |   |
|      Less: adoption of FASB ASC 320-10       |   |   |   |   |
|        in other comprehensive loss |   |   | 3,010  |   |
|   Balance at January 1, 2009, as adjusted                   |   |   | 1,586  |   |
|   Credit related impairments on portions                    |   |   |   |   |
| of OTTI previously recognized in other                           |   |
|       comprehensive loss                |   |   | 1,154  |   |
|   Balance at September 30, 2009                             |   | $      | 2,740  |   |

----

|                                        |   | Three Months Ended |   |   | Nine Months Ended |   |
|---------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                        |   | September 30,      |   |   | September 30,     |   |
|                                        |   | 2009               |   |   | 2008              |   |   | 2009 |   |   | 2008 |   |
|                                        |   |               |   |   |              |   |   |   |   |   |   |   |
| Beginning balance                           |   | $                  | 14,261 |   |              | $      | 8,160 |   |   | $ | 10,546 |   |   | $ | 6,827 |   |
| Provision for loan losses                   |   |               | 1,300  |   |              |   | 3,427 |   |   |   | 5,770 |   |   |   | 5,857 |   |
| Loans charged off                           |   |               | (544   | )      |              |   | (1,341 | ) |   |   | (1,482 | ) |   |   | (2,582 | ) |
| Recoveries                                  |   |               | 280    |   |              |   | 80 |   |   |   | 463 |   |   |   | 224 |   |
| Ending balance                              |   | $                  | 15,297 |   |              | $      | 10,326 |   |   | $ | 15,297 |   |   | $ | 10,326 |   |
|                                        |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                     |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Annualized net charge-offs to average       |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   loans outstanding               |   |               | 0.13   | %      |              |   | 0.66 | % |   |   | 0.17 | %  |   |   | 0.42 | % |
| Allowance for loan losses to nonperforming  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   loans at end of period          |   |               | 118.86 | %      |              |   | 175.14 | % |   |   | 118.86 | %  |   |   | 175.14 | % |
| Allowance for loan losses to total loans at |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   end of period                   |   |               | 1.86   | %      |              |   | 1.35 | % |   |   | 1.86 | %  |   |   | 1.35 | % |

----

|                                                    |   | September 30, |   |    | December 31, |   |
|---------------------------------------------------------|--------|---------------|--------|---------|--------------|--------|
|                                                    |   | 2009          |   |    | 2008         |   |
|                                                    |   |          |   |    |         |   |
| Nonaccrual loans                                        |   | $             | 12,286 |    |         | $      | 3,711 |   |
| Loans past due over 90 days still accruing              |   |          | 584    |    |         |   | 975 |   |
|   Total nonaccrual loans and loans past due   |   |          |   |    |         |   |   |   |
|     over 90 days and still accruing |   |          | 12,870 |    |         |   | 4,686 |   |
| Foreclosed and repossessed assets                       |   |          | 311    |    |         |   | 149 |   |
|   Total nonperforming assets                  |   | $             | 13,181 |    |         | $      | 4,835 |   |
|                                                    |   |          |   |    |         |   |   |   |
| Ratios:                                                 |   |          |   |    |         |   |   |   |
| Nonperforming loans to total loans                      |   |          | 1.56   | %       |         |   | 0.60 | % |
| Nonperforming assets to total assets                    |   |          | 1.23   | %  |         |   | 0.47 | % |
|                                                    |   |          |   |    |         |   |   |   |
| Impaired loans (in nonaccrual loans)                    |   | $             | 8,782  |    |         | $      | 2,439 |   |
| Impaired loans (not in nonaccrual loans)                |   |          | 648    |    |         |   | - |   |
| Total impaired loans                                    |   | $             | 9,430  |    |         | $      | 2,439 |   |
| Allowance for losses on impaired loans                  |   | $             | 3,578  |    |         | $      | 610 |   |
| Impaired loans with no allowance                        |   | $             | -      |    |         | $      | - |   |
| Average balance of impaired loans                       |   | $             | 5,620  |    |         | $      | 1,338 |   |
| Interest income recognized                              |   | $             | 141    |    |         | $      | 22 |   |

----

|                                      |   | September 30, |   |
|-------------------------------------------|--------|---------------|--------|
|                                      |   | 2009          |   |
|                                      |   |          |   |
| October 1, 2009 through December 31, 2009 |   | $             | 193    |   |
| January 1, 2010 through December 31, 2010 |   |          | 770    |   |
| January 1, 2011 through December 31, 2011 |   |          | 770    |   |
| January 1, 2012 through December 31, 2012 |   |          | 770    |   |
| January 1, 2013 through December 31, 2013 |   |          | 770    |   |
| January 1, 2014 through December 31, 2014 |   |          | 809    |   |
| Thereafter                                |   |          | 17,796 |   |
| Total minimum lease payments              |   |          | 21,878 |   |
| Less amount representing interest         |   |          | 9,636  |   |
| Present value of net minimum lease        |   | $             | 12,242 |   |

|                                         |   | Nine Months Ended |   |
|----------------------------------------------|--------|-------------------|--------|
|                                         |   | September 30,     |   |
|                                         |   | 2009              |   |   | 2008 |   |
|                                         |   |              |   |   |   |   |
| Beginning balance                            |   | $                 | 313    |   |   | $ | - |   |
| Additions                                    |   |              | 637    |   |   |   | - |   |
| Disposals                                    |   |              | -      |   |   |   | - |   |
| Change in fair value in non-interest expense |   |              | (150   | ) |   |   | - |   |
| Ending balance                               |   | $                 | 800    |   |   | $ | - |   |

----

|                                 |   | Three Months Ended |   |   | Nine Months Ended |   |
|--------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                 |   | September 30,      |   |   | September 30,     |   |
|                                 |   | 2009               |   |   | 2008              |   |   | 2009 |   |   | 2008 |   |
| Pre-tax                              |   | $                  | 70     |   |              |   | - |   |   | $ | 199 |   |   |   | - |   |
| After-tax                            |   |               | 42     |   |              |   | - |   |   |   | 120 |   |   |   | - |   |
| Basic and diluted earnings per share |   | $                  | 0.01   |   |              |   | - |   |   | $ | 0.02 |   |   |   | - |   |

----

|                                       |   |      |    |   |      |   |   | Weighted-   |   |   |      |   |
|--------------------------------------------|--------|-----------|---------|--------|-----------|--------|--------|-------------|--------|--------|-----------|--------|
|                                       |   |      |    |   |      |   |   | Average     |   |   |      |   |
|                                       |   |      |    |   | Weighted- |   |   | Remaining   |   |   |      |   |
|                                       |   |      |    |   | Average   |   |   | Contractual |   |   | Aggregate |   |
|                                       |   | Number    |    |   | Exercise  |   |   | Term in     |   |   | Intrinsic |   |
|                                       |   | of Shares |    |   | Price     |   |   | Years       |   |   | Value     |   |
| Outstanding at January 1, 2009             |   |      | 444,134 |   |      | $      | 8.23   |        |   |   | 9.90      |   |   | $ | - |   |
| Granted                                    |   |      | -       |   |      |   | -      |        |   |   | -         |   |   |   | - |   |
| Exercised                                  |   |      | -       |   |      |   | -      |        |   |   | -         |   |   |   | - |   |
| Expired                                    |   |      | -       |   |      |   | -      |        |   |   | -         |   |   |   | - |   |
| Forfeited                                  |   |      | (39,000 | )      |      |   | 8.23   |        |   |   | -         |   |   |   | - |   |
| Outstanding at September 30, 2009          |   |      | 405,134 |   |      | $      | 8.23   |        |   |   | 9.15      |   |   | $ | - |   |
| Exercisable at September 30, 2009          |   |      | -       |   |      | $      | -      |        |   |   | -         |   |   | $ | - |   |
| Vested at September 30, 2009               |   |      | 36,000  |   |      | $      | 8.23   |        |   |   | 9.15      |   |   | $ | - |   |
| At September 30, 2009 share options        |   |      |    |   |      |   |   |        |   |   |      |   |   |   |   |   |
|   expected to vest in the future |   |      | 362,174 |   |      | $      | 8.23   |        |   |   | 9.15      |   |   | $ | - |   |

|                                 |   | Three Months Ended |   |   | Nine Months Ended |   |
|--------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                 |   | September 30,      |   |   | September 30,     |   |
|                                 |   | 2009               |   |   | 2008              |   |   | 2009 |   |   | 2008 |   |
| Pre-tax                              |   | $                  | 224    |   |              | $      | - |   |   | $ | 636 |   |   | $ | - |   |
| After-tax                            |   |               | 134    |   |              |   | - |   |   |   | 381 |   |   |   | - |   |
| Basic and diluted earnings per share |   | $                  | 0.02   |   |              | $      | - |   |   | $ | 0.06 |   |   | $ | - |   |

----

|                            |   | Number    |    |   | Weighted-  |   |
|---------------------------------|--------|-----------|---------|--------|------------|--------|
|                            |   | of        |    |   | Average    |   |
|                            |   | Nonvested |    |   | Grant Date |   |
|                            |   | Shares    |    |   | Fair Value |   |
| Nonvested at January 1, 2009    |   |      | 265,884 |   |       | $      | 8.23 |   |
| Granted                         |   |      | -       |   |       |   | - |   |
| Vested                          |   |      | (25,000 | )      |       |   | 8.23 |   |
| Forfeited                       |   |      | (8,750  | )      |       |   | 8.23 |   |
| Nonvested at September 30, 2009 |   |      | 232,134 |   |       | $      | 8.23 |   |
|                            |   |      |    |   |       |   |   |   |

----

----

----

|                                            |   | 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          |   | $                | 102    |   |        |   | 26,019  |         |   |   | -      |   |   |   | 26,121 |   |
|   Pooled trust preferred securities   |   |             | -      |   |        |   | -       |         |   |   | 4,545  |   |   |   | 4,545 |   |
|   Mortgage-backed securities          |   |             | -      |   |        |   | 44,000  |         |   |   | -      |   |   |   | 44,000 |   |
|   Collateralized mortgage obligations |   |             | -      |   |        |   | 102,606 |         |   |   | -      |   |   |   | 102,606 |   |
|                                            |   | $                | 102    |   |        | $      | 172,625 |         |   | $      | 4,545  |   |   | $ | 177,272 |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Loans held for sale                             |   | $                | -      |   |        | $      | 1,764   |         |   | $      | -      |   |   | $ | 1,764 |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Mortgage servicing rights                       |   | $                | -      |   |        | $      | 800     |         |   | $      | -      |   |   | $ | 800 |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Loan commitment derivatives                     |   | $                | -      |   |        | $      | 96      |         |   | $      | -      |   |   | $ | 96 |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Liabilities                                     |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Sales contract derivatives                      |   | $                | -      |   |        | $      | 100     |         |   | $      | -      |   |   | $ | 100 |   |

----

|                                            |   | 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  |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |
| Trading account assets                          |   | $                | -      |   |        | $      | 23,337  |         |   | $      | -      |   |   | $ | 23,337 |   |
|                                            |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Available for sale securities:                  |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
| Debt securities:                                |   |             |   |   |        |   |    |         |   |   |   |   |   |   |   |   |
|   U.S. Treasury and agencies          |   | $                | -      |   |        | $      | 3,106   |         |   | $      | -      |   |   | $ | 3,106 |   |
|   Pooled trust preferred securities   |   |             | -      |   |        |   | 4,783   |         |   |   | -      |   |   |   | 4,783 |   |
|   Mortgage-backed securities          |   |             | -      |   |        |   | 48,642  |         |   |   | -      |   |   |   | 48,642 |   |
|   Collateralized mortgage obligations |   |             | -      |   |        |   | 83,272  |         |   |   | -      |   |   |   | 83,272 |   |
|                                            |   | $                | -      |   |        | $      | 139,803 |         |   | $      | -      |   |   | $ | 139,803 |   |

| Balance at January 1, 2009                    |   | $      | -      |   |
|-----------------------------------------------|--------|--------|--------|--------|
| Transfer from Level 2 to Level 3 input        |   |   |   |   |
|   category at March 31, 2009        |   |   | 3,874  |   |
| Unrealized gains recognized in other          |   |   |   |   |
|   comprehensive loss                |   |   | 888    |   |
| Decrease in unrealized losses due to          |   |   |   |   |
|   recognition of OTTI credit losses |   |   | 490    |   |
| OTTI credit related losses recognized in      |   |   |   |   |
|   non-interest expense              |   |   | (707   | )      |
| Balance at September 30, 2009                 |   | $      | 4,545  |   |

----

| Balance at January 1, 2009    |   | $      | 610   |   |
|-------------------------------|--------|--------|-------|--------|
| Provision for loan losses     |   |   | 3,004 |   |
| Loans charged off             |   |   | (36   | )      |
| Recoveries                    |   |   | -     |   |
| Balance at September 30, 2009 |   | $      | 3,578 |   |

|                                                                    |   | September 30, |    |   | December 31, |   |
|-------------------------------------------------------------------------|--------|---------------|---------|--------|--------------|--------|
|                                                                    |   | 2009          |    |   | 2008         |   |
|                                                                    |   | Carrying      |    |   | Fair         |   |   | Carrying |   |   | Fair |   |
|                                                                    |   | Amount        |    |   | Value        |   |   | Amount |   |   | Value |   |
|                                                                    |   |          |    |   |         |   |   |   |   |   |   |   |
| Financial assets:                                                       |   |          |    |   |         |   |   |   |   |   |   |   |
|     Cash and cash equivalents                       |   | $             | 11,482  |   |         | $      | 11,482 |   |   | $ | 18,297 |   |   | $ | 18,297 |   |
|     Interest-bearing deposits                       |   |          | 341     |   |         |   | 341 |   |   |   | 536 |   |   |   | 536 |   |
|    Trading account assets                                |   |          | -       |   |         |   | - |   |   |   | 23,337 |   |   |   | 23,337 |   |
|    Securities held to maturity                           |   |          | 15,682  |   |         |   | 15,554 |   |   |   | 23,315 |   |   |   | 21,955 |   |
|    Securities available for sale                         |   |          | 177,272 |   |         |   | 177,272 |   |   |   | 139,803 |   |   |   | 139,803 |   |
|    Loans held for sale                                   |   |          | 1,764   |   |         |   | 1,764 |   |   |   | 1,536 |   |   |   | 1,536 |   |
|    Loans, net                                            |   |          | 812,368 |   |         |   | 825,954 |   |   |   | 770,695 |   |   |   | 782,919 |   |
|    FHLB stock                                            |   |          | 12,240  |   |         |   | N/A |   |   |   | 13,080 |   |   |   | N/A |   |
|    Accrued interest receivable                           |   |          | 3,809   |   |         |   | 3,809 |   |   |   | 3,985 |   |   |   | 3,985 |   |
|                                                                    |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                  |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
|     Deposits                                        |   |          | 681,030 |   |         |   | 687,304 |   |   |   | 626,467 |   |   |   | 632,809 |   |
|     Federal Home Loan Bank                          |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
|         advances                |   |          | 206,094 |   |         |   | 218,054 |   |   |   | 218,641 |   |   |   | 234,217 |   |
|     Securities sold under                           |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
|         agreement to repurchase |   |          | 70,000  |   |         |   | 76,830 |   |   |   | 70,000 |   |   |   | 79,089 |   |
|    Accrued interest payable                              |   | $             | 1,514   |   |         | $      | 1,514 |   |   | $ | 2,098 |   |   | $ | 2,098 |   |

----

----

----

----

----

----

----

----

----

----

----

----

----

|                                                                               |   | For the Three Months Ended September 30, |      |
|------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|
|                                                                               |   | 2009                                     |      |   | 2008 |   |
|                                                                               |   | Average Outstanding Balance              |      |   | Interest Earned/Paid |   |   | Yield /Rate |   |   | Average Outstanding Balance |   |   | Interest Earned/Paid |   |   | Yield /Rate |   |
|                                                                               |   |  (Dollars in thousands)             |      |
| Interest-earning assets:                                                           |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Loans                                                            |   | $                                        | 823,122   |   |   | $ | 11,606 |   |   |   | 5.59 | % |   | $ | 768,897 |   |   | $ | 11,610 |   |   |   | 6.01 | % |
|    Securities                                                       |   |                                     | 178,656   |   |   |   | 2,178 |   |   |   | 4.84 |   |   |   | 184,829 |   |   |   | 2,653 |   |   |   | 5.71 |   |
|    FHLB stock                                                       |   |                                     | 12,394    |   |   |   | 175 |   |   |   | 5.60 |   |   |   | 14,090 |   |   |   | 211 |   |   |   | 5.96 |   |
|    Interest-earning deposits                                        |   |                                     | 16,312    |   |   |   | 8 |   |   |   | 0.19 |   |   |   | 3,395 |   |   |   | 37 |   |   |   | 4.34 |   |
|    Total interest-earning assets                                    |   |                                     | 1,030,484 |   |   |   | 13,967 |   |   |   | 5.38 |   |   |   | 971,211 |   |   |   | 14,511 |   |   |   | 5.94 |   |
|    Non-interest-earning assets                                      |   |                                     | 32,515    |   |   |   |   |   |   |   |   |   |   |   | 21,497 |   |   |   |   |   |   |   |   |   |
|         Total assets                       |   | $                                        | 1,062,999 |   |   |   |   |   |   |   |   |   |   | $ | 992,708 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                      |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                                                          |   | $                                        | 60,581    |   |   |   | 45 |   |   |   | 0.29 |   |   | $ | 62,338 |   |   |   | 84 |   |   |   | 0.54 |   |
|    Money market accounts                                            |   |                                     | 150,519   |   |   |   | 673 |   |   |   | 1.77 |   |   |   | 153,985 |   |   |   | 1,223 |   |   |   | 3.16 |   |
|    NOW accounts                                                     |   |                                     | 55,538    |   |   |   | 154 |   |   |   | 1.10 |   |   |   | 46,972 |   |   |   | 333 |   |   |   | 2.82 |   |
|    Time accounts                                                    |   |                                     | 374,677   |   |   |   | 2,929 |   |   |   | 3.10 |   |   |   | 282,182 |   |   |   | 2,885 |   |   |   | 4.07 |   |
|         Total deposits                     |   |                                     | 641,315   |   |   |   | 3,801 |   |   |   | 2.35 |   |   |   | 545,477 |   |   |   | 4,525 |   |   |   | 3.30 |   |
|    FHLB advances                                                    |   |                                     | 207,521   |   |   |   | 2,244 |   |   |   | 4.29 |   |   |   | 250,252 |   |   |   | 2,771 |   |   |   | 4.41 |   |
|    Reverse repurchase agreements                                    |   |                                     | 70,000    |   |   |   | 555 |   |   |   | 3.15 |   |   |   | 53,913 |   |   |   | 410 |   |   |   | 3.03 |   |
|    Lease obligation                                                 |   |                                     | 7,800     |   |    |   | 186 |   |   |   | 9.46 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|         Total interest-bearing liabilities |   |                                     | 926,636   |   |   |   | 6,786 |   |   |   | 2.91 |   |   |   | 849,642 |   |   |   | 7,706 |   |   |   | 3.61 |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Non-interest-bearing deposits                                    |   |                                     | 31,841    |   |   |   |   |   |   |   |   |   |   |   | 28,641 |   |   |   |   |   |   |   |   |   |
|    Other non-interest-bearing liabilities                           |   |                                     | 6,215     |   |   |   |   |   |   |   |   |   |   |   | 4,417 |   |   |   |   |   |   |   |   |   |
|         Total liabilities                  |   |                                     | 964,692   |   |   |   |   |   |   |   |   |   |   |   | 882,700 |   |   |   |   |   |   |   |   |   |
|    Stockholders' equity                                             |   |                                     | 98,307    |   |   |   |   |   |   |   |   |   |   |   | 110,008 |   |   |   |   |   |   |   |   |   |
|         Total liabilities and equity       |   | $                                        | 1,062,999 |   |   |   |   |   |   |   |   |   |   | $ | 992,708 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest income                                              |   |                                     |      |   |   | $ | 7,181 |   |   |   |   |   |   |   |   |   |   | $ | 6,805 |   |   |   |   |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest rate spread                                         |   |                                     |      |   |   |   |   |   |   |   | 2.47 | % |   |   |   |   |   |   |   |   |   |   | 2.33 | % |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest-earning assets                                      |   | $                                        | 103,848   |   |   |   |   |   |   |   |   |   |   | $ | 121,569 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest margin                                              |   |                                     |      |   |   |   |   |   |   |   | 2.76 | % |   |   |   |   |   |   |   |   |   |   | 2.79 | % |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average of interest-earning assets to                                              |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      interest-bearing liabilities                         |   |                                     |      |   |   |   |   |   |   |   | 111.21 | % |   |   |   |   |   |   |   |   |   |   | 114.31 | % |

----

|                                                                               |   | For the Nine Months Ended September 30, |      |
|------------------------------------------------------------------------------------|--------|-----------------------------------------|-----------|
|                                                                               |   | 2009                                    |      |   | 2008 |   |
|                                                                               |   | Average Outstanding Balance             |      |   | Interest Earned/Paid |   |   | Yield / Rate |   |   | Average Outstanding Balance |   |   | Interest Earned/Paid |   |   | Yield / Rate |   |
|                                                                               |   |  (Dollars in thousands)            |      |
| Interest-earning assets:                                                           |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Loans                                                            |   | $                                       | 810,826   |   |   | $ | 34,333 |   |   |   | 5.66 | % |   | $ | 746,782 |   |   | $ | 34,330 |   |   |   | 6.14 | % |
|    Securities                                                       |   |                                    | 165,462   |   |   |   | 6,612 |   |   |   | 5.34 |   |   |   | 165,789 |   |   |   | 6,797 |   |   |   | 5.48 |   |
|    FHLB stock                                                       |   |                                    | 12,645    |   |   |   | 451 |   |   |   | 4.77 |   |   |   | 13,061 |   |   |   | 611 |   |   |   | 6.25 |   |
|    Interest-earning deposits                                        |   |                                    | 20,971    |   |   |   | 36 |   |   |   | 0.23 |   |   |   | 14,150 |   |   |   | 342 |   |   |   | 3.23 |   |
|    Total interest-earning assets                                    |   |                                    | 1,009,904 |   |   |   | 41,432 |   |   |   | 5.49 |   |   |   | 939,782 |   |   |   | 42,080 |   |   |   | 5.98 |   |
|    Non-interest-earning assets                                      |   |                                    | 29,815    |   |   |   |   |   |   |   |   |   |   |   | 19,450 |   |   |   |   |   |   |   |   |   |
|         Total assets                       |   | $                                       | 1,039,719 |   |   |   |   |   |   |   |   |   |   | $ | 959,232 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                      |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                                                          |   | $                                       | 59,403    |   |   |   | 148 |   |   |   | 0.33 |   |   | $ | 61,225 |   |   |   | 262 |   |   |   | 0.57 |   |
|    Money market accounts                                            |   |                                    | 149,641   |   |   |   | 2,344 |   |   |   | 2.09 |   |   |   | 135,629 |   |   |   | 3,575 |   |   |   | 3.52 |   |
|    NOW accounts                                                     |   |                                    | 53,680    |   |   |   | 565 |   |   |   | 1.41 |   |   |   | 44,454 |   |   |   | 986 |   |   |   | 2.96 |   |
|    Time accounts                                                    |   |                                    | 360,694   |   |   |   | 8,916 |   |   |   | 3.30 |   |   |   | 281,753 |   |   |   | 9,358 |   |   |   | 4.44 |   |
|         Total deposits                     |   |                                    | 623,418   |   |   |   | 11,973 |   |   |   | 2.57 |   |   |   | 523,061 |   |   |   | 14,181 |   |   |   | 3.62 |   |
|    FHLB advances                                                    |   |                                    | 210,484   |   |   |   | 6,774 |   |   |   | 4.30 |   |   |   | 249,426 |   |   |   | 8,336 |   |   |   | 4.46 |   |
|    Reverse repurchase agreements                                    |   |                                    | 70,000    |   |   |   | 1,647 |   |   |   | 3.15 |   |   |   | 43,066 |   |   |   | 985 |   |   |   | 3.06 |   |
|    Lease obligation                                                 |   |                                    | 2,657     |   |   |   | 186 |   |   |   | 9.36 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|         Total interest-bearing liabilities |   |                                    | 906,559   |   |   |   | 20,580 |   |   |   | 3.04 |   |   |   | 815,553 |   |   |   | 23,502 |   |   |   | 3.85 |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Non-interest-bearing deposits                                    |   |                                    | 31,720    |   |   |   |   |   |   |   |   |   |   |   | 27,545 |   |   |   |   |   |   |   |   |   |
|    Other non-interest-bearing liabilities                           |   |                                    | 5,863     |   |   |   |   |   |   |   |   |   |   |   | 3,554 |   |   |   |   |   |   |   |   |   |
|         Total liabilities                  |   |                                    | 944,142   |   |   |   |   |   |   |   |   |   |   |   | 846,652 |   |   |   |   |   |   |   |   |   |
|    Stockholders' equity                                             |   |                                    | 95,577    |   |   |   |   |   |   |   |   |   |   |   | 112,580 |   |   |   |   |   |   |   |   |   |
|         Total liabilities and equity       |   | $                                       | 1,039,719 |   |   |   |   |   |   |   |   |   |   | $ | 959,232 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest income                                              |   |                                    |      |   |   | $ | 20,852 |   |   |   |   |   |   |   |   |   |   | $ | 18,578 |   |   |   |   |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest rate spread                                         |   |                                    |      |   |   |   |   |   |   |   | 2.45 | % |   |   |   |   |   |   |   |   |   |   | 2.13 | % |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest-earning assets                                      |   | $                                       | 103,345   |   |   |   |   |   |   |   |   |   |   | $ | 124,229 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net interest margin                                              |   |                                    |      |   |   |   |   |   |   |   | 2.76 | % |   |   |   |   |   |   |   |   |   |   | 2.64 | % |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average of interest-earning assets to                                              |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      interest-bearing liabilities                         |   |                                    |      |   |   |   |   |   |   |   | 111.40 | % |   |   |   |   |   |   |   |   |   |   | 115.23 | % |

----

----

|                                         |   |   |   |   |              |   |   |              |   |   |              |   |   | To Be Well        |   |
|----------------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                                         |   |   |   |   |              |   |   |              |   |   |              |   |   | Capitalized Under |   |
|                                         |   |   |   |   |              |   |   | For Capital       |   |   | Prompt Corrective |   |
|                                         |   | Actual |   |   | Adequacy Purposes |   |   | Action Provisions |   |
| September 30, 2009 (Dollars in Thousands)    |   | Amount |   |   | Ratio             |   |   | Amount            |   |   | Ratio             |   |   | Amount            |   |   | Ratio |   |
| Equity                                       |   | $      | 84,463 |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |
| Unrealized loss on securities as a result of |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |
|   cumulative effect adjustment     |   |   | 1,866  |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |
| Unrealized loss on AFS securities            |   |   | 4,142  |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |
| Tier 1 (Core) Capital and Tangible Capital   |   |   | 90,471 |   |              |   | 8.38   | %                 |   | $      | 16,193            |   |   |              | 1.50   | % |   |   |   |   |   |   |
| General valuation allowance  1)    |   |   | 10,068 |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |
| Deduction for low-level recourse             |   |   | (1,664 | )      |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |
| Total Capital to risk-weighted               |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |
|    assets                     |   | $      | 98,875 |   |              |   | 12.28  | %                 |   | $      | 64,432            |   |   |              | 8.00   | % |   | $ | 80,540 |   |   |   | 10.00 | % |
| Tier 1 (Core) Capital to risk-               |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
|    weighted assets            |   | $      | 88,807 |   |              |   | 11.03  | %                 |   | $      | 32,216            |   |   |              | 4.00   | % |   | $ | 48,324 |   |   |   | 6.00 | % |
| Tier 1 (Core) Capital to adjusted            |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
|    total assets               |   | $      | 90,471 |   |              |   | 8.38   | %                 |   | $      | 43,181            |   |   |              | 4.00   | % |   | $ | 53,976 |   |   |   | 5.00 | % |

----

|                                       |   |   |   |   |              |   |   |              |   |   |              |   |   | To Be Well        |   |
|--------------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                                       |   |   |   |   |              |   |   |              |   |   |              |   |   | Capitalized Under |   |
|                                       |   |   |   |   |              |   |   | For Capital       |   |   | Prompt Corrective |   |
|                                       |   | Actual |   |   | Adequacy Purposes |   |   | Action Provisions |   |
| December 31, 2008 (Dollars in Thousands)   |   | Amount |   |   | Ratio             |   |   | Amount            |   |   | Ratio             |   |   | Amount            |   |   | Ratio |   |
| Equity                                     |   | $      | 76,634 |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |
| Unrealized loss on AFS securities          |   |   | 8,251  |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |
| Tier 1 (Core) Capital and Tangible Capital |   |   | 84,885 |   |              |   | 8.20   | %                 |   | $      | 15,528            |   |   |              | 1.50   | % |   |   |   |   |   |   |
| General valuation allowance  1)  |   |   | 9,018  |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |
| Deduction for low-level recourse           |   |   | (1,507 | )      |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |
| Total Capital to risk-weighted             |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |
|    assets                   |   | $      | 92,396 |   |              |   | 12.81  | %                 |   | $      | 57,712            |   |   |              | 8.00   | % |   | $ | 72,140 |   |   |   | 10.00 | % |
| Tier 1 (Core) Capital to risk-             |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
|    weighted assets          |   | $      | 83,378 |   |              |   | 11.56  | %                 |   | $      | 28,856            |   |   |              | 4.00   | % |   | $ | 43,284 |   |   |   | 6.00 | % |
| Tier 1 (Core) Capital to adjusted          |   |   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
|    total assets             |   | $      | 84,885 |   |              |   | 8.20   | %                 |   | $      | 41,407            |   |   |              | 4.00   | % |   | $ | 51,579 |   |   |   | 5.00 | % |

----

|                            |   | September 30, 2009           |        |   | December 31, 2008 |   |
|---------------------------------|--------|------------------------------|-------------|--------|-------------------|--------|
|                            |   | Fixed                        |        |   | Variable          |   |   | Fixed |   |   | Variable |   |
|                            |   | Rate                         |        |   | Rate              |   |   | Rate |   |   | Rate |   |
|                            |   |  (Dollars in Thousands) |        |
| Commitments to make loans       |   | $                            | 32,555      |   |              | $      | 15,899 |   |   | $ | 20,090 |   |   | $ | 7,829 |   |
| Unused lines of credit          |   | $                            | 7,023       |   |              | $      | 57,786 |   |   | $ | 6,296 |   |   | $ | 55,773 |   |
| Range of fixed-rate commitments |   |                         | 3.25%-15.00 | %      |              |   | - |   |   |   | 4.49%-15.00 | % |   |   | - |   |

|                              |   | September 30, 2009     |   |   | December 31, 2008 |   |
|-----------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                              |   | Contract               |   |   | Fair              |   |   | Contract |   |   | Fair |   |
|                              |   | Amount                 |   |   | Value             |   |   | Amount |   |   | Value |   |
|                              |   | (Dollars in Thousands) |   |
| Standby letters of credit         |   | $                      | 1,041  |   |              | $      | - |   |   | $ | 882 |   |   | $ | - |   |
| Limited recourse obligations      |   |                   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   related to loans sold |   | $                      | 1,664  |   |              | $      | - |   |   | $ | 1,507 |   |   | $ | - |   |

----

----

----

----

|                      |   | ISSUER PURCHASES OF EQUITY SECURITIES |   |
|---------------------------|--------|---------------------------------------|--------|
|                      |   | (a)                                   |   |   | (b) |   |   | (c) |   |   | (d) |   |
|                      |   | Total Number                          |   |   | Average Price |   |   | Total Number of |   |   | Maximum Number |   |
|                      |   | of Shares                             |   |   | Paid per |   |   | Shares (or Units) |   |   | (or Approximate |   |
|                      |   | (or Units)                            |   |   | Share |   |   | Purchased as |   |   | Dollar Value) of |   |
|                      |   | Purchased                             |   |   | (or Unit) |   |   | Part of Publicly |   |   | Shares (or Units) |   |
|                      |   |                                  |   |   |   |   |   | Announced Plans |   |   | That May Yet Be |   |
|                      |   |                                  |   |   |   |   |   | or Programs |   |   | Purchased Under the |   |
| Period                    |   |                                  |   |   |   |   |   |   |   |   | Plans or Programs) |   |
|                      |   |                                  |   |   |   |   |   |   |   |   |   |   |
| July 1, 2009 through      |   |                                  |   |   |   |   |   |   |   |   |   |   |
| July 31, 2009             |   |                                  | -      |   |   | $ | - |   |   |   | - |   |   |   | 211,810 |   |
| August 1, 2009 through    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| August 31, 2009           |   |                                  | 88,407 |   |   | $ | 9.32 |   |   |   | 88,407 |   |   |   | 123,403 |   |
| September 1, 2009 through |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| September 30, 2009        |   |                                  | 9,728  |   |   | $ | 9.25 |   |   |   | 9,728 |   |   |   | 113,675 |   |
|   Total         |   |                                  | 98,135 |   |   | $ | 9.31 |   |   |   | 98,135 |   |   |   |   |   |

----

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

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

|   |   4.0   Form of Common Stock Certificate of Beacon Federal Bancorp, Inc. (1) |
|--------|-------------------------------------------------------------------------------------------------------|

|   | 10.1   Form of 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 Randy Wiley (4) |
|--------|-----------------------------------------------------------------|

|   | 10.6   Form of Change in Control Agreement (2) |
|--------|---------------------------------------------------------------|

|   | 10.7   Beacon Federal Excess Benefit Plan (3) |
|--------|--------------------------------------------------------------|

|   | 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) |
|--------|-----------------------------------------------------|

|   | 21.0   Subsidiaries of Registrant (1) |
|--------|------------------------------------------------------|

|   | 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 |
|--------|--------------------------------------------------------------------------------------------------------------------|

|         | 32.0  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) | Field with the Securities and Exchange Commission on October 4, 2007 on Form 8K. |
|-----|----------------------------------------------------------------------------------|

| (3) | Filed with the Securities and Exchange Commission on October 31, 2008 on Form 8K. |
|-----|-----------------------------------------------------------------------------------|

| (4) | Filed with the Securities and Exchange Commission on July 3, 2008 on Form 8K. |
|-----|-------------------------------------------------------------------------------|

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

| (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. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    | BEACON FEDERAL BANCORP, INC.(Registrant)                |             |
|-------------------------|---------------------------------------------------------|------------------|
|                    |                                                    |             |   |
| DATE: November 12, 2009 | By:                                                     | Ross J. Prossner |   |
|                    | Ross J. Prossner, President and Chief Executive Officer |             |

|   | By:                                                                          | Lisa M. Jones |   |
|--------|------------------------------------------------------------------------------|---------------|--------|
|   | Lisa M. Jones, Vice-President and Principal Financial and Accounting Officer |          |