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

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

|   | Indiana                                                    |   | 35-2042093          |   |
|--------|------------------------------------------------------------|--------|---------------------|--------|
|   | (State or other jurisdiction                               |   | (I.R.S. Employer    |   |
|   | of incorporation or organization)                          |   | Identification No.) |   |
|   |                                                       |   |                |   |
|   | 707 Ridge Road, Munster, Indiana                           |   | 46321               |   |
|   | (Address of principal executive offices)                   |   | (Zip code)          |   |
|   |                                                       |   |                |   |
|   | (219) 836-2960                                             |   |
|   | (Registrant’s telephone number, including area code) |   |

| Large accelerated filer £                                             | Accelerated filer £    |   |
|----------------------------------------------------------------------------|-----------------------------|--------|
| Non-accelerated filer £ (Do not check if a smaller reporting company) | Smaller reporting company R |   |

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CFS BANCORP, INC.

|                                                                          |                                                                                        | Page   |
|-------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------|
|                                                                          | PART I - FINANCIAL INFORMATION                                                              |   |
|                                                                          |                                                                                        |   |
| Item 1.                                                                       | Financial Statements (Unaudited)                                                            |   |
|                                                                          | Condensed Consolidated Statements of Condition                                              | 3      |
|                                                                          | Condensed Consolidated Statements of Income                                                 | 4      |
|                                                                          | Condensed Consolidated Statements of Changes in Shareholders’ Equity                  | 5      |
|                                                                          | Condensed Consolidated Statements of Cash Flows                                             | 6      |
|                                                                          | Notes to Condensed Consolidated Financial Statements                                        | 7      |
|                                                                          |                                                                                        |   |
| Item 2.                                                                       | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26     |
|                                                                          |                                                                                        |   |
| Item 3.                                                                       | Quantitative and Qualitative Disclosures about Market Risk                                  | 51     |
|                                                                          |                                                                                        |   |
| Item 4.                                                                       | Controls and Procedures                                                                     | 53     |
|                                                                          |                                                                                        |   |
|                                                                          |                                                                                        |   |
|                                                                          | PART II - OTHER INFORMATION                                                                 |   |
|                                                                          |                                                                                        |   |
| Item 1.                                                                       | Legal Proceedings                                                                           | 53     |
|                                                                          |                                                                                        |   |
| Item 1A.                                                                      | Risk Factors                                                                                | 53     |
|                                                                          |                                                                                        |   |
| Item 2.                                                                       | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 54     |
|                                                                          |                                                                                        |   |
| Item 3.                                                                       | Defaults Upon Senior Securities                                                             | 54     |
|                                                                          |                                                                                        |   |
| Item 4.                                                                       | (Removed and Reserved)                                                                      | 54     |
|                                                                          |                                                                                        |   |
| Item 5.                                                                       | Other Information                                                                           | 54     |
|                                                                          |                                                                                        |   |
| Item 6.                                                                       | Exhibits                                                                                    | 54     |
|                                                                          |                                                                                        |   |
| Signature Page                                                                | 55                                                                                          |
|                                                                          |                                                                                        |   |
| Certifications of Principal Executive Officer and Principal Financial Officer |  56                                                                                    |
|                                                                          | Exhibit 31.1                                                                           |   |
|                                                                          | Exhibit 31.2                                                                           |   |
|                                                                          | Exhibit 32.0                                                                           |   |

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table of contents

CFS BANCORP, INC.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | March 31, 2011         |      |    | December 31, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|---------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (Unaudited)            |      |    |              |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | (Dollars in thousands) |      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |      |    |              |   |
| Cash and amounts due from depository institutions                                                                                                                                                                                                                                                  |   | $                      | 19,211    |    |              | $      | 24,624 |   |
| Interest-bearing deposits                                                                                                                                                                                                                                                                          |   |                   | 38,757    |    |              |   | 37,130 |   |
|      Cash and cash equivalents                                                                                                                                                                                                                                            |   |                   | 57,968    |    |              |   | 61,754 |   |
| Investment securities available-for-sale, at fair value                                                                                                                                                                                                                                            |   |                   | 239,012   |    |              |   | 197,101 |   |
| Investment securities held-to-maturity, at cost                                                                                                                                                                                                                                                    |   |                   | 16,764    |    |              |   | 17,201 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                                                                                                                                                              |   |                   | 10,282    |    |              |   | 20,282 |   |
| Loans receivable                                                                                                                                                                                                                                                                                   |   |                   | 724,223   |    |              |   | 732,584 |   |
|      Allowance for loan losses                                                                                                                                                                                                                                            |   |                   | (17,095   | )  |              |   | (17,179 | )  |
|           Net loans                                                                                                                                                                                                                              |   |                   | 707,128   |    |              |   | 715,405 |   |
| Bank-owned life insurance                                                                                                                                                                                                                                                                          |   |                   | 35,669    |    |              |   | 35,463 |   |
| Accrued interest receivable                                                                                                                                                                                                                                                                        |   |                   | 3,265     |    |              |   | 3,162 |   |
| Other real estate owned                                                                                                                                                                                                                                                                            |   |                   | 23,567    |    |              |   | 22,324 |   |
| Office properties and equipment                                                                                                                                                                                                                                                                    |   |                   | 18,514    |    |              |   | 20,464 |   |
| Net deferred tax assets                                                                                                                                                                                                                                                                            |   |                   | 17,146    |    |              |   | 17,923 |   |
| Other assets                                                                                                                                                                                                                                                                                       |   |                   | 14,726    |    |              |   | 10,597 |   |
|           Total assets                                                                                                                                                                                                                           |   | $                      | 1,144,041 |    |              | $      | 1,121,676 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |      |    |              |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |      |    |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |      |    |              |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                           |   | $                      | 980,517   |    |              | $      | 945,884 |   |
| Borrowed funds                                                                                                                                                                                                                                                                                     |   |                   | 40,658    |    |              |   | 53,550 |   |
| Advance payments by borrowers for taxes and insurance                                                                                                                                                                                                                                              |   |                   | 4,785     |    |              |   | 4,618 |   |
| Other liabilities                                                                                                                                                                                                                                                                                  |   |                   | 4,317     |    |              |   | 4,696 |   |
|           Total liabilities                                                                                                                                                                                                                      |   |                   | 1,030,277 |    |              |   | 1,008,748 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |      |    |              |   |   |   |
| Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   |      |    |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |      |    |              |   |   |   |
| Shareholders’ equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   |      |    |              |   |   |   |
|      Preferred stock, $.01 par value; 15,000,000 shares authorized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   | —   |    |              |   | — |   |
|      Common stock, $.01 par value; 85,000,000 shares authorized;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                   |      |    |              |   |   |   |
|           23,423,306 shares issued; 10,869,236 and 10,850,040 shares          outstanding                                                                                                 |   |                   | 234       |    |              |   | 234 |   |
|      Additional paid-in capital                                                                                                                                                                                                                                           |   |                   | 186,929   |    |              |   | 187,164 |   |
|      Retained earnings                                                                                                                                                                                                                                                    |   |                   | 83,957    |    |              |   | 83,592 |   |
|      Treasury stock, at cost; 12,554,070 and 12,573,266 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | (154,877  | )       |              |   | (155,112 | ) |
|      Accumulated other comprehensive loss, net of tax                                                                                                                                                                                                                     |   |                   | (2,479    | )       |              |   | (2,950 | ) |
|           Total shareholders’ equity                                                                                                                                                                                                       |   |                   | 113,764   |    |              |   | 112,928 |   |
|           Total liabilities and shareholders’ equity                                                                                                                                                                                       |   | $                      | 1,144,041 |    |              | $      | 1,121,676 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Three Months Ended March 31,                           |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2011                                                   |       |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (Unaudited)                                            |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands, exceptshare and per share data) |       |
| Interest income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                   |       |   |   |   |
|      Loans receivable                                                                                                                                       |   | $                                                      | 8,811      |   |   | $ | 9,678 |   |
|      Investment securities                                                                                                                                  |   |                                                   | 2,045      |   |   |   | 2,213 |   |
|      Other interest-earning assets                                                                                                                          |   |                                                   | 157        |   |   |   | 124 |   |
|           Total interest income                                                                                                    |   |                                                   | 11,013     |   |   |   | 12,015 |   |
| Interest expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                   |       |   |   |   |   |   |
|      Deposits                                                                                                                                               |   |                                                   | 1,894      |   |   |   | 2,053 |   |
|      Borrowed funds                                                                                                                                         |   |                                                   | 262        |   |   |   | 519 |   |
|           Total interest expense                                                                                                   |   |                                                   | 2,156      |   |   |   | 2,572 |   |
| Net interest income                                                                                                                                                                  |   |                                                   | 8,857      |   |   |   | 9,443 |   |
| Provision for loan losses                                                                                                                                                            |   |                                                   | 903        |   |   |   | 1,710 |   |
| Net interest income after provision for loan losses                                                                                                                                  |   |                                                   | 7,954      |   |   |   | 7,733 |   |
| Non-interest income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                   |       |   |   |   |   |   |
|      Service charges and other fees                                                                                                                         |   |                                                   | 1,076      |   |   |   | 1,220 |   |
|      Card-based fees                                                                                                                                        |   |                                                   | 475        |   |   |   | 437 |   |
|      Commission income                                                                                                                                      |   |                                                   | 45         |   |   |   | 54 |   |
|      Net gain (loss) on sale of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                   |       |   |   |   |   |   |
|           Investment securities                                                                                                    |   |                                                   | 519        |   |   |   | 456 |   |
|           Loans receivable                                                                                                         |   |                                                   | 32         |   |   |   | ― |   |
|           Other assets                                                                                                             |   |                                                   | (5         | ) |   |   | 1 |   |
|      Income from bank-owned life insurance                                                                                                                  |   |                                                   | 206        |   |   |   | 223 |   |
|      Other income                                                                                                                                           |   |                                                   | 103        |   |   |   | 150 |   |
|           Total non-interest income                                                                                                |   |                                                   | 2,451      |   |   |   | 2,541 |   |
| Non-interest expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                   |       |   |   |   |   |   |
|      Compensation and employee benefits                                                                                                                     |   |                                                   | 5,239      |   |   |   | 4,668 |   |
|      Net occupancy expense                                                                                                                                  |   |                                                   | 765        |   |   |   | 755 |   |
|      FDIC insurance premiums and OTS assessments                                                                                                            |   |                                                   | 653        |   |   |   | 600 |   |
|      Professional fees                                                                                                                                      |   |                                                   | 388        |   |   |   | 593 |   |
|      Furniture and equipment expense                                                                                                                        |   |                                                   | 463        |   |   |   | 533 |   |
|      Data processing                                                                                                                                        |   |                                                   | 442        |   |   |   | 430 |   |
|      Marketing                                                                                                                                              |   |                                                   | 187        |   |   |   | 114 |   |
|      Other real estate owned related expense, net                                                                                                           |   |                                                   | 592        |   |   |   | 631 |   |
|      Loan collection expense                                                                                                                                |   |                                                   | 120        |   |   |   | 169 |   |
|      Severance and early retirement expense                                                                                                                 |   |                                                   | ―    |   |   |   | 4 |   |
|      Other general and administrative expenses                                                                                                              |   |                                                   | 1,118      |   |   |   | 970 |   |
|           Total non-interest expense                                                                                               |   |                                                   | 9,967      |   |   |   | 9,467 |   |
| Income before income taxes                                                                                                                                                           |   |                                                   | 438        |   |   |   | 807 |   |
| Income tax (benefit) expense                                                                                                                                                         |   |                                                   | (34        | ) |   |   | 109 |   |
|           Net income                                                                                                               |   | $                                                      | 472        |   |   | $ | 698 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                   |       |   |   |   |   |   |
| Per share data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                   |       |   |   |   |   |   |
|      Basic earnings per share                                                                                                                               |   | $                                                      | .04        |   |   | $ | .07 |   |
|      Diluted earnings per share                                                                                                                             |   |                                                   | .04        |   |   |   | .07 |   |
|      Cash dividends declared per share                                                                                                                      |   |                                                   | .01        |   |   |   | .01 |   |
| Weighted-average common and common share equivalents outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                   |       |   |   |   |   |   |
|      Basic                                                                                                                                                  |   |                                                   | 10,650,743 |   |   |   | 10,581,770 |   |
|      Diluted                                                                                                                                                |   |                                                   | 10,706,677 |   |   |   | 10,673,776 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                 |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |  Accumulated |                                       |    |   |    |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------|--------|---------------|------------------|---------|----------------|--------|---------|----------------|--------|--------|---------------|----------|--------|-------------|-------------------|--------------------------------------------|---------|--------|---------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                 |    |                                                |   |          |  Additional |    |           |   |    |           |   |   |          |     |   |  Other |              |                                       |    |   |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                 | Common  |                                                |   |  Paid-In |             |    |  Retained |   |    |  Treasury |   |   | Comprehensive |     |   |        |              |                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                 | Stock   |                                                |   |  Capital |             |    |  Earnings |   |    |  Stock    |   |   |  Loss    |     |   |  Total |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                 |    | (Unaudited)                                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                 |    | (Dollars in thousands, except per share data)  |   |
| Balance at January 1, 2010                                                                                                             | $  |     234                         |   |          | $                | 188,930 |           |   |  $ | 80,564         |   |   |  $       | (157,041 | )      |        |  $           |      (2,314       | )  |   | $       | 110,373 |   |
| Net income                                                                                                                             |    | —                                             |   |          |             | — |           |   |    | 698            |   |   |          | —  |   |        |              | —                                    |    |   |    | 698     |   |
| Other comprehensive income:                                                                                                                                                                                                                                                                                                                                                                                     |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
|      Change in unrealized appreciation                                                                                                                                                                                                                                                                                                                                                 |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
|      on investment securities available-for-sale,                                                                                                                                                                                                                                                                                                                                      |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
|      net of reclassification and tax                                                                          |    | —                                             |   |          |             | — |           |   |    | —        |   |   |          | —  |   |        |              | 229                                        |    |   |    | 229     |   |
| Total comprehensive income                                                                                                             |    | —                                             |   |          |             | — |           |   |    | —        |   |   |          | —  |   |        |              | —                                    |    |   |    | 927     |   |
| Net purchases of Rabbi Trust shares                                                                                                                                                                                                                                                                                                                                                                                  |    | —                                             |   |          |             | — |           |   |    | —        |   |   |          | (1       | )      |        |              | —                                    |    |   |    | (1      | ) |
| Forfeiture of restricted stock awards                                                                                                                                                                                                                                                                                                                                                                                |    | —                                             |   |          |             | 205     |           |   |    | —        |   |   |          | (205     | )      |        |              | —                                    |    |   |    | — |   |
| Unearned compensation restricted stock award                                                                                                                                                                                                                                                                                                                                                                         |    | —                                             |   |          |             | (395    | )         |   |    | —        |   |   |          | 395      |   |        |              | —                                    |    |   |    | — |   |
| Dividends declared on common stock     ($.01 per share)                                                       |    | —                                             |   |          |             | — |           |   |    | (106           | )      |   |          | —  |   |        |              | —                                    |    |   |    | (106    | ) |
| Balance at March 31, 2010                                                                                                              |  $ |    234                               |   |          | $                | 188,740 |           |   |  $ | 81,156         |   |   |  $       | (156,852 | )      |        |  $           |       (2,085 | )  |   | $       | 111,193 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                 |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
| Balance at January 1, 2011                                                                                                             |  $ |    234                               |   |          | $                | 187,164 |           |   |  $ | 83,592         |   |   |  $       | (155,112 | )      |        |  $           |       (2,950 | )  |   | $       | 112,928 |   |
| Net income                                                                                                                             |    | —                                             |   |          |             | — |           |   |    | 472            |   |   |          | —  |   |        |              | —                                    |    |   |    | 472     |   |
| Other comprehensive income:                                                                                                                                                                                                                                                                                                                                                                                     |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
|      Change in unrealized appreciation                                                                                                                                                                                                                                                                                                                                                 |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
|      on investment securities available-for-sale,                                                                                                                                                                                                                                                                                                                                           |    |                                                |   |          |             |    |           |   |    |           |   |   |          |     |   |        |              |                                       |    |   |    |    |   |
|      net of reclassification and tax                                                                          |    | —                                             |   |          |             | — |           |   |    | —        |   |   |          | —  |   |        |              | 471                                        |    |   |    | 471     |   |
| Total comprehensive income                                                                                                             |    | —                                             |   |          |             | — |           |   |    | —        |   |   |          | —  |   |        |              | —                                    |    |   |    | 943     |   |
| Forfeiture of restricted stock awards                                                                                                                                                                                                                                                                                                                                                                                |    | —                                             |   |          |             | 437     |           |   |    | 2              |   |   |          | (437     | )      |        |              | —                                    |    |   |    | 2       |   |
| Unearned compensation restricted stock awards                                                                                                                                                                                                                                                                                                                                                                        |    | —                                             |   |          |             | (672    | )         |   |    | —        |   |   |          | 672      |   |        |              | —                                    |    |   |    | — |   |
| Dividends declared on common stock     ($.01 per share)                                                                                                                                                                                                                                                                                                                                |    | —                                             |   |          |             | — |           |   |    | (109           | )      |   |          | —  |   |        |              | —                                    |    |   |    | (109    | ) |
| Balance at March 31, 2011                                                                                                              |  $ |      234                   |   |          | $                | 186,929 |           |   |  $ | 83,957         |   |   |  $       | (154,877 | )      |        |  $           |       (2,479 | )  |   | $  | 113,764 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Three Months EndedMarch 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2011                        |    |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Unaudited)                 |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Dollars in thousands)      |    |
| OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |    |   |   |   |
| Net income                                                                                                                                                                                                                                                     |   | $                           | 472     |   |   | $ | 698 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |    |   |   |   |   |   |
|        Provision for loan losses                                                                                                                                                                                                           |   |                        | 903     |   |   |   | 1,710 |   |
|        Depreciation and amortization                                                                                                                                                                                                       |   |                        | 380     |   |   |   | 404 |   |
|        Net discount accretion on investment securities available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | (83     | ) |   |   | (198 | ) |
|        Net premium amortization on investment securities held-to-maturity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                        | 40      |   |   |   | — |   |
|        Net (gain) loss on sale of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |    |   |   |   |   |   |
|                Loans held-for-sale                                                                                                                                                  |   |                        | (32     | ) |   |   | — |   |
|                Investment securities                                                                                                                                                               |   |                        | (519    | ) |   |   | (456 | ) |
|                Other assets                                                                                                                                                                        |   |                        | 5       |   |   |   | (1 | ) |
|        Write down on transfer of future branch sites to other real estate owned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                        | 396     |   |   |   | — |   |
|        Write down of construction-in-progress                                                                                                                                                                               |   |                        | 106     |   |   |   | — |   |
|        Deferred income tax expense                                                                                                                                                                                                         |   |                        | 515     |   |   |   | 110 |   |
|        Proceeds from sale of loans held-for-sale                                                                                                                                                                                           |   |                        | 1,231   |   |   |   | — |   |
|        Origination of loans held-for-sale                                                                                                                                                                                                  |   |                        | (899    | ) |   |   | — |   |
|        Increase in cash surrender value of bank-owned life insurance                                                                                                                                                                       |   |                        | (206    | ) |   |   | (223 | ) |
|        (Increase) decrease in other assets                                                                                                                                                                                                 |   |                        | (4,456  | ) |   |   | 1,275 |   |
|        Increase (decrease) in other liabilities                                                                                                                                                                                            |   |                        | (125    | ) |   |   | 288 |   |
|                Net cash provided by (used in) operating activities                                                                                                                                                     |   |                        | (2,272  | ) |   |   | 3,607 |   |
| INVESTING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |    |   |   |   |   |   |
| Proceeds from sale of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |    |   |   |   |   |   |
|        Investment securities, available-for-sale                                                                                                                                                                                           |   |                        | 6,405   |   |   |   | 9,603 |   |
|        Other real estate owned                                                                                                                                                                                              |   |                        | 402     |   |   |   | 57 |   |
| Proceeds from maturities and paydowns of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                        |    |   |   |   |   |   |
|        Investment securities, available-for-sale                                                                                                                                                                                           |   |                        | 21,086  |   |   |   | 19,043 |   |
|        Investment securities, held-to-maturity                                                                                                                                                                                             |   |                        | 397     |   |   |   | — |   |
| Purchases of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        |    |   |   |   |   |   |
|        Investment securities, available-for-sale                                                                                                                                                                                           |   |                        | (68,070 | ) |   |   | (22,871 | ) |
|        Properties and equipment                                                                                                                                                                                             |   |                        | (43     | ) |   |   | (150 | ) |
| Redemption of Federal Home Loan Bank stock                                                                                                                                                                                                                     |   |                        | 10,000  |   |   |   | — |   |
| Net loan repayments (fundings)                                                                                                                                                                                                                                 |   |                        | 6,537   |   |   |   | (4,059 | ) |
|                Net cash flows provided by (used in) investing activities                                                                                                            |   |                        | (23,286 | ) |   |   | 1,623 |   |
| FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |    |   |   |   |   |   |
| Net increase (decrease) in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        |    |   |   |   |   |   |
|        Deposit accounts                                                                                                                                                                                                     |   |                        | 34,606  |   |   |   | 37,348 |   |
|        Advance payments by borrowers for taxes and insurance                                                                                                                                                                |   |                        | 167     |   |   |   | 493 |   |
|        Short-term borrowed funds                                                                                                                                                                                            |   |                        | 2,158   |   |   |   | (9,321 | ) |
| Proceeds from Federal Home Loan Bank advances                                                                                                                                                                                                                  |   |                        | — |   |   |   | 18,000 |   |
| Repayments of Federal Home Loan Bank advances                                                                                                                                                                                                                  |   |                        | (15,050 | ) |   |   | (37,047 | ) |
| Dividends paid on common stock                                                                                                                                                                                                                                 |   |                        | (109    | ) |   |   | (109 | ) |
| Net purchase of Rabbi Trust shares                                                                                                                                                                                                                             |   |                        | — |   |   |   | (1 | ) |
|                Net cash flows provided by financing activities                                                                                                                                                         |   |                        | 21,772  |   |   |   | 9,363 |   |
| Increase (decrease) in cash and cash equivalents                                                                                                                                                                                                               |   |                        | (3,786  | ) |   |   | 14,593 |   |
| Cash and cash equivalents at beginning of period                                                                                                                                                                                                               |   |                        | 61,754  |   |   |   | 24,428 |   |
| Cash and cash equivalents at end of period                                                                                                                                                                                                                     |   | $                           | 57,968  |   |   | $ | 39,021 |   |
| Supplemental disclosures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |    |   |   |   |   |   |
|        Loans and land transferred to other real estate owned                                                                                                                                                                               |   | $                           | 1,672   |   |   | $ | 1,845 |   |
|        Cash paid for interest on deposits                                                                                                                                                                                                  |   |                        | 1,890   |   |   |   | 2,044 |   |
|        Cash paid for interest on borrowed funds                                                                                                                                                                                            |   |                        | 289     |   |   |   | 543 |   |
|        Cash paid for income taxes                                                                                                                                                                                                          |   |                        | — |   |   |   | 275 |   |

----

table of contents

| 1. | Basis of Presentation |
|----|-----------------------|

| 2. | Earnings Per Share |
|----|--------------------|

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    | Three Months EndedMarch 31,                                                 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    | 2011                                                                        |   |   |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    | (Dollars in thousands, except pershare data)                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    |                                                                        |   |   |   |   |   |
| Net income                                                                                                                                                                                                                  |  $ |            472       |   |   | $ | 698 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    |                                                                        |   |   |   |   |   |
| Weighted-average common shares:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |    |                                                                        |   |   |   |   |   |
|      Outstanding                                                                                                                                                                              |    | 10,650,743                                                                  |   |   |   | 10,581,770 |   |
|      Equivalents (1)                                                                                                                                                                               |    | 55,934                                                                      |   |   |   | 92,006 |   |
|          Total                                                                                                                                                                 |    | 10,706,677                                                                  |   |   |   | 10,673,776 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    |                                                                        |   |   |   |   |   |
| Earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |    |                                                                        |   |   |   |   |   |
|      Basic                                                                                                                                                                                         |  $ |             .04 |   |   | $ | .07 |   |
|      Diluted                                                                                                                                                                                       |    | .04                                                                         |   |   |   | .07 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |    |                                                                        |   |   |   |   |   |
| Number of anti-dilutive stock options excluded from the diluted     earnings per share calculation                                                                                                 |    | 647,995                                                                     |   |   |   | 740,995 |   |
| Weighted-average exercise price of anti-dilutive option shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  $ |            13.46     |   |   | $ | 13.24 |   |

| (1) |       | Assumes exercise of dilutive stock options, a portion of the unearned restricted stock awards, and treasury shares held in Rabbi Trust accounts. |
|-----|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                              |   |                   |    |   |      |   |    | Gross      |   |   | Gross      |   |   |   |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-----------|--------|---------|------------|--------|--------|------------|--------|--------|--------|---------|
|                                                                                                                                                                                                                                                                                                                                                                              |   | Par                    |    |   | Amortized |   |    | Unrealized |   |   | Unrealized |   |   | Fair   |    |
|                                                                                                                                                                                                                                                                                                                                                                              |   | Value                  |    |   | Cost      |   |    | Gains      |   |   | Losses     |   |   | Value  |    |
|                                                                                                                                                                                                                                                                                                                                                                              |   | (Dollars in thousands) |    |
| At March 31, 2011:                                                                                                                                                                                                                                                                                                                                                                |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |
| Available-for-sale investment securities:                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |
| U.S. Treasury securities                                                                                                                                        |   | $                      | 21,000  |   |      | $      | 20,946  |       |   | $      | 24         |   |   | $      | (202    | ) |   | $ | 20,768 |   |
| Government sponsored entity (GSE) securities                                                                                                                                                                                                                                                                                                                                      |   |                   | 68,800  |   |      |   | 69,724  |       |   |   | 370        |   |   |   | (219    | ) |   |   | 69,875 |   |
| Corporate bonds                                                            |   |                   | 4,000   |   |      |   | 3,645   |       |   |   | —    |   |   |   | (43     | ) |   |   | 3,602 |   |
| Collateralized mortgage obligations                                                                                                                                                                                              |   |                   | 54,340  |   |      |   | 51,021  |       |   |   | 2,062      |   |   |   | (97     | ) |   |   | 52,986 |   |
| Commercial mortgage-backed securities                                                                                                                                                                                                                                                                                                                                             |   |                   | 70,218  |   |      |   | 71,341  |       |   |   | 1,418      |   |   |   | (252    | ) |   |   | 72,507 |   |
| Pooled trust preferred securities                                                                                                                                                                                           |   |                   | 29,285  |   |      |   | 26,386  |       |   |   | —    |   |   |   | (7,124  | ) |   |   | 19,262 |   |
| GSE preferred stock                                                                                                          |   |                   | 200     |   |      |   | — |       |   |   | 12         |   |   |   | — |   |   |   | 12 |   |
| Total available-for-sale securities                                                                                                                                                                                                                            |   | $                      | 247,843 |   |      | $      | 243,063 |       |   | $      | 3,886      |   |   | $      | (7,937  | ) |   | $ | 239,012 |   |
|                                                                                                                                                                                                                                                                                                                                                                              |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |   |   |   |   |   |
| Held-to-maturity investment securities:                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |   |   |   |   |   |
| Asset backed securities                                                                                                                               |   | $                      | 9,447   |   |      | $      | 9,824   |       |   | $      | 112        |   |   | $      | — |   |   | $ | 9,936 |   |
| Municipals                                                                 |   |                   | 6,940   |   |      |   | 6,940   |       |   |   | 113        |   |   |   | — |   |   |   | 7,053 |   |
| Total held-to-maturity investment securities                                                                                                                                                                                                                                                                                                                                      |   | $                      | 16,387  |   |      | $      | 16,764  |       |   | $      | 225        |   |   | $      | — |   |   | $ | 16,989 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |    |   |      |   |    | Gross      |   |   | Gross      |   |   |   |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-----------|--------|---------|------------|--------|--------|------------|--------|--------|--------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                       |   | Par                    |    |   | Amortized |   |    | Unrealized |   |   | Unrealized |   |   | Fair   |    |
|                                                                                                                                                                                                                                                                                                                                                                                       |   | Value                  |    |   | Cost      |   |    | Gains      |   |   | Losses     |   |   | Value  |    |
|                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands) |    |
| At December 31, 2010:                                                                                                                                                                                                                                                                                                                                                                      |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |
| Available-for-sale investment securities:                                                                                                                                                                                                                                                                                                                                                  |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |
| U.S. Treasury securities                                                            |   | $                      | 15,000  |   |      | $      | 14,975  |       |   | $      | 3          |   |   | $      | (159    | ) |   | $ | 14,819 |   |
| Government sponsored entity (GSE) securities                                                                                                                                                                                                                                                                                                                                               |   |                   | 30,800  |   |      |   | 30,717  |       |   |   | 421        |   |   |   | (118    | ) |   |   | 31,020 |   |
| Corporate bonds                                                                     |   |                   | 4,000   |   |      |   | 3,629   |       |   |   | —    |   |   |   | (43     | ) |   |   | 3,586 |   |
| Collateralized mortgage obligations                                                                                                                                 |   |                   | 62,512  |   |      |   | 59,037  |       |   |   | 2,071      |   |   |   | (353    | ) |   |   | 60,755 |   |
| Commercial mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                      |   |                   | 66,282  |   |      |   | 67,052  |       |   |   | 1,804      |   |   |   | (158    | ) |   |   | 68,698 |   |
| Pooled trust preferred securities                                                                                                     |   |                   | 29,409  |   |      |   | 26,473  |       |   |   | —    |   |   |   | (8,348  | ) |   |   | 18,125 |   |
| GSE preferred stock                                                                 |   |                   | 5,837   |   |      |   | — |       |   |   | 98         |   |   |   | — |   |   |   | 98 |   |
| Total available-for-sale securities                                                                                                                                      |   | $                      | 213,840 |   |      | $      | 201,883 |       |   | $      | 4,397      |   |   | $      | (9,179  | ) |   | $ | 197,101 |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |   |   |   |   |   |
| Held-to-maturity investment securities:                                                                                                                                                                                                                                                                                                                                                    |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |    |   |   |   |   |   |
| Asset backed securities                                                             |   | $                      | 9,844   |   |      | $      | 10,261  |       |   | $      | 126        |   |   | $      | (7      | ) |   | $ | 10,380 |   |
| Municipals                                                                          |   |                   | 6,940   |   |      |   | 6,940   |       |   |   | 106        |   |   |   | — |   |   |   | 7,046 |   |
| Total held-to-maturity investment securities                                                                                                                                                                                                                                                                                                                                               |   | $                      | 16,784  |   |      | $      | 17,201  |       |   | $      | 232        |   |   | $      | (7      | ) |   | $ | 17,426 |   |

|                                                                                                                                                                                                                                                                                                                                                            |   | March 31, 2011         |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                            |   | Less than 12 Months    |    |   | 12 Months or More |   |   | Total |   |
|                                                                                                                                                                                                                                                                                                                                                            |   | Fair                   |    |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                                                                                                                                                                                                                                                                                                                                            |   | Value                  |    |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                                                                                                                                                                                                                                                                                                                                            |   | (Dollars in thousands) |    |
| U.S. Treasury Securities                                                                                                                                     |   | $                      | 14,773  |   |   | $ | (202 | ) |   | $ | — |   |   | $ | — |   |   | $ | 14,773 |   |   | $ | (202 | ) |
| GSE securities                                                               |   |                   | 29,478  |   |   |   | (219 | ) |   |   | — |   |   |   | — |   |   |   | 29,478 |   |   |   | (219 | ) |
| Corporate bonds                                                         |   |                   | 3,602   |   |   |   | (43 | ) |   |   | — |   |   |   | — |   |   |   | 3,602 |   |   |   | (43 | ) |
| Collateralized mortgage obligations                                                                                                                                                                                                                    |   |                   | 8,557   |   |   |   | (81 | ) |   |   | 39 |   |   |   | (16 | ) |   |   | 8,596 |   |   |   | (97 | ) |
| Commercial mortgage-backed securities                                                                                                                                                                                                                                                               |   |                   | 21,538  |   |   |   | (252 | ) |   |   | — |   |   |   | — |   |   |   | 21,538 |   |   |   | (252 | ) |
| Pooled trust preferred securities                                                                                                                                                                              |   |                   | — |   |   |   | — |   |   |   | 19,262 |   |   |   | (7,124 | ) |   |   | 19,262 |   |   |   | (7,124 | ) |
|                                                                                                                                                                                                                                                                                                                                                            |   | $                      | 77,948  |   |   | $ | (797 | ) |   | $ | 19,301 |   |   | $ | (7,140 | ) |   | $ | 97,249 |   |   | $ | (7,937 | ) |

|                                                                                                                                                                                                                                                                                                                                                           |   | December 31, 2010      |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                           |   | Less than 12 Months    |    |   | 12 Months or More |   |   | Total |   |
|                                                                                                                                                                                                                                                                                                                                                           |   | Fair                   |    |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                                                                                                                                                                                                                                                                                                                                           |   | Value                  |    |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |    |
| U.S. Treasury securities                                                                                                                                                                  |   | $                      | 11,905  |   |   | $ | (159 | ) |   | $ | — |   |   | $ | — |   |   | $ | 11,905 |   |   | $ | (159 | ) |
| GSE securities                                                         |   |                   | 5,870   |   |   |   | (118 | ) |   |   | — |   |   |   | — |   |   |   | 5,870 |   |   |   | (118 | ) |
| Corporate bonds                                                                  |   |                   | 3,586   |   |   |   | (43 | ) |   |   | — |   |   |   | — |   |   |   | 3,586 |   |   |   | (43 | ) |
| Collateralized mortgage obligations                                                                                                                                                                                                              |   |                   | 8,538   |   |   |   | (323 | ) |   |   | 1,204 |   |   |   | (30 | ) |   |   | 9,742 |   |   |   | (353 | ) |
| Commercial mortgage-backed securities                                                                                                                                                                                                                                          |   |                   | 10,255  |   |   |   | (158 | ) |   |   | — |   |   |   | — |   |   |   | 10,255 |   |   |   | (158 | ) |
| Pooled trust preferred securities                                                                                                                                                                             |   |                   | — |   |   |   | — |   |   |   | 18,125 |   |   |   | (8,348 | ) |   |   | 18,125 |   |   |   | (8,348 | ) |
|                                                                                                                                                                                                                                                                                                                                                           |   | $                      | 40,154  |   |   | $ | (801 | ) |   | $ | 19,329 |   |   | $ | (8,378 | ) |   | $ | 59,483 |   |   | $ | (9,179 | ) |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Available-for-Sale     |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Amortized              |    |   | Fair |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Cost                   |    |   | Value |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |    |
| U.S. Treasury securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   |    |   |   |   |
|        Due in one year or less                                                                                                                                            |   | $                      | 3,013   |   |   | $ | 3,015 |   |
|        Due after one year through five years                                                                                                                              |   |                   | 17,933  |   |   |   | 17,753 |   |
| GSE securities — Due after one year through five years                                                                                                                                  |   |                   | 69,724  |   |   |   | 69,875 |   |
| Corporate bonds — Due after five years                                                                                                                                                  |   |                   | 3,645   |   |   |   | 3,602 |   |
| Collateralized mortgage obligations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |   |   |   |   |
|        Due after one year through five years                                                                                                                              |   |                   | 1,047   |   |   |   | 1,054 |   |
|        Due after five years                                                                                                                                               |   |                   | 49,973  |   |   |   | 51,932 |   |
| Commercial mortgage-backed securities                                                                                                                                                         |   |                   | 71,341  |   |   |   | 72,507 |   |
| Pooled trust preferred securities                                                                                                                                                             |   |                   | 26,386  |   |   |   | 19,262 |   |
| GSE preferred stock                                                                                                                                                                           |   |                   | — |   |   |   | 12 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                      | 243,062 |   |   | $ | 239,012 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Held-to-Maturity       |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Amortized              |   |   | Fair |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Cost                   |   |   | Value |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |   |
| Asset backed securities — Due after five years                                                                                                                                          |   | $                      | 9,824  |   |   | $ | 9,936 |   |
| State and municipal securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |   |   |   |   |   |   |
|        Due in one year or less                                                                                                                                            |   |                   | 2,970  |   |   |   | 3,003 |   |
|        Due after one year through five years                                                                                                                              |   |                   | 3,970  |   |   |   | 4,050 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                      | 16,764 |   |   | $ | 16,989 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |    | March 31, 2011                                            |   |   |    | March 31, 2010                                            |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|-----------------------------------------------------------|--------|--------|---------|-----------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |    | (Dollars in thousands)                                    |   |
| Available-for-sale securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |    |                                                      |   |   |    |                                                      |   |
|        Gross realized gains                                                                                                                                                   |   |  $ |          519 |   |   |  $ |          456 |   |
|        Gross realized losses                                                                                                                                                  |   |    | —                                                   |   |   |    |  —                                             |   |
|        Impairment losses                                                                                                                                                      |   |    | —                                                   |   |   |    | —                                                   |   |
|                Net realized gains                                                                                                                         |   |  $ |          519 |   |   |  $ |          456 |   |
|        Income tax expense on realized gains                                                                                                                                   |   |  $ |          189 |   |   |  $ |         155       |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | March 31,2011          |    |   | December 31,2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |    |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   |    |   |             |   |
|      Commercial and industrial                                                                                                                                                                                                                     |   | $                      | 68,381  |   |             | $      | 74,940 |   |
|      Commercial real estate – owner occupied                                                                                                                                                                                                 |   |                   | 102,053 |   |             |   | 99,435 |   |
|      Commercial real estate – non-owner occupied                                                                                                                                                                                             |   |                   | 191,443 |   |             |   | 191,998 |   |
|      Commercial real estate – multifamily                                                                                                                                                                                                    |   |                   | 74,552  |   |             |   | 72,080 |   |
|      Commercial construction and land development                                                                                                                                                                                                  |   |                   | 21,130  |   |             |   | 24,310 |   |
|      Commercial participations                                                                                                                                                                                                                     |   |                   | 22,419  |   |             |   | 23,594 |   |
|           Total commercial loans                                                                                                                                                                                          |   |                   | 479,978 |   |             |   | 486,357 |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |    |   |             |   |   |   |
|      One-to-four family residential                                                                                                                                                                                                                |   |                   | 183,623 |   |             |   | 185,321 |   |
|      Home equity lines of credit                                                                                                                                                                                                                   |   |                   | 55,649  |   |             |   | 56,177 |   |
|      Retail construction                                                                                                                                                                                                                           |   |                   | 3,328   |   |             |   | 3,176 |   |
|      Other                                                                                                                                                                                                                                         |   |                   | 2,192   |   |             |   | 2,122 |   |
|           Total retail loans                                                                                                                                                                                              |   |                   | 244,792 |   |             |   | 246,796 |   |
|                Total loans receivable                                                                                                                                                            |   |                   | 724,770 |   |             |   | 733,153 |   |
|                Net deferred loan fees                                                                                                                                                            |   |                   | (547    | )      |             |   | (569 | ) |
|                     Total loans receivable, net of deferred fees                                                                                                        |   | $                      | 724,223 |   |             | $      | 732,584 |   |

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table of contents

|                                                                                                                     |   | Commercial                                                                                                                                   |   | Commercial Real Estate — |                                                                                                   | Construction |   |                                                                                       |   | One-to-four |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        | Total        |
|--------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------------------------------------------------------------------------------------------------------|--------------|--------|--------------------------------------------------------------------------------------------|--------|-------------|-----------------------------------------------------------------------------------------------------------------------------------|----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------|--------------|
|                                                                                                                     |   | and                                                                                                                                          |   | Owner                          |                                                                                                   | Non-Owner    |   |                                                                                       |   | and Land    |                                                                                                                              | Commercial     |   | Family                                                                                                                            |   |   |                                                                                        | Retail       |   |   |   | Loans |
|                                                                                                                     |   | Industrial                                                                                                                                   |   | Occupied                       |                                                                                                   | Occupied     |   | Multifamily                                                                                |   | Development |                                                                                                                              | Participations |   | Residential                                                                                                                       |   | HELOC  |                                                                                        | Construction |   | Other |   | Receivable |
|                                                                                                                     |   | (Dollars in thousands)                                                                                                                       |
| Allowance for loan losses:                                                                                               |   |                                                                                                                                         |   |                           |                                                                                                   |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at12/31/10                                                                                           |   | $                1,279                                            |   |                           | $               1,090            |         |   | $              6,906      |   |        | $                  350                            |           |   | $                  188                            |   |   | $               4,559      |         |   | $               1,356 |   |   | $                1,309 |   |   | $                       7 |   |   | $                  135 |   |   | $            17,179 |   |
|   Provision for loan losses                                                                                    |   |     (13                                                                                                                  | )      |                           |     (78                                                                                 | )            |   |      (197                                                              | )      |        |      315                                                                                                      |           |   |      (30                                                                                                      | )      |   |      863                                                           |         |   |      (11 | ) |   |     65 |   |   |   2 |   |   | (13 | ) |   |  903 |   |
|   Loans charged-off:                                                                                           |   |                                                                                                                                         |   |                           |                                                                                                   |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Current year charge-offs                                                                         |   |     —                                                                                                                        |   |                           |     —                                                                             |         |   |     —                                                                 |   |        |               (204                                                    | )              |   |    (4                                                                                                                   | )      |   |       (703                                                         | )            |   |      (23 | ) |   |      (52 | ) |   |     — |   |   | (28 | ) |   |    (1,014 | ) |
|     Previously established      specific allowance                     |   |     —                                                                                                                   |   |                           |     —                                                                             |         |   |     —                                                                 |   |        |                   —                    |           |   |     —                                                                                                   |   |   |     —                                                             |         |   |     — |   |   |     — |   |   |     — |   |   | — |   |   | — |   |
|        Total loans charged-         off: |   |     —                                                                                                                   |   |                           |     —                                                                             |         |   |     —                                                                 |   |        |       (204                                                                                               | )              |   |     (4                                                                                                             | )      |   |       (703                                                         | )            |   |      (23 | ) |   |      (52 | ) |   |     — |   |   | (28 | ) |   |    (1,014 | ) |
|   Recoveries                                                                                                   |   |    2                                                                                                                          |   |                           |     —                                                                             |         |   |  8                                                                                    |   |        | —                                                                                                                           |           |   |     —                                                                                                   |   |   |     —                                                             |         |   |   1 |   |   |    5 |   |   |     — |   |   |             11 |   |   | 27 |   |
| Balance at 3/31/11                                                                                                       |   | $                1,268                                       |   |                           | $              1,012             |         |   | $              6,717 |   |        | $                  461                  |           |   | $                  154                  |   |   | $               4,719 |         |   | $               1,323 |   |   | $                1,327 |   |   | $                       9 |   |   | $                  105 |   |   | $            17,095 |   |
|                                                                                                                     |   |                                                                                                                                         |   |                           |                                                                                                   |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:                                                                                                          |   |                                                                                                                                         |   |                           |                                                                                                   |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Individually evaluated    for impairment                                                 |   | $                      — |   |                           | $                  380 |         |   | $              4,387 |   |        | $                     — |           |   | $                     — |   |   | $               3,573 |         |   | $                     — |   |   | $                      — |   |   | $                     — |   |   | $                     — |   |   | $               8,340 |   |
|   Collectively evaluated    for impairment                                                 |   | $                1,268                                                 |   |                           | $                  632 |         |   | $              2,330      |   |        | $                  461                  |           |   | $                  154                  |   |   | $               1,146 |         |   | $               1,323 |   |   | $                1,327 |   |   | $                       9 |   |   | $                  105 |   |   | $               8,755 |   |
|                                                                                                                     |   |                                                                                                                                         |   |                           |                                                                                                   |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable:                                                                                                        |   |                                                                                                                                         |   |                           |                                                                                                   |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at 3/31/11                                                                                           |   | $              68,381                                                            |   |                           | $          102,053                                        |         |   |  $         191,443                            |   |        | $            74,552                                                        |           |   |  $            21,130                                                  |   |   | $             22,419            |         |   | $          183,623 |   |   | $              55,649 |   |   | $               3,328 |   |   | $               2,192 |   |   |  $         724,770 |   |
|   Individually evaluated    for impairment                                                 |   | $                3,168                                       |   |                           | $            12,313                             |         |   | $            24,400                 |   |        |  $                  263                 |           |   | $               9,183                                       |   |   | $               8,796      |         |   |   $                     — |   |   | $                       — |   |   | $                      — |   |   | $                      — |   |   |  $            58,123 |   |
|   Collectively evaluated     for impairment                                                     |   | $             65,213                                                             |   |                           | $            89,740                             |         |   |  $         167,043                       |   |        |  $            74,289                                                  |           |   |  $            11,947                                             |   |   |  $            13,623            |         |   | $          183,623 |   |   | $              55,649 |   |   | $               3,328 |   |   | $               2,192 |   |   |  $         666,647 |   |

----

table of contents

|                                                                     |   | Commercial                                                                                                                                   |   | Commercial Real Estate — |                                                                                                        | Construction |   |                                                                                       |   | One-to-four |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        | Total        |
|--------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|-------------------------------------------------------------------------------------------------------------|--------------|--------|--------------------------------------------------------------------------------------------|--------|-------------|-----------------------------------------------------------------------------------------------------------------------------------|----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------|--------------|
|                                                                     |   | and                                                                                                                                          |   | Owner                          |                                                                                                        | Non-Owner    |   |                                                                                       |   | and Land    |                                                                                                                              | Commercial     |   | Family                                                                                                                            |   |   |                                                                                        | Retail       |   |   |   | Loans |
|                                                                     |   | Industrial                                                                                                                                   |   | Occupied                       |                                                                                                        | Occupied     |   | Multifamily                                                                                |   | Development |                                                                                                                              | Participations |   | Residential                                                                                                                       |   | HELOC  |                                                                                        | Construction |   | Other |   | Receivable |
|                                                                     |   | (Dollars in thousands)                                                                                                                       |
| Allowance for loan losses:                                               |   |                                                                                                                                         |   |                           |                                                                                                        |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at12/31/10                                           |   | $                1,279                                            |   |                           | $               1,090                 |         |   | $              6,906      |   |        | $                  350                            |           |   | $                  188                            |   |   | $               4,559      |         |   | $               1,356 |   |   | $               1,309 |   |   | $                       7 |   |   | $                  135 |   |   | $            17,179 |   |
|                                                                     |   |                                                                                                                                         |   |                           |                                                                                                        |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:                                                          |   |                                                                                                                                         |   |                           |                                                                                                        |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Individually evaluated    for impairment |   | $                      — |   |                           | $                  433 |         |   | $              4,492 |   |        | $                     — |           |   | $                     — |   |   | $               3,497 |         |   | $                     — |   |   | $                     — |   |   | $                     — |   |   | $                     — |   |   | $               8,422 |   |
|   Collectively evaluated    for impairment |   | $               1,279                                                  |   |                           | $                  657      |         |   | $              2,414      |   |        | $                  350                  |           |   | $                  188                  |   |   | $               1,062 |         |   | $               1,356 |   |   | $               1,309 |   |   | $                       7 |   |   | $                  135 |   |   | $               8,757 |   |
|                                                                     |   |                                                                                                                                         |   |                           |                                                                                                        |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable:                                                        |   |                                                                                                                                         |   |                           |                                                                                                        |         |   |                                                                                       |   |        |                                                                                                                              |           |   |                                                                                                                              |   |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at 12/31/10                                          |   | $             74,940                                                             |   |                           | $            99,435                                  |         |   |  $         191,998                            |   |        | $            72,080                                                        |           |   |  $            24,310                                                  |   |   | $             23,594            |         |   | $          185,321 |   |   | $             56,177 |   |   | $               3,176 |   |   | $               2,122 |   |   |  $         733,153 |   |
|   Individually evaluated    for impairment |   | $                3,692                                       |   |                           | $            11,135                                  |         |   | $            21,218                 |   |        |  $                  264                 |           |   | $               9,183                                       |   |   | $               9,499 |         |   |   $                     — |   |   | $                      — |   |   | $                      — |   |   | $                      — |   |   |  $            54,991 |   |
|   Collectively evaluated     for impairment     |   | $             71,248                                                                  |   |                           | $            88,300                                  |         |   |  $         170,780                       |   |        |  $            71,816                                                  |           |   |  $            15,127                                             |   |   |  $            14,095            |         |   | $          185,321 |   |   | $             56,177 |   |   | $               3,176 |   |   | $               2,122 |   |   | $          678,162 |   |

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table of contents

| ● | Pass.  Loans that meet the conservative underwriting guidelines that include core credit attributes noted above as measured by the loan grading matrices at levels that are in excess of the minimum amounts required to adequately service the loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | Pass Watch.  Loans which are performing per their contractual terms and are not necessarily demonstrating signs of credit or operational weakness, including but not limited to delinquency.  Loans in this category are monitored by management for timely payments.  Current financial information may be pending or, based upon the most recent analysis of the loan, possess credit attributes that are sufficient to adequately service the loan, but are less than the parameters required for a pass risk rating.  This rating is considered transitional because management does not have current financial information to determine the appropriate risk grade or the quality of the loan appears to be changing.  Loans may be graded as pass watch when a single event may have occurred that could be indicative of an emerging issue or indicate trending that would warrant a change in the risk rating. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | Special Mention.  Loans that have a potential weakness that will be closely monitored by management.  A credit graded special mention does not expose the Company to elevated risk that would warrant an adverse classification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | Substandard.  Loans that are inadequately protected by the current net worth and paying capacity of the borrower, guarantor, or the collateral pledged.  Loans classified as substandard have a well-defined weakness or weaknesses, characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | Doubtful.  Loans that have the same weaknesses as those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   |    |   |       |   |    | Special |   |   |        |   |   |     |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------|--------|---------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                          |   | Pass                   |    |   | Pass Watch |   |    | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                          |   | (Dollars in thousands) |    |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                        |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |   |   |   |   |
|      Commercial and industrial                                                                                                                                                                                                           |   | $                      | 60,944  |   |       | $      | 5,915   |    |   | $      | 937         |   |   | $        | 578    |   |   | $      | 7 |   |   | $ | 68,381 |   |
|      Commercial real estate – owner          occupied                                                                                                                                                                                                       |   |                   | 66,639  |   |       |   | 20,636  |    |   |   | 1,030       |   |   |     | 13,748 |   |   |   | — |   |   |   | 102,053 |   |
|      Commercial real estate –          non-owner occupied                                                                                                                                                                                    |   |                   | 142,744 |   |       |   | 23,047  |    |   |   | 2,106       |   |   |     | 23,546 |   |   |   | — |   |   |   | 191,443 |   |
|      Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                      |   |                   | 70,660  |   |       |   | 2,381   |    |   |   | —     |   |   |     | 1,511  |   |   |   | — |   |   |   | 74,552 |   |
|      Commercial construction and          land development                                                                                                                                  |   |                   | 6,517   |   |       |   | 4,894   |    |   |   | —     |   |   |     | 9,719  |   |   |   | — |   |   |   | 21,130 |   |
|      Commercial participations                                                                                                                                                                                                      |   |                   | 13,623  |   |       |   | — |    |   |   | —     |   |   |     | 8,796  |   |   |   | — |   |   |   | 22,419 |   |
|           Total commercial loans                                                                                                                                                                                                              |   |                   | 361,127 |   |       |   | 56,873  |    |   |   | 4,073       |   |   |     | 57,898 |   |   |   | 7 |   |   |   | 479,978 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                            |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      One-to-four family residential                                                                                                                                                                                                                                                                                                                                                  |   |                   | 179,829 |   |       |   | — |    |   |   | —     |   |   |     | 3,794  |   |   |   | — |   |   |   | 183,623 |   |
|      Home equity lines of credit                                                                                                                                                                                                                                                      |   |                   | 55,038  |   |       |   | — |    |   |   | —     |   |   |     | 611    |   |   |   | — |   |   |   | 55,649 |   |
|      Retail construction                                                                                                                                                                                   |   |                   | 3,159   |   |       |   | — |    |   |   | —     |   |   |     | 169    |   |   |   | — |   |   |   | 3,328 |   |
|      Other                                                                                                            |   |                   | 2,188   |   |       |   | — |    |   |   | —     |   |   |     | 4      |   |   |   | — |   |   |   | 2,192 |   |
|           Total retail loans                                                                                                                                                      |   |                   | 240,214 |   |       |   | — |    |   |   | —     |   |   |     | 4,578  |   |   |   | — |   |   |   | 244,792 |   |
|                Total loans                                                    |   | $                      | 601,341 |   |       |   | 56,873  |    |   | $      | 4,073       |   |   | $        | 62,476 |   |   | $      | 7 |   |   | $ | 724,770 |   |

|                                                                                                                                                                                                                                                                                                                                                                            |   |                   |    |   |       |   |    | Special |   |   |        |   |   |     |    |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------|--------|---------|---------|--------|--------|-------------|--------|--------|----------|---------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                            |   | Pass                   |    |   | Pass Watch |   |    | Mention |   |   | Substandard |   |   | Doubtful |    |   | Total  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |   | (Dollars in thousands) |    |
| Current                                                                                                          |   | $                      | 593,220 |   |       | $      | 55,254  |    |   | $      | 3,790       |   |   | $        | 11,386  |   |   | $      | 7 |   |   | $ | 663,657 |   |
| Delinquent:                                                                                                                                                                                                                                                                                                                                                                     |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |    |   |   |   |   |   |   |   |   |   |
|      30-59 days                                                                                   |   |                   | 5,226   |   |       |   | 1,319   |    |   |   | —     |   |   |     | 2,594   |   |   |   | — |   |   |   | 9,139 |   |
|      60-89 days                                                                                   |   |                   | 2,558   |   |       |   | 300     |    |   |   | 283         |   |   |     | — |   |   |   | — |   |   |   | 3,141 |   |
|      90 days or more                                                                              |   |                   | 337     |   |       |   | — |    |   |   | —     |   |   |     | 48,496  |   |   |   | — |   |   |   | 48,833 |   |
|           Total loans                                                    |   | $                      | 601,341 |   |       | $      | 56,873  |    |   | $      | 4,073       |   |   | $        | 62,476  |   |   | $      | 7 |   |   | $ | 724,770 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |       |   |    | Special |   |   |        |   |   |     |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------|--------|---------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Pass                   |    |   | Pass Watch |   |    | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |    |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |   |   |   |   |
|      Commercial and industrial                                                                                                                                                                                                                                                 |   | $                      | 62,969  |   |       | $      | 3,908   |    |   | $      | 7,813       |   |   | $        | 228    |   |   | $      | 22 |   |   | $ | 74,940 |   |
|      Commercial real estate – owner          occupied                                                    |   |                   | 65,768  |   |       |   | 20,239  |    |   |   | 4,310       |   |   |     | 9,118  |   |   |   | — |   |   |   | 99,435 |   |
|      Commercial real estate –          non-owner occupied                                                                                                                                                         |   |                   | 142,636 |   |       |   | 25,191  |    |   |   | 2,448       |   |   |     | 21,723 |   |   |   | — |   |   |   | 191,998 |   |
|      Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 61,822  |   |       |   | 8,238   |    |   |   | 708         |   |   |     | 1,312  |   |   |   | — |   |   |   | 72,080 |   |
|      Commercial construction and          land development                                                                                                                                          |   |                   | 10,138  |   |       |   | 4,989   |    |   |   | —     |   |   |     | 9,183  |   |   |   | — |   |   |   | 24,310 |   |
|      Commercial participations                                                                                                                                                                                                                                       |   |                   | 14,095  |   |       |   | — |    |   |   | —     |   |   |     | 9,499  |   |   |   | — |   |   |   | 23,594 |   |
|           Total commercial loans                                                                                                                                                                                                                 |   |                   | 357,428 |   |       |   | 62,565  |    |   |   | 15,279      |   |   |     | 51,063 |   |   |   | 22 |   |   |   | 486,357 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |    |   |       |   |    |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      One-to-four family residential                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 181,991 |   |       |   | — |    |   |   | 107         |   |   |     | 3,223  |   |   |   | — |   |   |   | 185,321 |   |
|      Home equity lines of credit                                                                                                                                                                                                                                                         |   |                   | 55,688  |   |       |   | — |    |   |   | —     |   |   |     | 489    |   |   |   | — |   |   |   | 56,177 |   |
|      Retail construction                                                                                                                                                                                           |   |                   | 2,973   |   |       |   | — |    |   |   | —     |   |   |     | 203    |   |   |   | — |   |   |   | 3,176 |   |
|      Other                                                                                                                                             |   |                   | 2,118   |   |       |   | — |    |   |   | —     |   |   |     | 4      |   |   |   | — |   |   |   | 2,122 |   |
|           Total retail loans                                                                                                                                                                                  |   |                   | 242,770 |   |       |   | — |    |   |   | 107         |   |   |     | 3,919  |   |   |   | — |   |   |   | 246,796 |   |
|                Total loans                                                                                     |   | $                      | 600,198 |   |       | $      | 62,565  |    |   | $      | 15,386      |   |   | $        | 54,982 |   |   | $      | 22 |   |   | $ | 733,153 |   |

|                                                                                                                                                                                                                                                                                                                                                                            |   |                   |    |   |       |   |   | Special |   |   |        |   |   |     |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------|--------|--------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                            |   | Pass                   |    |   | Pass Watch |   |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |   | (Dollars in thousands) |    |
| Current                                                                                                          |   | $                      | 589,067 |   |       | $      | 61,449 |    |   | $      | 11,857      |   |   | $        | 13,770 |   |   | $      | 22 |   |   | $ | 676,165 |   |
| Delinquent:                                                                                                                                                                                                                                                                                                                                                                     |   |                   |    |   |       |   |   |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      30-59 days                                                                                   |   |                   | 5,347   |   |       |   | 457    |    |   |   | 415         |   |   |     | 540    |   |   |   | — |   |   |   | 6,759 |   |
|      60-89 days                                                                                   |   |                   | 5,322   |   |       |   | 536    |    |   |   | 768         |   |   |     | 321    |   |   |   | — |   |   |   | 6,947 |   |
|      90 days or more                                                                              |   |                   | 462     |   |       |   | 123    |    |   |   | 2,346       |   |   |     | 40,351 |   |   |   | — |   |   |   | 43,282 |   |
|           Total loans                                                    |   | $                      | 600,198 |   |       | $      | 62,565 |    |   | $      | 15,386      |   |   | $        | 54,982 |   |   | $      | 22 |   |   | $ | 733,153 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    | Loans        |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------|--------|---------|---------|--------|--------|--------|--------|--------|---------|--------|--------|------------|--------|---------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  30-59            |    |   |  60-89 |   |    | Greater |   |   | Total  |   |   |    |   |   | Total      |   |    | > 90 Days |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Days Past              |    |   | Days Past   |   |    | Than 90 |   |   | Past   |   |   |    |   |   | Loans      |   |    | And          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Due                    |    |   | Due         |   |    | Days    |   |   | Due    |   |   | Current |   |   | Receivable |   |    | Accruing     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |    |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    |         |   |   |   |
|      Commercial and industrial                                                                                                                                                                                                                                                                                                        |   | $                      | 184     |   |        | $      | 833     |    |   | $      | 544    |   |   | $       | 1,561  |   |       | $      | 66,820  |         |   | $ | 68,381 |   |   | $ | — |   |
|      Commercial real estate – owner          occupied                                                    |   |                   | 148     |   |        |   | 1,705   |    |   |   | 13,114 |   |   |    | 14,967 |   |       |   | 87,086  |         |   |   | 102,053 |   |   |   | — |   |
|      Commercial real estate –          non-owner occupied                                                                                                                                                                                            |   |                   | 2,130   |   |        |   | 444     |    |   |   | 12,028 |   |   |    | 14,602 |   |       |   | 176,841 |         |   |   | 191,443 |   |   |   | 1,183 |   |
|      Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 1,594   |   |        |   | — |    |   |   | 471    |   |   |    | 2,065  |   |       |   | 72,487  |         |   |   | 74,552 |   |   |   | 241 |   |
|      Commercial construction and          land development                                                                                                                                                                                  |   |                   | — |   |        |   | — |    |   |   | 9,719  |   |   |    | 9,719  |   |       |   | 11,411  |         |   |   | 21,130 |   |   |   | — |   |
|      Commercial participations                                                                                                                                                                                                                                                                                    |   |                   | — |   |        |   | — |    |   |   | 8,796  |   |   |    | 8,796  |   |       |   | 13,623  |         |   |   | 22,419 |   |   |   | — |   |
|           Total commercial loans                                                                                                                                                                                                                                                                   |   |                   | 4,056   |   |        |   | 2,982   |    |   |   | 44,672 |   |   |    | 51,710 |   |       |   | 428,268 |         |   |   | 479,978 |   |   |   | 1,424 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    |         |   |   |   |   |   |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    |         |   |   |   |   |   |   |   |   |
|      One-to-four family residential                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 4,308   |   |        |   | 29      |    |   |   | 3,503  |   |   |    | 7,840  |   |       |   | 175,783 |         |   |   | 183,623 |   |   |   | — |   |
|      Home equity lines of credit                                                                                                                                                                                                                                                                                                 |   |                   | 495     |   |        |   | 130     |    |   |   | 485    |   |   |    | 1,110  |   |       |   | 54,539  |         |   |   | 55,649 |   |   |   | — |   |
|      Retail construction                                                                                                                                                                                                                                        |   |                   | 275     |   |        |   | — |    |   |   | 169    |   |   |    | 444    |   |       |   | 2,884   |         |   |   | 3,328 |   |   |   | — |   |
|      Other                                                                                                                                             |   |                   | 5       |   |        |   | — |    |   |   | 4      |   |   |    | 9      |   |       |   | 2,183   |         |   |   | 2,192 |   |   |   | — |   |
|           Total retail loans                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 5,083   |   |        |   | 159     |    |   |   | 4,161  |   |   |    | 9,403  |   |       |   | 235,389 |         |   |   | 244,792 |   |   |   | — |   |
|                Total loans receivable                                                                                                                                                                                                                                                              |   | $                      | 9,139   |   |        | $      | 3,141   |    |   | $      | 48,833 |   |   | $       | 61,113 |   |       | $      | 663,657 |         |   | $ | 724,770 |   |   | $ | 1,424 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    | Loans        |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------|--------|---------|---------|--------|--------|--------|--------|--------|---------|--------|--------|------------|--------|---------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  30-59            |    |   |  60-89 |   |    | Greater |   |   | Total  |   |   |    |   |   | Total      |   |    | > 90 Days |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Days Past              |    |   | Days Past   |   |    | Than 90 |   |   | Past   |   |   |    |   |   | Loans      |   |    | And          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Due                    |    |   | Due         |   |    | Days    |   |   | Due    |   |   | Current |   |   | Receivable |   |    | Accruing     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars in thousands) |    |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    |         |   |   |   |
|      Commercial and industrial                                                                                                                                                                                                                                                                                              |   | $                      | 448     |   |        | $      | 664     |    |   | $      | 180    |   |   | $       | 1,292  |   |       | $      | 73,648  |         |   | $ | 74,940 |   |   | $ | — |   |
|      Commercial real estate – owner          occupied                                                    |   |                   | 678     |   |        |   | 3,691   |    |   |   | 11,464 |   |   |    | 15,833 |   |       |   | 83,602  |         |   |   | 99,435 |   |   |   | 2,346 |   |
|      Commercial real estate –          non-owner occupied                                                                                                                                                                                                 |   |                   | 361     |   |        |   | 216     |    |   |   | 9,081  |   |   |    | 9,658  |   |       |   | 182,340 |         |   |   | 191,998 |   |   |   | 123 |   |
|      Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 656     |   |        |   | — |    |   |   | 436    |   |   |    | 1,092  |   |       |   | 70,988  |         |   |   | 72,080 |   |   |   | — |   |
|      Commercial construction and          land development                                                                                                                                                                                  |   |                   | — |   |        |   | 536     |    |   |   | 9,023  |   |   |    | 9,559  |   |       |   | 14,751  |         |   |   | 24,310 |   |   |   | — |   |
|      Commercial participations                                                                                                                                                                                                                                                                                    |   |                   | — |   |        |   | — |    |   |   | 9,660  |   |   |    | 9,660  |   |       |   | 13,934  |         |   |   | 23,594 |   |   |   | — |   |
|           Total commercial loans                                                                                                                                                                                                                                                                   |   |                   | 2,143   |   |        |   | 5,107   |    |   |   | 39,844 |   |   |    | 47,094 |   |       |   | 439,263 |         |   |   | 486,357 |   |   |   | 2,469 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    |         |   |   |   |   |   |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |    |   |        |   |    |    |   |   |   |   |   |    |   |   |       |   |    |         |   |   |   |   |   |   |   |   |
|      One-to-four family residential                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 4,229   |   |        |   | 1,832   |    |   |   | 2,589  |   |   |    | 8,650  |   |       |   | 176,671 |         |   |   | 185,321 |   |   |   | — |   |
|      Home equity lines of credit                                                                                                                                                                                                                                                                                       |   |                   | 386     |   |        |   | 8       |    |   |   | 642    |   |   |    | 1,036  |   |       |   | 55,141  |         |   |   | 56,177 |   |   |   | — |   |
|      Retail construction                                                                                                                                                                                                                              |   |                   | — |   |        |   | — |    |   |   | 203    |   |   |    | 203    |   |       |   | 2,973   |         |   |   | 3,176 |   |   |   | — |   |
|      Other                                                                                                                                             |   |                   | 1       |   |        |   | — |    |   |   | 4      |   |   |    | 5      |   |       |   | 2,117   |         |   |   | 2,122 |   |   |   | — |   |
|           Total retail loans                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 4,616   |   |        |   | 1,840   |    |   |   | 3,438  |   |   |    | 9,894  |   |       |   | 236,902 |         |   |   | 246,796 |   |   |   | — |   |
|                Total loans receivable                                                                                                                                                                                                                                                                                                                                         |   | $                      | 6,759   |   |        | $      | 6,947   |    |   | $      | 43,282 |   |   | $       | 56,988 |   |       | $      | 676,165 |         |   | $ | 733,153 |   |   | $ | 2,469 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   | Unpaid    |   |   |      |   |   | Average    |   |   | Interest   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                       |   | Recorded               |   |   | Principal |   |   | Related   |   |   | Recorded   |   |   | Income     |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   | Investment             |   |   | Balance   |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands) |   |
| Loans without a specific valuation allowance:                                                                                                                                                                                                                                                                                                                                              |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |
| Commercial and industrial                                                                |   | $                      | 3,168  |   |      | $      | 3,168  |      |   | $      | —    |   |   | $          | 3,697  |   |   | $ | — |   |
| Commercial real estate – owner occupied                                                                                                                                                                                                                                                                                                                                              |   |                   | 9,559  |   |      |   | 9,619  |      |   |   | —    |   |   |       | 9,641  |   |   |   | — |   |
| Commercial real estate – non-owneroccupied                                                        |   |                   | 7,198  |   |      |   | 7,424  |      |   |   | —    |   |   |       | 7,393  |   |   |   | 41 |   |
| Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                 |   |                   | 263    |   |      |   | 263    |      |   |   | —    |   |   |       | 264    |   |   |   | 3 |   |
| Commercial construction and landdevelopment                                                             |   |                   | 9,183  |   |      |   | 11,498 |      |   |   | —    |   |   |       | 11,498 |   |   |   | — |   |
| Commercial participations                                                                |   |                   | 3,494  |   |      |   | 8,012  |      |   |   | —    |   |   |       | 7,881  |   |   |   | — |   |
| Retail                                                                                   |   |                   | 7,372  |   |      |   | 7,415  |      |   |   | —    |   |   |       | 7,670  |   |   |   | 50 |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Loans with a specific valuation allowance:                                                                                                                                                                                                                                                                                                                                                 |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial real estate – owner occupied                                                                                                                                                                                                                                                                                                                                              |   | $                      | 2,754  |   |      | $      | 3,168  |      |   | $      | 380        |   |   | $          | 2,778  |   |   | $ | — |   |
| Commercial real estate – non-owneroccupied                                                        |   |                   | 17,202 |   |      |   | 17,710 |      |   |   | 4,387      |   |   |       | 17,243 |   |   |   | — |   |
| Commercial participations                                                                |   |                   | 5,302  |   |      |   | 5,443  |      |   |   | 3,573      |   |   |       | 5,443  |   |   |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Total impaired loans:                                                                                                                                                                                                                                                                                                                                                                      |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial                                                                               |   | $                      | 58,123 |   |      | $      | 66,305 |      |   | $      | 8,340      |   |   | $          | 65,838 |   |   | $ | 44 |   |
| Retail                                                                                   |   |                   | 7,372  |   |      |   | 7,415  |      |   |   | —    |   |   |       | 7,670  |   |   |   | 50 |   |

|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   | Unpaid    |   |   |      |   |   | Average    |   |   | Interest   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                       |   | Recorded               |   |   | Principal |   |   | Related   |   |   | Recorded   |   |   | Income     |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   | Investment             |   |   | Balance   |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands) |   |
| Loans without a specific valuation allowance:                                                                                                                                                                                                                                                                                                                                              |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |
| Commercial and industrial                                                                |   | $                      | 3,692  |   |      | $      | 3,976  |      |   | $      | —    |   |   | $          | 4,738  |   |   | $ | 128 |   |
| Commercial real estate – owner occupied                                                                                                                                                                                                                                                                                                                                              |   |                   | 5,041  |   |      |   | 5,082  |      |   |   | —    |   |   |       | 5,059  |   |   |   | — |   |
| Commercial real estate – non-owneroccupied                                                        |   |                   | 6,664  |   |      |   | 6,834  |      |   |   | —    |   |   |       | 6,695  |   |   |   | 144 |   |
| Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                 |   |                   | 264    |   |      |   | 264    |      |   |   | —    |   |   |       | 268    |   |   |   | 4 |   |
| Commercial construction and landdevelopment                                                             |   |                   | 9,183  |   |      |   | 11,498 |      |   |   | —    |   |   |       | 9,313  |   |   |   | — |   |
| Commercial participations                                                                |   |                   | 4,197  |   |      |   | 8,012  |      |   |   | —    |   |   |       | 4,397  |   |   |   | — |   |
| One-to-four family residential                                                           |   |                   | 2,847  |   |      |   | 2,891  |      |   |   | —    |   |   |       | 2,758  |   |   |   | 122 |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Loans with a specific valuation allowance:                                                                                                                                                                                                                                                                                                                                                 |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial real estate – owner occupied                                                                                                                                                                                                                                                                                                                                              |   | $                      | 2,798  |   |      | $      | 3,168  |      |   | $      | 433        |   |   | $          | 2,900  |   |   | $ | — |   |
| Commercial real estate – non-owneroccupied                                                        |   |                   | 17,850 |   |      |   | 18,311 |      |   |   | 4,492      |   |   |       | 18,066 |   |   |   | — |   |
| Commercial participations                                                                |   |                   | 5,302  |   |      |   | 5,443  |      |   |   | 3,497      |   |   |       | 5,302  |   |   |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Total impaired loans:                                                                                                                                                                                                                                                                                                                                                                      |   |                   |   |   |      |   |   |      |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial                                                                               |   | $                      | 54,991 |   |      | $      | 62,588 |      |   | $      | 8,422      |   |   | $          | 56,738 |   |   | $ | 276 |   |
| Retail                                                                                   |   |                   | 2,847  |   |      |   | 2,891  |      |   |   | —    |   |   |       | 2,758  |   |   |   | 122 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | March 31,              |   |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2011                   |   |   | 2010         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (Dollars in thousands) |   |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   |         |   |
|      Commercial and industrial                                                                                                                                                                              |   | $                      | 578    |   |         | $      | 228 |   |
|      Commercial real estate – owner occupied                                                                                                                                                          |   |                   | 13,748 |   |         |   | 9,119 |   |
|      Commercial real estate – non-owner occupied                                                                                                                                                      |   |                   | 21,320 |   |         |   | 21,512 |   |
|      Commercial real estate – multifamily                                                                                                                                                             |   |                   | 855    |   |         |   | 1,071 |   |
|      Commercial construction and land development                                                                                                                                                           |   |                   | 9,719  |   |         |   | 9,183 |   |
|      Commercial participations                                                                                                                                                                    |   |                   | 8,796  |   |         |   | 9,499 |   |
|           Total commercial loans                                                                                                                                                             |   |                   | 55,016 |   |         |   | 50,612 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |   |   |         |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   |   |   |         |   |   |   |
|      One-to-four family residential                                                                                                                                                                         |   |                   | 3,862  |   |         |   | 2,955 |   |
|      Home equity lines of credit                                                                                                                                                                            |   |                   | 610    |   |         |   | 718 |   |
|      Retail construction                                                                                                                                                                                    |   |                   | 169    |   |         |   | 203 |   |
|      Other                                                                                                                                                                                                  |   |                   | 4      |   |         |   | 4 |   |
|           Total retail loans                                                                                                                                             |   |                   | 4,645  |   |         |   | 3,880 |   |
|                Total non-accrual loans                                                                                                          |   | $                      | 59,661 |   |         | $      | 54,492 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |   |   | Fair Value Measurements at March 31, 2011                     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Fair Value             |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Dollars in thousands) |   |
| Investment securities available-for-sale:                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |   |   |                                                          |   |   |   |   |   |   |   |
| U.S. Treasury securities                                                                              |   | $                      | 20,768 |   |                                                          | $      | — |   |   | $ | 20,768 |   |   | $ | — |   |
| GSE securities                                                                                        |   |                   | 69,875 |   |                                                          |   | — |   |   |   | 69,875 |   |   |   | — |   |
| Corporate bonds                                                                                       |   |                   | 3,602  |   |                                                          |   | — |   |   |   | 3,602 |   |   |   | — |   |
| Collateralized mortgage obligations                                                                   |   |                   | 52,986 |   |                                                          |   | — |   |   |   | 52,986 |   |   |   | — |   |
| Commercial mortgage-backed securities                                                                 |   |                   | 72,507 |   |                                                          |   | — |   |   |   | 72,507 |   |   |   | — |   |
| Pooled trust preferred securities                                                                     |   |                   | 19,262 |   |                                                          |   | — |   |   |   | — |   |   |   | 19,262 |   |
| GSE preferred stock                                                                                   |   |                   | 12     |   |                                                          |   | 12 |   |   |   | — |   |   |   | — |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |   |   | Fair Value Measurements at December 31, 2010                  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Fair Value             |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Dollars in thousands) |   |
| Investment securities available-for-sale:                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |   |   |                                                          |   |   |   |   |   |   |   |
| U.S. Treasury securities                                                                              |   | $                      | 14,819 |   |                                                          | $      | — |   |   | $ | 14,819 |   |   | $ | — |   |
| GSE securities                                                                                        |   |                   | 31,020 |   |                                                          |   | — |   |   |   | 31,020 |   |   |   | — |   |
| Corporate bonds                                                                                       |   |                   | 3,586  |   |                                                          |   | — |   |   |   | 3,586 |   |   |   | — |   |
| Collateralized mortgage obligations                                                                   |   |                   | 60,755 |   |                                                          |   | — |   |   |   | 60,755 |   |   |   | — |   |
| Commercial mortgage-backed securities                                                                 |   |                   | 68,698 |   |                                                          |   | — |   |   |   | 68,698 |   |   |   | — |   |
| Pooled trust preferred securities                                                                     |   |                   | 18,125 |   |                                                          |   | — |   |   |   | — |   |   |   | 18,125 |   |
| GSE preferred stock                                                                                   |   |                   | 98     |   |                                                          |   | 98 |   |   |   | — |   |   |   | — |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Investment SecuritiesAvailable-For-Sale |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Three Months EndedMarch 31,             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 2011                                    |   |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (Dollars in thousands)                  |
| Beginning balance                                                                                                                 |   | $                                       | 18,125 |   |   | $ | 20,012 |   |
| Total realized and unrealized gains and losses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                    |   |   |   |   |   |   |
| Included in accumulated other comprehensive income (loss)                                                                                                       |   |                                    | 1,224  |   |   |   | 3 |   |
| Principal repayments                                                                                                                             |   |                                    | (87    | ) |   |   | (114 | ) |
| Ending balance                                                                                                                    |   | $                                       | 19,262 |   |   | $ | 19,901 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |   |   | Fair Value Measurements at March 31, 2011                     |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Fair Value             |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (Dollars in thousands) |   |
| Impaired loans                                                                          |   | $                      | 2,262  |   |                                                          | $      | — |   |   | $ | — |   |   | $ | 2,262 |   |
| Other real estate owned                                                                 |   |                   | 991    |   |                                                          |   | — |   |   |   | — |   |   |   | 991 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |   |   | Fair Value Measurements at December 31, 2010                  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Fair Value             |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (Dollars in thousands) |   |
| Impaired loans                                                                          |   | $                      | 15,258 |   |                                                          | $      | — |   |   | $ | — |   |   | $ | 15,258 |   |
| Other real estate owned                                                                 |   |                   | 4,837  |   |                                                          |   | — |   |   |   | — |   |   |   | 4,837 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | March 31, 2011         |            |   | December 31, 2010 |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------------|--------|-------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Carrying               |            |   | Fair              |    |   | Carrying |   |   | Fair |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Amount                 |            |   | Value             |    |   | Amount |   |   | Value |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (Dollars in thousands) |            |
| Financial Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |            |   |              |    |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                              |   | $                      | 57,968          |   |              | $       | 57,968 |   |   | $ | 61,754 |   |   | $ | 61,754 |   |
| Investment securities, available-for-sale                                                                              |   |                   | 239,012         |   |              |    | 239,012 |   |   |   | 197,101 |   |   |   | 197,101 |   |
| Investment securities, held-to-maturity                                                                                |   |                   | 16,764          |   |              |    | 16,989 |   |   |   | 17,201 |   |   |   | 17,426 |   |
| Federal Home Loan Bank stock                                                                                           |   |                   | 10,282          |   |              |    | 10,282 |   |   |   | 20,282 |   |   |   | 20,282 |   |
| Loans receivable, net of allowance for loan losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 707,128         |   |              |    | 708,766 |   |   |   |  715,405 |   |   |   |  718,556 |   |
| Interest receivable                                                                                                    |   |                   | 3,265           |   |              |    | 3,265 |   |   |   | 3,162 |   |   |   | 3,162 |   |
|    Total financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                 |  1,034,419 |   |              | $  |  1,036,282 |   |   | $  |  1,014,905 |   |   | $  |  1,018,281 |   |
| Financial Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |            |   |              |    |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                 |  980,517   |   |              | $  |  983,076 |   |   | $  |  945,884 |   |   | $  |  948,804 |   |
| Borrowed funds                                                                                                         |   |                   | 40,658          |   |              |    | 42,530 |   |   |   | 53,550 |   |   |   | 55,572 |   |
| Interest payable                                                                                                       |   |                   | 83              |   |              |    | 83 |   |   |   | 106 |   |   |   | 106 |   |
|    Total financial liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                 |  1,021,258 |   |              | $  |  1,025,689 |   |   | $  |  999,540 |   |   | $  |  1,004,482 |   |

| 6. | Share-Based Compensation |
|----|--------------------------|

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|                          |   |   |    |   |      |    |    | Weighted-Average |   |
|-------------------------------|--------|--------|---------|--------|-----------|---------|---------|------------------|--------|
|                          |   |   |    |   | Number of |    |    | Grant-Date       |   |
|                          |   |   |    |   | Shares    |    |    | Fair Value       |   |
| Unvested at December 31, 2010 |   |   |    |   |      | 188,027 |    |             | $      | 4.98 |   |
| 2011 Awards:                  |   |   |    |   |      |    |    |             |   |   |   |
| Granted                       |   |   | 54,915  |   |      |    |    |             |   |   | 5.62 |   |
| Forfeited                     |   |   | — |   |      |    |    |             |   |   | — |   |
| Net 2011 grant awards         |   |   |    |   |      |    | 54,915  |             |   |   | 5.62 |   |
| Vested                        |   |   |    |   |      |    | — |             |   |   | — |   |
| Forfeited                     |   |   |    |   |      |    | (35,745 | )                |   |   | 3.53 |   |
| Unvested as of March 31, 2011 |   |   |    |   |      |    | 207,197 |             |   | $ | 5.40 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2011      |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |      |    |   | Weighted- |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |      |    |   | Average |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Number of |    |   | Exercise |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Options   |    |   | Price |   |
| Options outstanding and exercisable at December 31, 2010                                                                                                                 |   |      | 650,995 |   |   | $ | 13.44 |   |
| Granted                                                                                                                                                                  |   |      | — |   |   |   | — |   |
| Exercised                                                                                                                                                                |   |      | — |   |   |   | — |   |
| Forfeited                                                                                                                                                                |   |      | — |   |   |   | — |   |
| Expired unexercised                                                                                                                                                      |   |      | (3,000  | ) |   |   | 13.16 |   |
| Options outstanding and exercisable at March 31, 2011                                                                                                                    |   |      | 647,995 |   |   | $ | 13.45 |   |

| 7. | Other Comprehensive Income |
|----|----------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Three Months EndedMarch 31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2011                        |   |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (Dollars in thousands)      |   |
| Unrealized holding gains arising during the period:                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |   |   |   |   |
| Unrealized net gains                                                                                           |   | $                           | 1,250  |   |   | $ | 802 |   |
| Related tax expense                                                                                            |   |                        | (449   | ) |   |   | (272 | ) |
| Net unrealized gains                                                                                           |   |                        | 801    |   |   |   | 530 |   |
| Less:  reclassification adjustment for net gains realizedduring the period:                                                                                                                                                                                                                                                                                                                                                               |   |                        |   |   |   |   |   |   |
| Realized net gains                                                                                                            |   |                        | 519    |   |   |   | 456 |   |
| Related tax expense                                                                                                           |   |                        | (189   | ) |   |   | (155 | ) |
| Net realized gains                                                                                                            |   |                        | 330    |   |   |   | 301 |   |
| Total other comprehensive income                                                                     |   | $                           | 471    |   |   | $ | 229 |   |

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| 8. | Recent Accounting Pronouncements |
|----|----------------------------------|

Item 2.          Management’s Discussion and Analysis of Financial Condition and Results of 

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Three Months EndedMarch 31, |      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2011                        |      |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (Dollars in thousands)      |      |
| Net income                                                                                                                                                    |   | $                           | 472       |   |   | $ | 698 |   |
| Diluted earnings per share                                                                                                                                    |   |                        | .04       |   |   |   | .07 |   |
| Pre-tax, pre-provision earnings from core operations (1)                                                                                                      |   |                        | 1,539     |   |   |   | 2,864 |   |
| Return on average assets (2)                                                                                                                                  |   |                        | .17       | % |   |   | .26 | % |
| Return on average equity (2)                                                                                                                                  |   |                        | 1.69      |   |   |   | 2.55 |   |
| Average interest-earning assets                                                                                                                               |   | $                           | 1,012,431 |   |   | $ | 982,630 |   |
| Net interest income                                                                                                                                           |   |                        | 8,857     |   |   |   | 9,443 |   |
| Net interest margin                                                                                                                                           |   |                        | 3.55      | % |   |   | 3.90 | % |
| Non-interest income                                                                                                                                           |   | $                           | 2,451     |   |   | $ | 2,541 |   |
| Non-interest expense                                                                                                                                          |   |                        | 9,967     |   |   |   | 9,467 |   |
| Efficiency ratio (3)                                                                                                                                          |   |                        | 92.34     | % |   |   | 82.13 | % |

| (1) See “Non-GAAP Financial Information” on page 33.                                                                                                                                               |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (2) Annualized.                                                                                                                                                                                                |   |
| (3) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income, excluding net gain on sales of investment securities and other assets. |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | March 31,2011 |   |   | December 31,2010 |   |   | March 31,2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|--------|---------------|--------|
| Book value per share                                                                                                |   | $             | 10.47  |   |             | $      | 10.41  |          |   | $ | 10.28 |   |
| Shareholders’ equity to total assets                                                                          |   |          | 9.94   | %      |             |   | 10.07  | %             |   |   | 10.18 | % |
| Tangible capital ratio (Bank only)                                                                                  |   |          | 8.94   |   |             |   | 9.07   |          |   |   | 8.92 |   |
| Core capital ratio (Bank only)                                                                                      |   |          | 8.94   |   |             |   | 9.07   |          |   |   | 8.92 |   |
| Risk based capital ratio (Bank only)                                                                                |   |          | 13.22  |   |             |   | 13.32  |          |   |   | 12.63 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2011                        |    |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (Dollars in thousands)      |    |
| Reconciliation of Income Before Income Taxes to Pre-Tax,   Pre-Provision Earnings from Core Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |    |   |   |   |
| Income before income taxes                                                                                                                                              |   | $                           | 438     |   |   | $ | 807 |   |
| Provision for loan losses                                                                                                                                               |   |                        | 903     |   |   |   | 1,710 |   |
| Pre-tax, pre-provision earnings                                                                                                                                         |   |                        | 1,341   |   |   |   | 2,517 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        |    |   |   |   |   |   |
| Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |    |   |   |   |   |   |
| Net (gain) loss on sale of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |    |   |   |   |   |   |
|      Investment securities                                                                                                                     |   |                        | (519    | ) |   |   | (456 | ) |
|      Other assets                                                                                                                         |   |                        | 5       |   |   |   | (1 | )  |
| Other real estate owned expense, net                                                                                                                                    |   |                        | 592     |   |   |   | 631 |   |
| Loan collection expense                                                                                                                                                 |   |                        | 120     |   |   |   | 169 |   |
| Severance and early retirement expense                                                                                                                                  |   |                        | ― |   |   |   | 4 |   |
| Pre-tax, pre-provision earnings from core operations                                                                                                                    |   | $                           | 1,539   |   |   | $ | 2,864 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        |    |   |   |   |   |   |
| Pre-tax, pre-provision earnings from core operations to average assets                                                                                                                                                                   |   |                        | .55     | % |   |   | 1.07 | % |

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|                                                                                                                                                                                                                                                                                                                                                        |   | Three Months Ended March 31, |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                        |   | 2011                         |      |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                        |   | Average                      |      |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                                                                                                                                                                                                                                                                                                                                        |   | Balance                      |      |   | Interest |   |   | Yield/Cost |   |   | Balance |   |   | Interest |   |   | Yield/Cost |   |
|                                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands)       |      |
| Interest-earning assets:                                                                                                                                                                                                                                                                                                                                    |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Loans receivable (1)                                                                                     |   | $                            | 727,422   |   |   | $ | 8,811 |   |   |   | 4.91 | % |   | $ | 760,822 |   |   | $ | 9,678 |   |   |   | 5.16 | % |
|    Investment securities (2)                                                                                                                                  |   |                         | 239,070   |   |   |   | 2,045 |   |   |   | 3.42 |   |   |   | 194,812 |   |   |   | 2,213 |   |   |   | 4.54 |   |
|    Other interest-earning assets (3)                                                                                                                                                                                 |   |                         | 45,939    |   |   |   | 157 |   |   |   | 1.39 |   |   |   | 26,996 |   |   |   | 124 |   |   |   | 1.86 |   |
|       Total interest-earning assets                                                                                                                                                                   |   |                         | 1,012,431 |   |   |   | 11,013 |   |   |   | 4.41 |   |   |   | 982,630 |   |   |   | 12,015 |   |   |   | 4.96 |   |
| Non-interest earning assets                                                                                                                                                  |   |                         | 117,646   |   |   |   |   |   |   |   |   |   |   |   | 100,684 |   |   |   |   |   |   |   |   |   |
| Total assets                                                             |   | $                            | 1,130,077 |   |   |   |   |   |   |   |   |   |   | $ | 1,083,314 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                                                                                                                                                                                                                                                                               |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits:                                                                                                                                                                                                                                                                                                                                      |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Checking accounts                                                                                     |   | $                            | 157,782   |   |   |   | 112 |   |   |   | .29 |   |   | $ | 134,715 |   |   |   | 67 |   |   |   | .20 |   |
|       Money market accounts                                                                                                                                        |   |                         | 183,431   |   |   |   | 249 |   |   |   | .55 |   |   |   | 152,912 |   |   |   | 246 |   |   |   | .65 |   |
|       Savings accounts                                                                                                |   |                         | 124,096   |   |   |   | 76 |   |   |   | .25 |   |   |   | 115,497 |   |   |   | 94 |   |   |   | .33 |   |
|       Certificates of deposit                                                                                                                       |   |                         | 404,475   |   |   |   | 1,457 |   |   |   | 1.46 |   |   |   | 368,106 |   |   |   | 1,646 |   |   |   | 1.81 |   |
|          Total deposits                                                                      |   |                         | 869,784   |   |   |   | 1,894 |   |   |   | .88 |   |   |   | 771,230 |   |   |   | 2,053 |   |   |   | 1.08 |   |
|    Borrowed funds:                                                                                                                                                                                                                                                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Other short-term borrowed funds                                                                                                                                                                                                                                                                                                        |   |                         | 14,199    |   |   |   | 18 |   |   |   | .51 |   |   |   | 16,711 |   |   |   | 21 |   |   |   | .51 |   |
|       FHLB advances                                                                                    |   |                         | 25,657    |   |   |   | 244 |   |   |   | 3.80 |   |   |   | 80,147 |   |   |   | 498 |   |   |   | 2.49 |   |
|          Total borrowed funds                                                                                                                            |   |                         | 39,856    |   |   |   | 262 |   |   |   | 2.63 |   |   |   | 96,858 |   |   |   | 519 |   |   |   | 2.14 |   |
|             Total interest-bearing liabilities                                                                                                                                                                                                                                                  |   |                         | 909,640   |   |   |   | 2,156 |   |   |   | .96 |   |   |   | 868,088 |   |   |   | 2,572 |   |   |   | 1.20 |   |
| Non-interest bearing deposits                                                                                                                                                                         |   |                         | 95,596    |   |   |   |   |   |   |   |   |   |   |   | 93,620 |   |   |   |   |   |   |   |   |   |
| Non-interest bearing liabilities                                                                                                                                                                                     |   |                         | 11,451    |   |   |   |   |   |   |   |   |   |   |   | 10,425 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                        |   |                         | 1,016,687 |   |   |   |   |   |   |   |   |   |   |   | 972,133 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                                                                                                               |   |                         | 113,390   |   |   |   |   |   |   |   |   |   |   |   | 111,181 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity                                                                                                                                                                                                                                                                                                       |   | $                            | 1,130,077 |   |   |   |   |   |   |   |   |   |   | $ | 1,083,314 |   |   |   |   |   |   |   |   |   |
| Net interest-earning assets                                                                                                                                                       |   | $                            | 102,791   |   |   |   |   |   |   |   |   |   |   | $ | 114,542 |   |   |   |   |   |   |   |   |   |
| Net interest income/ interest rate spread                                                                                                                                                                                                                                                                                                                   |   |                         |      |   |   | $ | 8,857 |   |   |   | 3.45 | % |   |   |   |   |   | $ | 9,443 |   |   |   | 3.76 | % |
| Net interest margin                                                                                                                  |   |                         |      |   |   |   |   |   |   |   | 3.55 | % |   |   |   |   |   |   |   |   |   |   | 3.90 | % |
| Ratio of average interest-earning assets to                                                                                                                                                                                                                                                                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    average interest-bearing liabilities                                                                                                                                                                                                                                                                                                           |   |                         |      |   |   |   |   |   |   |   | 111.30 | % |   |   |   |   |   |   |   |   |   |   | 113.19 | % |

| (1)    |   | The average balance of loans receivable includes loans held for sale and non-performing loans, interest on which is recognized on a cash basis. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                            |
| (2)    |   | Average balances of investment securities are based on amortized cost.                                                                          |
|   |   |                                                                                                                                            |
| (3)    |   | Includes FHLB stock and interest-earning bank deposits.                                                                                         |

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table of contents

| Rate / Volume Analysis |
|------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Three Months Ended March 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2011 Compared to 2010        |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Changedue toRate             |    |   | Changedue toVolume |   |   | TotalChange |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | (Dollars in thousands)       |    |
| Interest income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         |    |   |   |   |   |   |   |
| Loans receivable                                                                                                                                |   | $                            | (452    | ) |   | $ | (415 | ) |   | $ | (867 | ) |
| Investment securities                                                                                                                           |   |                         | (612    | ) |   |   | 444 |   |   |   | (168 | ) |
| Other interest-earning assets                                                                                                                   |   |                         | (38     | ) |   |   | 71 |   |   |   | 33 |   |
| Total                                                                                                                                                |   |                         | (1,102  | ) |   |   | 100 |   |   |   | (1,002 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         |    |   |   |   |   |   |   |   |   |   |
| Interest expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                         |    |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         |    |   |   |   |   |   |   |   |   |   |
| Checking accounts                                                                                                                                    |   |                         | 33      |   |   |   | 12 |   |   |   | 45 |   |
| Money market accounts                                                                                                                                |   |                         | (41     | ) |   |   | 44 |   |   |   | 3 |   |
| Savings accounts                                                                                                                                     |   |                         | (25     | ) |   |   | 7 |   |   |   | (18 | ) |
| Certificates of deposit                                                                                                                              |   |                         | (341    | ) |   |   | 152 |   |   |   | (189 | ) |
| Total deposits                                                                                                                                            |   |                         | (374    | ) |   |   | 215 |   |   |   | (159 | ) |
| Borrowed funds:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |
| Other short-term borrowed funds                                                                                                                      |   |                         | ― |   |   |   | (3 | ) |   |   | (3 | ) |
| FHLB advances                                                                                                                                        |   |                         | 186     |   |   |   | (440 | ) |   |   | (254 | ) |
| Total borrowed funds                                                                                                                                      |   |                         | 186     |   |   |   | (443 | ) |   |   | (257 | ) |
| Total                                                                                                                                                |   |                         | (188    | ) |   |   | (228 | ) |   |   | (416 | ) |
| Net change in net interest income                                                                                                     |   | $                            | (914    | ) |   | $ | 328 |   |   | $ | (586 | ) |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Three Months Ended     |   |   |   |   |    |     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|---------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | March 31,              |   |   |   |   |    |     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2011                   |   |   | 2010   |   |    | $ Change |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (Dollars in thousands) |   |
| Service charges and other fees                                                                                                                             |   | $                      | 1,076  |   |   | $      | 1,220   |     |   | $ | (144 | ) |   |   | (11.8 | )% |
| Card-based fees                                                                                                                                            |   |                   | 475    |   |   |   | 437     |     |   |   | 38 |   |   |   | 8.7 |   |
| Commission income                                                                                                                                          |   |                   | 45     |   |   |   | 54      |     |   |   | (9 | ) |   |   | (16.7 | ) |
|      Subtotal fee based revenues                                                                                                  |   |                   | 1,596  |   |   |   | 1,711   |     |   |   | (115 | ) |   |   | (6.7 | ) |
| Income from bank-owned life insurance                                                                                                                                                                                  |   |                   | 206    |   |   |   | 223     |     |   |   | (17 | ) |   |   | (7.6 | ) |
| Other income                                                                                                                                               |   |                   | 103    |   |   |   | 150     |     |   |   | (47 | ) |   |   | (31.3 | ) |
|      Subtotal                                                                                                                     |   |                   | 1,905  |   |   |   | 2,084   |     |   |   | (179 | ) |   |   | (8.6 | ) |
| Net gain on sale of investment securities                                                                                                                                                                                                  |   |                   | 519    |   |   |   | 456     |     |   |   | 63 |   |   |   | (13.8 | ) |
| Net gain on sale of loans receivable                                                                                                                       |   |                   | 32     |   |   |   | ― |     |   |   | 32 |   |   | NM |   |
| Net gain (loss) on sale of other assets                                                                                                                                                                                                                   |   |                   | (5     | )      |   |   | 1       |     |   |   | (6 | ) |   | NM |   |
|      Total non-interest income                                                                                                    |   | $                      | 2,451  |   |   | $      | 2,541   |     |   | $ | (90 | ) |   |   | (3.5 | ) % |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Three Months Ended     |    |   |   |   |   |     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|--------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | March 31,              |    |   |   |   |   |     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2011                   |    |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands) |    |
| Compensation and mandatory benefits                                                                                                                                                                                                         |   | $                      | 4,469   |   |   | $      | 4,080  |     |   | $ | 389 |   |   |   | 9.5 | % |
| Retirement and stock related compensation                                                                                                                                                                                                                                                                                                                                               |   |                   | 213     |   |   |   | 194    |     |   |   | 19 |   |   |   | 9.8 |   |
| Medical and life benefits                                                                                                                                   |   |                   | 547     |   |   |   | 375    |     |   |   | 172 |   |   |   | 45.9 |   |
| Other employee benefits                                                                                                                                     |   |                   | 10      |   |   |   | 19     |     |   |   | (9 | ) |   |   | 47.4 |   |
|      Subtotal compensation and employee benefits                                                                                                                                                                                                                                                   |   |                   | 5,239   |   |   |   | 4,668  |     |   |   | 571 |   |   |   | 12.2 |   |
| Net occupancy expense                                                                                                                                       |   |                   | 765     |   |   |   | 755    |     |   |   | 10 |   |   |   | 1.3 |   |
| FDIC insurance premiums and OTS assessments                                                                                                                                                                                                                                                                                                     |   |                   | 653     |   |   |   | 600    |     |   |   | 53 |   |   |   | 8.8 |   |
| Professional fees                                                                                                                                           |   |                   | 388     |   |   |   | 593    |     |   |   | (205 | ) |   |   | (34.8 | ) |
| Furniture and equipment expense                                                                                                                             |   |                   | 463     |   |   |   | 533    |     |   |   | (70 | ) |   |   | (13.1 | ) |
| Data processing                                                                                                                                             |   |                   | 442     |   |   |   | 430    |     |   |   | 12 |   |   |   | 2.8 |   |
| Marketing                                                                                                                                                   |   |                   | 187     |   |   |   | 114    |     |   |   | 73 |   |   |   | 64.0 |   |
| Other real estate owned related expense, net                                                                                                                                                                                                                                        |   |                   | 592     |   |   |   | 631    |     |   |   | (39 | ) |   |   | (6.2 | ) |
| Loan collection expense                                                                                                                                     |   |                   | 120     |   |   |   | 169    |     |   |   | (49 | ) |   |   | (29.0 | ) |
| Severance and early retirement expense                                                                                                                                                                                                                     |   |                   | ― |   |   |   | 4      |     |   |   | (4 | ) |   | NM |   |
| Other general and administrative expenses                                                                                                                                                                                                                                                                                                       |   |                   | 1,118   |   |   |   | 970    |     |   |   | 148 |   |   |   | 15.3 |   |
|      Total non-interest expense                                                                                                    |   | $                      | 9,967   |   |   | $      | 9,467  |     |   | $ | 500 |   |   |   | 5.3 | % |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | March 31,2011          |      |   | December 31,2010 |   |      | $ Change |   |   | % Change |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|------------------|--------|-----------|----------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (Dollars in thousands) |      |
| Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |      |   |             |   |      |     |   |   |     |   |
| Cash and cash equivalents                                                                               |   | $                      | 57,968    |   |             | $      | 61,754    |     |   | $      | (3,786   | )      |   |   | (6.1 | )%  |
| Investment securities available-for-sale, at fair value                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 239,012   |   |             |   | 197,101   |     |   |   | 41,911   |   |   |   | 21.3 |   |
| Investment securities held-to-maturity, at cost                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 16,764    |   |             |   | 17,201    |     |   |   | (437     | )      |   |   | (2.5 | )  |
| Federal Home Loan Bank stock, at cost                                                                   |   |                   | 10,282    |   |             |   | 20,282    |     |   |   | (10,000  | )      |   |   | (49.3 | )  |
| Loans receivable, net                                                                                   |   |                   | 707,128   |   |             |   | 715,405   |     |   |   | (8,277   | )      |   |   | (1.2 | )  |
| Bank-owned life insurance                                                                               |   |                   | 35,669    |   |             |   | 35,463    |     |   |   | 206      |   |   |   | .6 |   |
| Other real estate owned                                                                                 |   |                   | 23,567    |   |             |   | 22,324    |     |   |   | 1,243    |   |   |   | 5.6 |   |
| Other assets                                                                                            |   |                   | 53,651    |   |             |   | 52,146    |     |   |   | 1,505    |   |   |   | 2.9 |   |
| Total assets                                                                                                      |   | $                      | 1,144,041 |   |             | $      | 1,121,676 |     |   | $      | 22,365   |   |   |   | 2.0 | %  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   |      |   |             |   |      |     |   |   |     |   |   |   |   |   |
| Liabilities and Equity:                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |      |   |             |   |      |     |   |   |     |   |   |   |   |   |
| Deposits                                                                                                |   | $                      | 980,517   |   |             | $      | 945,884   |     |   | $      | 34,633   |   |   |   | 3.7 | %  |
| Borrowed funds                                                                                          |   |                   | 40,658    |   |             |   | 53,550    |     |   |   | (12,892  | )      |   |   | (24.1 | ) |
| Other liabilities                                                                                       |   |                   | 9,102     |   |             |   | 9,314     |     |   |   | (212     | )      |   |   | (2.3 | ) |
| Total liabilities                                                                                                 |   |                   | 1,030,277 |   |             |   | 1,008,748 |     |   |   | 21,529   |   |   |   | 2.1 |   |
| Shareholders’ equity                                                                              |   |                   | 113,764   |   |             |   | 112,928   |     |   |   | 836      |   |   |   | .7 |   |
| Total liabilities and equity                                                                                      |   | $                      | 1,144,041 |   |             | $      | 1,121,676 |     |   | $      | 22,365   |   |   |   | 2.0 | % |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | March 31, 2011         |    |   | December 31, 2010 |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Amount                 |    |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (Dollars in thousands) |    |
| Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |    |
|      Commercial and industrial                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                      | 68,381  |   |              |   | 9.5    | %      |   | $ | 74,940 |   |   |   | 10.3 | % |   |   | (8.8 | )% |
|      Commercial real estate – owner occupied                                                                                                                                                                                                                            |   |                   | 102,053 |   |              |   | 14.1   |   |   |   | 99,435 |   |   |   | 13.6 |   |   |   | 2.6 |   |
|      Commercial real estate – non-owner occupied                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | 191,443 |   |              |   | 26.4   |   |   |   | 191,998 |   |   |   | 26.2 |   |   |   | (.3 | )  |
|      Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 74,552  |   |              |   | 10.3   |   |   |   | 72,080 |   |   |   | 9.8 |   |   |   | 3.4 |   |
|      Commercial construction and land development                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   | 21,130  |   |              |   | 2.9    |   |   |   | 24,310 |   |   |   | 3.3 |   |   |   | (13.1 | )  |
|      Commercial participations                                                                                                                                                           |   |                   | 22,419  |   |              |   | 3.1    |   |   |   | 23,594 |   |   |   | 3.2 |   |   |   | (5.0 | ) |
|         Total commercial loans                                                                           |   |                   | 479,978 |   |              |   | 66.3   |   |   |   | 486,357 |   |   |   | 66.4 |   |   |   | (1.3 | )  |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to-four family residential                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   | 183,623 |   |              |   | 25.3   |   |   |   | 185,321 |   |   |   | 25.3 |   |   |   | (.9 | )  |
|      Home equity lines of credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   | 55,649  |   |              |   | 7.7    |   |   |   | 56,177 |   |   |   | 7.7 |   |   |   | (.9 | ) |
|      Retail construction                                                                                                     |   |                   | 3,328   |   |              |   | .5     |   |   |   | 3,176 |   |   |   | .4 |   |   |   | 4.8 |   |
|      Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 2,192   |   |              |   | .3     |   |   |   | 2,122 |   |   |   | .3 |   |   |   | 3.3 |   |
|         Total retail loans                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 244,792 |   |              |   | 33.8   |   |   |   | 246,796 |   |   |   | 33.7 |   |   |   | (.8 | ) |
|             Total loans receivable                                                                                                                    |   |                   | 724,770 |   |              |   | 100.1  |   |   |   | 733,153 |   |   |   | 100.1 |   |   |   | (1.1 | ) |
|             Net deferred loan fees                                                                                                                                                                                                    |   |                   | (547    | )      |              |   | (.1    | )      |   |   | (569 | ) |   |   | (.1 | ) |   |   | (3.9 | ) |
|                Total loans receivable, net of deferred fees                                                                                                                                                                                                                                                                                                                                                                                             |   | $                      | 724,223 |   |              |   | 100.0  | %      |   | $ | 732,584 |   |   |   | 100.0 | % |   |   | (1.1 | )%  |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                        |   | March 31, 2011         |   | December 31, 2010 |       |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|-------------------|------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                        |   | Amount                 |   |              | % of Total |   | Amount |   |   | % of Total |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands) |   |
| Commercial and industrial                                                            |   | $                      | 216    |              |       |   | .9     | % |   | $ | 226 |   |   |   | 1.0 | % |   |   | (4.4 | )% |
| Commercial real estate – owner occupied                                                                                                                                                                                                                                                                                                                                               |   |                   | 105    |              |       |   | .5     |   |   |   | 83 |   |   |   | .3 |   |   |   | 26.5 |   |
| Commercial real estate – non-owner occupied                                                                                                                                                                                                                                                                                                                                           |   |                   | 18,604 |              |       |   | 83.0   |   |   |   | 19,064 |   |   |   | 80.8 |   |   |   | (2.4 | ) |
| Commercial construction and land development                                                                                                                                                                                                                                                                                                                                                |   |                   | 3,494  |              |       |   | 15.6   |   |   |   | 4,221 |   |   |   | 17.9 |   |   |   | (17.2 | ) |
| Total commercial participations                                                           |   | $                      | 22,419 |              |       |   | 100.0  | % |   | $ | 23,594 |   |   |   | 100.0 | % |   |   | (5.0 | )% |

|                                                                                                                                                                                                                                                                                                                                                                                        |   | March 31, 2011         |   |   | December 31, 2010 |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                        |   | Amount                 |   |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands) |   |
| Illinois                                                                             |   | $                      | 4,797  |   |              |   | 21.4   | %      |   | $ | 4,988 |   |   |   | 21.1 | % |   |   | (3.8 | )% |
| Indiana                                                                              |   |                   | 5,767  |   |              |   | 25.7   |   |   |   | 5,774 |   |   |   | 24.5 |   |   |   | (.1 | ) |
| Ohio                                                                                 |   |                   | 7,228  |   |              |   | 32.2   |   |   |   | 7,332 |   |   |   | 31.1 |   |   |   | (1.4 | ) |
| Florida                                                                              |   |                   | 1,140  |   |              |   | 5.1    |   |   |   | 1,843 |   |   |   | 7.8 |   |   |   | (38.1 | ) |
| Colorado                                                                             |   |                   | 1,925  |   |              |   | 8.6    |   |   |   | 2,075 |   |   |   | 8.8 |   |   |   | (7.2 | ) |
| Texas                                                                                |   |                   | 1,562  |   |              |   | 7.0    |   |   |   | 1,582 |   |   |   | 6.7 |   |   |   | (1.3 | ) |
| Total commercial participations                                                           |   | $                      | 22,419 |   |              |   | 100.0  | %      |   | $ | 23,594 |   |   |   | 100.0 | % |   |   | (5.0 | )% |

|                                                                |   |                   |    |   |      |   |    | Gross      |   |   | Gross      |   |   |   |
|---------------------------------------------------------------------|--------|------------------------|---------|--------|-----------|--------|---------|------------|--------|--------|------------|--------|--------|--------|
|                                                                |   | Par                    |    |   | Amortized |   |    | Unrealized |   |   | Unrealized |   | Fair   |   |
|                                                                |   | Value                  |    |   | Cost      |   |    | Gains      |   |   | Losses     |   | Value  |   |
|                                                                |   | (Dollars in thousands) |    |
| At March 31, 2011:                                                  |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |
| U.S. Treasury securities                                            |   | $                      | 21,000  |   |      | $      | 20,946  |       |   | $      | 24         |   |   | $      | (202 | ) |   | $ | 20,768 |   |
| Government sponsored entity (GSE)    securities |   |                   | 68,800  |   |      |   | 69,724  |       |   |   | 370        |   |   |   | (219 | ) |   |   | 69,875 |   |
| Corporate bonds                                                     |   |                   | 4,000   |   |      |   | 3,645   |       |   |   | —    |   |   |   | (43 | ) |   |   | 3,602 |   |
| Collateralized mortgage obligations                                 |   |                   | 54,340  |   |      |   | 51,021  |       |   |   | 2,062      |   |   |   | (97 | ) |   |   | 52,986 |   |
| Commercial mortgage-backed securities                               |   |                   | 70,218  |   |      |   | 71,341  |       |   |   | 1,418      |   |   |   | (252 | ) |   |   | 72,507 |   |
| Pooled trust preferred securities                                   |   |                   | 29,285  |   |      |   | 26,386  |       |   |   | —    |   |   |   | (7,124 | ) |   |   | 19,262 |   |
| GSE preferred stock                                                 |   |                   | 200     |   |      |   | — |       |   |   | 12         |   |   |   | — |   |   |   | 12 |   |
|                                                                |   | $                      | 247,843 |   |      | $      | 243,063 |       |   | $      | 3,886      |   |   | $      | (7,937 | ) |   | $ | 239,012 |   |

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table of contents

|                                                                |   |                   |    |   |      |   |    | Gross      |   |   | Gross      |   |   |   |
|---------------------------------------------------------------------|--------|------------------------|---------|--------|-----------|--------|---------|------------|--------|--------|------------|--------|--------|--------|
|                                                                |   | Par                    |    |   | Amortized |   |    | Unrealized |   |   | Unrealized |   | Fair   |   |
|                                                                |   | Value                  |    |   | Cost      |   |    | Gains      |   |   | Losses     |   | Value  |   |
|                                                                |   | (Dollars in thousands) |    |
| At December 31, 2010:                                               |   |                   |    |   |      |   |    |       |   |   |       |   |   |   |
| U.S. Treasury securities                                            |   | $                      | 15,000  |   |      | $      | 14,975  |       |   | $      | 3          |   |   | $      | (159 | ) |   | $ | 14,819 |   |
| Government sponsored entity (GSE)    securities |   |                   | 30,800  |   |      |   | 30,717  |       |   |   | 421        |   |   |   | (118 | ) |   |   | 31,020 |   |
| Corporate bonds                                                     |   |                   | 4,000   |   |      |   | 3,629   |       |   |   | —    |   |   |   | (43 | ) |   |   | 3,586 |   |
| Collateralized mortgage obligations                                 |   |                   | 62,512  |   |      |   | 59,037  |       |   |   | 2,071      |   |   |   | (353 | ) |   |   | 60,755 |   |
| Commercial mortgage-backed securities                               |   |                   | 66,282  |   |      |   | 67,052  |       |   |   | 1,804      |   |   |   | (158 | ) |   |   | 68,698 |   |
| Pooled trust preferred securities                                   |   |                   | 29,409  |   |      |   | 26,473  |       |   |   | —    |   |   |   | (8,348 | ) |   |   | 18,125 |   |
| GSE preferred stock                                                 |   |                   | 5,837   |   |      |   | — |       |   |   | 98         |   |   |   | — |   |   |   | 98 |   |
|                                                                |   | $                      | 213,840 |   |      | $      | 201,883 |       |   | $      | 4,397      |   |   | $      | (9,179 | ) |   | $ | 197,101 |   |

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table of contents

|                                                                       |   | March 31, 2011         |    |   | December 31, 2010 |   |   |   |   |
|----------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                                                                       |   | Amount                 |    |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                                                                       |   | (Dollars in thousands) |    |
| Checking accounts:                                                         |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |
|      Non-interest bearing                         |   | $                      | 101,126 |   |              |   | 10.3   | %      |   | $ | 90,315 |   |   |   | 9.5 | % |   |   | 12.0 | % |
|      Interest-bearing                             |   |                   | 158,473 |   |              |   | 16.2   |   |   |   | 149,948 |   |   |   | 15.9 |   |   |   | 5.7 |   |
| Money market accounts                                                      |   |                   | 189,034 |   |              |   | 19.3   |   |   |   | 177,566 |   |   |   | 18.8 |   |   |   | 6.5 |   |
| Savings accounts                                                           |   |                   | 127,902 |   |              |   | 13.0   |   |   |   | 121,504 |   |   |   | 12.8 |   |   |   | 5.3 |   |
|      Core deposits                                |   |                   | 576,535 |   |              |   | 58.8   |   |   |   | 539,333 |   |   |   | 57.0 |   |   |   | 6.9 |   |
| Certificates of deposit accounts                                           |   |                   | 403,982 |   |              |   | 41.2   |   |   |   | 406,551 |   |   |   | 43.0 |   |   |   | (.6 | ) |
|           Total deposits |   | $                      | 980,517 |   |              |   | 100.0  | %      |   | $ | 945,884 |   |   |   | 100.0 | % |   |   | 3.7 | % |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | March 31, 2011         |    |   | December 31, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   | Weighted-         |   |   |   |   | Weighted- |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   | Average           |   |   |   |   | Average |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   | Contractual       |   |   |   |   | Contractual |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Amount                 |    |   | Rate              |   |   | Amount |   | Rate |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars in thousands) |
| Advances from FHLB of Indianapolis:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   |    |   |              |   |   |   |   |   |   |   |
|      Fixed rate advances due in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |    |   |              |   |   |   |   |   |   |   |
|           2011                                                                                                                                                                                    |   | $                      | — |   |              |   | — | % |   | $ | 15,000 |   |   |   | 3.75 | % |
|           2013                                                                                                                                                                     |   |                   | 15,000  |   |              |   | 2.22 |   |   |   | 15,000 |   |   |   | 2.22 |   |
|           2014 (1)                                                                                                                                                                           |   |                   | 1,096   |   |              |   | 6.71 |   |   |   | 1,096 |   |   |   | 6.71 |   |
|           2018 (1)                                                                                                                                                                           |   |                   | 2,513   |   |              |   | 5.54 |   |   |   | 2,513 |   |   |   | 5.54 |   |
|           2019 (1)                                                                                                                                                                           |   |                   | 6,539   |   |              |   | 6.30 |   |   |   | 6,589 |   |   |   | 6.30 |   |
|                Total FHLB advances                                                                                                                        |   |                   | 25,148  |   |              |   | 3.81 |   |   |   | 40,198 |   |   |   | 3.79 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Short-term variable-rate borrowed funds - repo sweep accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   | 15,510  |   |              |   | .50 |   |   |   | 13,352 |   |   |   | .50 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                     Total borrowed funds                                                                                         |   | $                      | 40,658  |   |              |   | 2.55 | % |   | $ | 53,550 |   |   |   | 2.97 | % |

| (1) |      | These are amortizing advances and are listed by their contractual final maturity date. |
|-----|--------------------------|----------------------------------------------------------------------------------------|

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | March 31,2011          |   |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (Dollars in thousands) |   |
| Non-performing loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   |   |   |              |   |
|      Commercial loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   |   |   |              |   |
|           Commercial and industrial                                                                                                                                               |   | $                      | 578    |   |              | $      | 228 |   |
|           Commercial real estate – owner occupied                                                                                                                           |   |                   | 13,748 |   |              |   | 9,119 |   |
|           Commercial real estate – non-owner occupied                                                                                                                       |   |                   | 21,320 |   |              |   | 21,512 |   |
|           Commercial real estate – multifamily                                                                                                                              |   |                   | 855    |   |              |   | 1,071 |   |
|           Commercial construction and land development                                                                                                                            |   |                   | 9,719  |   |              |   | 9,183 |   |
|           Commercial participations                                                                                                                                                    |   |                   | 8,796  |   |              |   | 9,499 |   |
|           Total commercial loans                                                                                                                                                  |   |                   | 55,016 |   |              |   | 50,612 |   |
|      Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |   |   |              |   |   |   |
|           One-to-four family residential                                                                                                                                          |   |                   | 3,862  |   |              |   | 2,955 |   |
|           Home equity lines of credit                                                                                                                                             |   |                   | 610    |   |              |   | 718 |   |
|           Retail construction                                                                                                                                                     |   |                   | 169    |   |              |   | 203 |   |
|           Other                                                                                                                                                                   |   |                   | 4      |   |              |   | 4 |   |
|           Total retail loans                                                                                                                                                      |   |                   | 4,645  |   |              |   | 3,880 |   |
|           Total non-performing loans                                                                                                                                              |   |                   | 59,661 |   |              |   | 54,492 |   |
| Other real estate owned, net                                                                                                                                                                                                        |   |                   | 23,567 |   |              |   | 22,324 |   |
|      Total non-performing assets                                                                                                                                                                           |   |                   | 83,228 |   |              |   | 76,816 |   |
| 90 days past due loans still accruing interest                                                                                                                                                                                      |   |                   | 1,424  |   |              |   | 2,469 |   |
|      Total non-performing assets plus 90 days past due                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   |   |   |              |   |   |   |
|           loans still accruing interest                                                                                                                                           |   | $                      | 84,652 |   |              | $      | 79,285 |   |
| Non-performing assets to total assets                                                                                                                                                                                               |   |                   | 7.27   | %      |              |   | 6.85 | % |
| Non-performing loans to total loans, net of deferred fees                                                                                                                                                                           |   |                   | 8.24   |   |              |   | 7.44 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | March 31,2011          |   |   | December 31, 2010 |   |   | % Change |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (Dollars in thousands) |   |
| Commercial real estate – non-owner occupied                                                                                                                                                                                         |   | $                      | 5,302  |   |              | $      | 5,302  |     |   |   | ― | % |
| Commercial construction and land development                                                                                                                                                                                              |   |                   | 3,494  |   |              |   | 4,197  |     |   |   | (16.8 | ) |
|      Total non-performing syndications and          purchased participations                                                                                   |   | $                      | 8,796  |   |              | $      | 9,499  |     |   |   | (7.4 | ) |
| Percentage of total non-performing loans                                                                                                                                                                                                  |   |                   | 14.7   | %      |              |   | 17.4   | %        |   |   |   |   |
| Percentage of total syndications and purchased participations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   | 39.2   |   |              |   | 40.3   |     |   |   |   |   |

|                                                                                                                                                    |   | March 31,2011          |   |   | December 31,2010 |   |   | % Change |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|------------------|--------|--------|----------|--------|
|                                                                                                                                                    |   | (Dollars in thousands) |   |
| Illinois                                                                                                                                                |   | $                      | 2,354  |   |             | $      | 2,354  |     |   |   | ― | % |
| Indiana                                                                                                                                                 |   |                   | 5,302  |   |             |   | 5,302  |     |   |   | ― |   |
| Florida                                                                                                                                                 |   |                   | 1,140  |   |             |   | 1,843  |     |   |   | (38.1 | ) |
|      Total non-performing syndications and          purchased participations |   | $                      | 8,796  |   |             | $      | 9,499  |     |   |   | (7.4 | ) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Three Months Ended March 31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2011                         |   |   | 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands)       |   |
| Balance at beginning of period                                                                                                                                                  |   | $                            | 17,179 |   |   | $ | 19,461 |   |
|      Loan charge-offs                                                                                                                                  |   |                         | (1,014 | ) |   |   | (881 | ) |
|      Recoveries of loans previously charged-off                                                                                                        |   |                         | 27     |   |   |   | 112 |   |
|           Net loan charge-offs                                                                                                |   |                         | (987   | ) |   |   | (769 | ) |
|      Provision for loan losses                                                                                                                         |   |                         | 903    |   |   |   | 1,710 |   |
| Balance at end of period                                                                                                                                                        |   | $                            | 17,095 |   |   | $ | 20,402 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March 31, 2011    |    |   | December 31, 2010 |   |    | March 31,2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|---------|---------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | (Dollars in thousands) |    |
| Allowance for loan losses                                                                                                             |   | $                      | 17,095  |   |                   | $      | 17,179  |          |   | $ | 20,402 |   |
| Total loans receivable, net of unearned fees                                                                                          |   |                   | 724,223 |   |                   |   | 732,584 |          |   |   | 763,767 |   |
| Allowance for loan losses to total loans                                                                                              |   |                   | 2.36    | %      |                   |   | 2.34    | %             |   |   | 2.67 | % |
| Allowance for loan losses to non-performing loans                                                                                     |   |                   | 28.65   |   |                   |   | 31.53   |          |   |   | 35.29 |   |

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table of contents

|   | • | deposits and Repo Sweeps; |
|--------|---------|---------------------------|

|   | • | scheduled payments of amortizing loans and mortgage-backed investment securities;  |
|--------|---------|-----------------------------------------------------------------------------------------|

|   | • | prepayments and maturities of outstanding loans and mortgage-backed investment securities;  |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | • | maturities of investment securities and other short-term investments;  |
|--------|---------|-----------------------------------------------------------------------------|

|   | • | funds provided from operations; |
|--------|---------|---------------------------------|

|   | • | federal funds line of credit; and |
|--------|---------|-----------------------------------|

|   | • | borrowed funds from the FHLB and Federal Reserve Bank. |
|--------|---------|--------------------------------------------------------|

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table of contents

| • | purchases of investment securities totaling $68.1 million and  |
|---------|---------------------------------------------------------------------|
| • | repayment of FHLB advances totaling $15.1 million.                  |

| • | increases in deposit accounts totaling $34.6 million;                                              |
|---------|---------------------------------------------------------------------------------------------------------|
| • | proceeds from sales, maturities, and paydowns of investment securities aggregating $27.9 million;  |
| • | redemption of FHLB stock of $10.0 million; and                                                     |
| • | net loan repayments totaling $6.5 million.                                                              |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Payments Due By Period |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   |    |   | Over One |   |   | Over Three |   |   | Over |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | One Year               |    |   | through |   |   | through |   |   | Five |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | or less                |    |   | Three Years |   |   | Five Years |   |   | Years |   |   | Total |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (Dollars in thousands) |    |
| Certificates of deposit                                                                             |   | $                      | 299,350 |   |   | $ | 81,539 |   |   | $ | 22,511 |   |   | $ | 582 |   |   | $ | 403,982 |   |
| FHLB advances (1)                                                                                   |   |                   | 336     |   |   |   | 15,746 |   |   |   | 1,789 |   |   |   | 7,277 |   |   |   | 25,148 |   |
| Short-term borrowed funds (2)                                                                                                                                                                                                                   |   |                   | 15,510  |   |   | ― |   |   | ― |   |   | ― |   |   |   | 15,510 |   |
| Service bureau contract                                                                                  |   |                   | 1,548   |   |   |   | 3,096 |   |   |   | 3,096 |   |   | ― |   |   |   | 7,740 |   |
| Operating leases                                                                                         |   |                   | 374     |   |   |   | 403 |   |   |   | 255 |   |   |   | 1,967 |   |   |   | 2,999 |   |
| Dividends payable on common stock                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 109     |   |   | ― |   |   | ― |   |   | ― |   |   |   | 109 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                      | 317,227 |   |   | $ | 100,784 |   |   | $ | 27,651 |   |   | $ | 9,826 |   |   | $ | 455,488 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   |    |   | Over One |   |    |       |   |   |    |   |   |   |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|----------|--------|---------|------------|--------|--------|---------|--------|--------|--------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   |    |   | through  |   |    | Over Three |   |   | Over    |   |   |   |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | One Year               |    |   | Three    |   |    | through    |   |   | Five    |   |   |   |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | or Less                |    |   | Years    |   |    | Five Years |   |   | Years   |   |   | Total  |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (Dollars in thousands) |    |
| Commitments to extend credit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |    |   |     |   |    |       |   |   |    |   |   |   |    |
|        Commercial and industrial                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                      | 11,038  |   |     | $      | — |       |   | $      | — |   |   | $      | 247     |   |   | $ | 11,285 |   |
|        Commercial real estate – owner occupied                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 13,070  |   |     |   | — |       |   |   | 135     |   |   |   | — |   |   |   | 13,205 |   |
|        Commercial real estate – non-owner occupied                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   | 1,355   |   |     |   | — |       |   |   | — |   |   |   | — |   |   |   | 1,355 |   |
|        Commercial real estate – multifamily                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   | 1,467   |   |     |   | — |       |   |   | — |   |   |   | — |   |   |   | 1,467 |   |
|        Commercial construction and land development                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   | 10,875  |   |     |   | 137     |       |   |   | — |   |   |   | — |   |   |   | 11,012 |   |
|        Commercial participations                                                                                                                                                                                                                                                                                                |   |                   | — |   |     |   | 48      |       |   |   | — |   |   |   | — |   |   |   | 48 |   |
|        Retail                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   | 3,737   |   |     |   | — |       |   |   | — |   |   |   | — |   |   |   | 3,737 |   |
| Commitments to fund unused:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |    |   |     |   |    |       |   |   |    |   |   |   |    |   |   |   |   |   |
|        Equity lines of credit                                                                            |   |                   | 12,408  |   |     |   | — |       |   |   | — |   |   |   | 40,553  |   |   |   | 52,961 |   |
|        Commercial business lines                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 42,541  |   |     |   | 2,600   |       |   |   | 21      |   |   |   | — |   |   |   | 45,162 |   |
|        Construction loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   | 2,254   |   |     |   | — |       |   |   | — |   |   |   | — |   |   |   | 2,254 |   |
| Credit enhancements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 3,984   |   |     |   | — |       |   |   | — |   |   |   | 13,518  |   |   |   | 17,502 |   |
| Letters of credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   | 4,373   |   |     |   | 12      |       |   |   | — |   |   |   | — |   |   |   | 4,385 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                      | 107,102 |   |     | $      | 2,797   |       |   | $      | 156     |   |   | $      | 54,318  |   |   | $ | 164,373 |   |

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|                                           |   |                   |    |   |                 |   |   | To Be Well Capitalized  |   |
|------------------------------------------------|--------|------------------------|---------|--------|----------------------|--------|--------|-------------------------|--------|
|                                           |   |                   |    |   | For Capital Adequacy |   |   | Under Prompt Corrective |   |
|                                           |   | Actual                 |    |   | Purposes             |   |   | Action Provisions       |   |
|                                           |   | Amount                 |    | Ratio  |                 |   | Amount |                    | Ratio  |   |   | Amount |   | Ratio |   |
|                                           |   | (Dollars in thousands) |    |
| As of March 31, 2011:                          |   |                   |    |   |                 |   |   |                    |   |   |   |   |   |   |   |
| Tangible capital to adjusted total assets      |   | $                      | 101,563 |   |                 | 8.94   | %      |                    | $      | 17,039 |   |  >=1.5 | %  |   | $ | 22,718 |   |  >=2.0 | %  |
| Tier 1 (core) capital to adjusted total assets |   |                   | 101,563 |   |                 | 8.94   |   |                    |   | 45,437 |   |  >=4.0 |   |   |   | 56,796 |   |  >=5.0 |   |
| Tier 1 (core) capital to risk-weighted assets  |   |                   | 101,563 |   |                 | 12.18  |   |                    |   | 33,366 |   |  >=4.0 |   |   |   | 50,049 |   |  >=6.0 |   |
| Total capital to risk-weighted assets          |   |                   | 110,301 |   |                 | 13.22  |   |                    |   | 66,732 |   |  >=8.0 |   |   |   | 83,416 |   |  >=10.0 |   |
|                                           |   |                   |    |   |                 |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2010:                       |   |                   |    |   |                 |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Tangible capital to adjusted total assets      |   | $                      | 101,144 |   |                 | 9.07   | %      |                    | $      | 16,719 |   |  >=1.5 | %  |   | $ | 22,292 |   |  >=2.0 | %  |
| Tier 1 (core) capital to adjusted total assets |   |                   | 101,144 |   |                 | 9.07   |   |                    |   | 44,583 |   |  >=4.0 |   |   |   | 55,729 |   |   >=5.0 |   |
| Tier 1 (core) capital to risk-weighted assets  |   |                   | 101,144 |   |                 | 12.26  |   |                    |   | 33,005 |   |  >=4.0 |   |   |   | 49,508 |   |   >=6.0 |   |
| Total capital to risk-weighted assets          |   |                   | 109,869 |   |                 | 13.32  |   |                    |   | 66,011 |   |  >=8.0 |   |   |   | 82,514 |   |  >=10.0 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Tangible               |    |   | Core   |   |    | Risk-Based |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (Dollars in thousands) |    |
| Shareholders’ equity of the Bank                                                                                 |   | $                      | 112,072 |   |   | $      | 112,072 |       |   | $ | 112,072 |   |
| Disallowed deferred tax asset                                                                                          |   |                   | (12,159 | )      |   |   | (12,159 | )          |   |   | (12,159 | ) |
| Adjustment for unrealized losses on available-for-sale securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   | 2,487   |   |   |   | 2,487   |       |   |   | 2,487 |   |
| Other                                                                                                                  |   |                   | (837    | )      |   |   | (837    | )          |   |   | (837 | ) |
| General allowance for loan losses                                                                                      |   |                   | ― |   |   |   | ― |       |   |   | 8,738 |   |
| Regulatory capital of the Bank                                                                                         |   | $                      | 101,563 |   |   | $      | 101,563 |       |   | $ | 110,301 |   |

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Item 3.           Quantitative and Qualitative Disclosures about Market Risk 

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|                             |                    | Net Portfolio Value    |
|----------------------------------|-------------------------|------------------------|
|                             |  At March 31, 2011 |                   |   |  At December 31, 2010 |
|                             |  $ Amount          |                   |   |  $ Change |   |   | % Change |   |   |  $ Amount |   |   |  $ Change |   |   |  % Change |
|                             |                    | (Dollars in thousands) |
| Assumed Change in Interest Rates |                    |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   (Basis Points)            |                    |              |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
|                             | +300                    |                   | $ | 132,593 |   |   | $ | 5,257 |   |   |   | 4.1 |  %  |   | $ | 135,273 |   |   | $  |     5,530 |   |   |   | 4.3 |  % |
|                             | +200                    |                   |   |   132,381 |   |   |   |   5,044 |   |   |   |   4.0 |   |   |   | 135,380 |   |   |   | 5,637 |   |   |   | 4.3 |   |
|                             | +100                    |                   |   |   130,800 |   |   |   |   3,464 |   |   |   |   2.7 |   |   |   | 132,500 |   |   |   | 2,757 |   |   |   | 2.1 |   |
|                             | 0                       |                   |   |   127,337 |   |   |   | — |   |   |   |   — |   |   |   | 129,743 |   |   |   | — |   |   |   | — |   |
|                             | -100                    |                   |   | 117,130 |   |   |   |   (10,206 | )  |   |   |   (8.0 | ) |   |   | 119,664 |   |   |   | (10,079 | )  |   |   | (7.8 | ) |
|                             | -200                    |                   |   |   108,366 |   |   |   |   (18,971 | )  |   |   |   (19.6 | )  |   |   | 111,927 |   |   |   |  (21,763 | )  |   |   | (16.8 | ) |

|                                          |  Change In              |   |
|-----------------------------------------------|------------------------------|--------|
|                                          |  Net Interest Income    |   |
|                                          |  Over a Twelve          |   |
|                                          |  MonthPeriod            |   |
|                                          |  March31,2011           |   |   |  December 31, 2010 |   |
|                                          |  $ Change               |   |   |  % Change |   |   |  $ Change |   |   |  % Change |   |
|                                          |  (Dollars in thousands) |   |
| Assumed Change in Interest Rates         |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       (Basis Points) |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          | +300                    |   |   |  $ | (1,663 | )  |   |   | (4.4 | )%  |   |  $ | (504 | )  |   |   | (1.3 | )%  |
|                                          | +200                         |   |   |   | (1,291 | ) |   |   | (3.4 | ) |   |   | (334 | )  |   |   | (.9 | )  |
|                                          | +100                         |   |   |   | (823 | ) |   |   | (2.2 | ) |   |   | (231 | )  |   |   | (.6 | )  |
|                                          | -100                         |   |   |   | 1,516 |   |   |   | 4.0 |   |   |   | 1,276 |   |   |   |  3.4 |   |
|                                          | -200                         |   |   |   | 1,120 |   |   |   | 3.0 |   |   |   | 808 |   |   |   | 2.2 |   |

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Item 4.            Controls and Procedures

Item 1.           Legal Proceedings

Item 1A.        Risk Factors

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Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds

| (a)    | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| (b)    | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| (c)    | We did not repurchase any shares of our common stock during the quarter ended March 31, 2011.  Under our repurchase plan publicly announced on March 20, 2008 for 530,000 shares, we have 448,612 shares that may yet be purchased.  We are currently prohibited from repurchasing our common stock without prior approval pursuant to an informal regulatory agreement with the OTS. |

Item 3.         Defaults Upon Senior Securities

| (a)    | None.           |
|--------|-----------------|
|   |            |
| (b)    | Not applicable. |

Item 4.         (Removed and Reserved)

Item 5.         Other Information

| (a)    | Not applicable. |
|--------|-----------------|
|   |            |
| (b)    | None.           |

Item 6.         Exhibits

| (a)                            | List of exhibits (filed herewith unless otherwise noted).                                                        |
|--------------------------------|------------------------------------------------------------------------------------------------------------------|
|  3.1                      | Articles of Incorporation of CFS Bancorp, Inc. (1)                                                               |
|  3.2                      | Amended and Restated Bylaws of CFS Bancorp, Inc. (2)                                                             |
|  4.0                      | Form of Stock Certificate of CFS Bancorp, Inc. (3)                                                               |
|      10.25 | Employment Agreement entered into between CFS Bancorp, Inc., Citizens Financial Bank, and Jerry A. Weberling (4) |
|    31.1              | Rule 13a-14(a) Certification of Chief Executive Officer                                                          |
|    31.2              | Rule 13a-14(a) Certification of Chief Financial Officer                                                          |
|    32.0              | Section 1350 Certifications                                                                                      |

|   ________ | ____________ |
|-----------------|--------------|

| (1) | Incorporated herein by Reference to the Company’s Definitive Proxy Statement from the Annual Meeting of Shareholders filed with the SEC on March 25, 2005 (File No. 000-24611). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated herein by Reference to the Company’s Form 8-K filed with the SEC on December 17, 2010. |
|-----|-----------------------------------------------------------------------------------------------------------|

| (3) | Incorporated herein by Reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 filed with the SEC on March 15, 2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated herein by Reference to the Company’s Form 8-K filed with the SEC on February 23, 2011. |
|-----|-----------------------------------------------------------------------------------------------------------|

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SIGNATURES

| Date:  April 29, 2011 | By:    | /s/ Thomas F. Prisby                                                         |
|---------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |   | Thomas F. Prisby, Chairman of the Board and                                                                                                                                                                                                                                                                                                           |
|                            |   | Chief Executive Officer                                                                                                                                                                                                                                                                                                                               |
|                            |   |                                                                                                                                                                                                                                                                                                                                                  |
| Date:  April 29, 2011 | By:    | /s/ Jerry A. Weberling                                                       |
|                            |   | Jerry A. Weberling, Executive Vice President                                                                                                                                                                                                                                                                                                          |
|                            |   | and Chief Financial Officer                                                                                                                                                                                                                                                                                                                           |

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