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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)      836-5500                                             |   |
|   | (Registrant’s telephone number,      including area code) |   |

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

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TABLE OF CONTENTS

|                                                                                  |                                                                                                  | 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 | 15     |
|                                                                                  |                                                                                                  |   |
| Item 3.                                                                               | Quantitative      and Qualitative Disclosures about Market Risk                                       | 37     |
|                                                                                  |                                                                                                  |   |
| Item 4.                                                                               | Controls      and Procedures                                                                          | 40     |
|                                                                                  |                                                                                                  |   |
|                                                                                  |                                                                                                  |   |
|                                                                                  | PART      II - OTHER INFORMATION                                                                      |   |
|                                                                                  |                                                                                                  |   |
| Item 1.                                                                               | Legal      Proceedings                                                                                | 40     |
|                                                                                  |                                                                                                  |   |
| Item 1A.                                                                              | Risk      Factors                                                                                     | 40     |
|                                                                                  |                                                                                                  |   |
| Item 2.                                                                               | Unregistered      Sales of Equity Securities and Use of Proceeds                                      | 41     |
|                                                                                  |                                                                                                  |   |
| Item 3.                                                                               | Defaults      Upon Senior Securities                                                                  | 41     |
|                                                                                  |                                                                                                  |   |
| Item 4.                                                                               | Submission      of Matters to a Vote of Security Holders                                              | 41     |
|                                                                                  |                                                                                                  |   |
| Item 5.                                                                               | Other      Information                                                                                | 41     |
|                                                                                  |                                                                                                  |   |
| Item 6.                                                                               | Exhibits                                                                                              | 43     |
|                                                                                  |                                                                                                  |   |
| Signature Page                                                                        | 45                                                                                                    |
|                                                                                  |                                                                                                  |   |
| Certifications      of Principal Executive Officer and Principal Financial    Officer | 46                                                                                                    |
|                                                                                  | Exhibit 31.1                                                                                          |   |
|                                                                                  | Exhibit 31.2                                                                                     |   |
|                                                                                  | Exhibit 32.0                                                                                     |   |

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table of contents

CFS BANCORP, INC.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | March 31, 2009         |      |   | December 31, 2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Unaudited)            |      |   |              |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (Dollars in thousands) |      |
| Cash      and amounts due from depository      institutions                                                                                        |   | $                      | 14,937    |   |              | $      | 15,714 |   |
| Interest-bearing      deposits                                                                                                                     |   |                   | 16,767    |   |              |   | 3,133 |   |
| Federal      funds      sold                                                                                                                       |   |                   | 433       |   |              |   | 259 |   |
| Cash and cash      equivalents                                                                                                                                    |   |                   | 32,137    |   |              |   | 19,106 |   |
| Securities      available-for-sale, at fair      value                                                                                             |   |                   | 222,080   |   |              |   | 251,270 |   |
| Securities      held-to-maturity, at      cost                                                                                                     |   |                   | 6,940     |   |              |   | 6,940 |   |
| Investment      in Federal Home Loan Bank stock, at cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   | 23,944    |   |              |   | 23,944 |   |
| Loans      receivable                                                                                                                              |   |                   | 756,134   |   |              |   | 749,973 |   |
| Allowance for losses on      loans                                                                                                                                |   |                   | (15,472   | )      |              |   | (15,558 | ) |
| Net      loans                                                                                                                                                              |   |                   | 740,662   |   |              |   | 734,415 |   |
| Interest      receivable                                                                                                                           |   |                   | 4,045     |   |              |   | 4,325 |   |
| Other      real estate      owned                                                                                                                  |   |                   | 3,299     |   |              |   | 3,242 |   |
| Office      properties and      equipment                                                                                                          |   |                   | 19,697    |   |              |   | 19,790 |   |
| Investment      in bank-owned life      insurance                                                                                                  |   |                   | 36,784    |   |              |   | 36,606 |   |
| Other      assets                                                                                                                                  |   |                   | 22,320    |   |              |   | 22,217 |   |
| Total      assets                                                                                                                                                           |   | $                      | 1,111,908 |   |              | $      | 1,121,855 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |      |   |              |   |   |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |      |   |              |   |   |   |
| Deposits                                                                                                                                           |   | $                      | 863,884   |   |              | $      | 824,097 |   |
| Borrowed      money                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 124,770   |   |              |   | 172,937 |   |
| Advance      payments by borrowers for taxes and insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 4,594     |   |              |   | 4,320 |   |
| Other      liabilities                                                                                                                             |   |                   | 7,909     |   |              |   | 8,692 |   |
| Total      liabilities                                                                                                                                                      |   |                   | 1,001,157 |   |              |   | 1,010,046 |   |
| Commitments      and      contingencies                                                                                                            |   |                   | –   |   |              |   | – |   |
| Shareholders’      equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   |      |   |              |   |   |   |
| Preferred      stock, $0.01 par value; 15,000,000 shares authorized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | –   |   |              |   | – |   |
| Common      stock, $0.01 par value; 85,000,000 shares authorized;23,423,306 shares issued;      10,723,903 and 10,674,511 sharesoutstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 234       |   |              |   | 234 |   |
| Additional      paid-in      capital                                                                                                               |   |                   | 189,367   |   |              |   | 189,211 |   |
| Retained      earnings                                                                                                                             |   |                   | 82,894    |   |              |   | 81,525 |   |
| Treasury      stock, at cost; 12,566,255 and 12,616,572 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   | (156,296  | )      |              |   | (155,740 | ) |
| Treasury      stock held in Rabbi Trust, at cost; 133,148 and 132,223    shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   | (1,731    | )      |              |   | (1,726 | ) |
| Unallocated      common stock held by Employee Stock Ownership Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | –   |   |              |   | (832 | ) |
| Accumulated      other comprehensive loss, net of      tax                                                                                         |   |                   | (3,717    | )      |              |   | (863 | ) |
| Total shareholders’      equity                                                                                                                                       |   |                   | 110,751   |   |              |   | 111,809 |   |
| Total liabilities and      shareholders’      equity                                                                                                                  |   | $                      | 1,111,908 |   |              | $      | 1,121,855 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Three      Months EndedMarch 31,                                  |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2009                                                              |       |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (Unaudited)                                                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (Dollars      in thousands, except share      and per share data) |       |
| Interest      income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                              |       |   |   |   |
| Loans                                                                                                                                                       |   | $                                                                 | 9,945      |   |   | $ | 12,788 |   |
| Securities                                                                                                                                                  |   |                                                              | 3,043      |   |   |   | 3,079 |   |
| Other                                                                                                                                                       |   |                                                              | 243        |   |   |   | 447 |   |
| Total interest      income                                                                                                                                            |   |                                                              | 13,231     |   |   |   | 16,314 |   |
| Interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                              |       |   |   |   |   |   |
| Deposits                                                                                                                                                    |   |                                                              | 3,096      |   |   |   | 5,688 |   |
| Borrowed      money                                                                                                                                         |   |                                                              | 960        |   |   |   | 2,061 |   |
| Total interest      expense                                                                                                                                           |   |                                                              | 4,056      |   |   |   | 7,749 |   |
| Net      interest      income                                                                                                                |   |                                                              | 9,175      |   |   |   | 8,565 |   |
| Provision      for losses on      loans                                                                                                      |   |                                                              | 624        |   |   |   | 742 |   |
| Net      interest income after provision for losses on loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                              | 8,551      |   |   |   | 7,823 |   |
| Non-interest      income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                              |       |   |   |   |   |   |
| Service charges and other      fees                                                                                                                         |   |                                                              | 1,299      |   |   |   | 1,439 |   |
| Card-based      fees                                                                                                                                        |   |                                                              | 388        |   |   |   | 380 |   |
| Commission      income                                                                                                                                      |   |                                                              | 71         |   |   |   | 58 |   |
| Security gains,    net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                              | 720        |   |   |   | 69 |   |
| Income from bank-owned life      insurance                                                                                                                  |   |                                                              | 178        |   |   |   | 409 |   |
| Other      income                                                                                                                                           |   |                                                              | 295        |   |   |   | 172 |   |
| Total non-interest      income                                                                                                                                        |   |                                                              | 2,951      |   |   |   | 2,527 |   |
| Non-interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                              |       |   |   |   |   |   |
| Compensation and employee      benefits                                                                                                                     |   |                                                              | 5,175      |   |   |   | 4,336 |   |
| Net occupancy      expense                                                                                                                                  |   |                                                              | 897        |   |   |   | 833 |   |
| Furniture and equipment      expense                                                                                                                        |   |                                                              | 535        |   |   |   | 551 |   |
| Data      processing                                                                                                                                        |   |                                                              | 419        |   |   |   | 458 |   |
| Professional      fees                                                                                                                                      |   |                                                              | 350        |   |   |   | 274 |   |
| FDIC insurance      premiums                                                                                                                                |   |                                                              | 304        |   |   |   | 40 |   |
| Marketing                                                                                                                                                   |   |                                                              | 198        |   |   |   | 208 |   |
| Other general and      administrative      expenses                                                                                                         |   |                                                              | 1,550      |   |   |   | 1,345 |   |
| Total non-interest      expense                                                                                                                                       |   |                                                              | 9,428      |   |   |   | 8,045 |   |
| Income before      income      taxes                                                                                                    |   |                                                              | 2,074      |   |   |   | 2,305 |   |
| Income      tax      expense                                                                                                                 |   |                                                              | 613        |   |   |   | 526 |   |
| Net      income                                                                                                                                                       |   | $                                                                 | 1,461      |   |   | $ | 1,779 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                              |       |   |   |   |   |   |
| Per      share data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                              |       |   |   |   |   |   |
| Basic earnings per      share                                                                                                                          |   | $                                                                 | 0.14       |   |   | $ | 0.17 |   |
| Diluted earnings per      share                                                                                                                             |   |                                                              | 0.14       |   |   |   | 0.17 |   |
| Cash dividends declared per      share                                                                                                                      |   |                                                              | 0.01       |   |   |   | 0.12 |   |
| Weighted-average      shares      outstanding                                                                                                |   |                                                              | 10,495,835 |   |   |   | 10,387,292 |   |
| Weighted-average      diluted shares      outstanding                                                                                        |   |                                                              | 10,628,901 |   |   |   | 10,658,026 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                      | Common      Stock                                  |                      |   | Additional      Paid-In Capital |   |          | Retained      Earnings |   |   | Treasury      Stock |   |   | Unallocated      Common Stock Held By ESOP |     |   | Accumulated      Other Comprehensive Income (Loss) |   |    | Total  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|---------------------------|--------|---------------------------------|--------|---------------|------------------------|--------|--------|---------------------|--------|--------|--------------------------------------------|----------|--------|----------------------------------------------------|--------|---------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                      | (Unaudited)                                        |
|                                                                                                                                                                                                                                                                                                                                                                      | (Dollars in      thousands, except per share data) |
| Balance      at January 1,      2008                                                             | $                                                  | 234                       |   |                            | $      | 191,162       |                   |   | $      | 97,029              |   |   | $                                          | (156,661 | )      |                                               | $      | (3,126  | )      |   | $ | 1,776 |   |   | $ | 130,414 |   |
| Net      income                                                                                  |                                               | –                   |   |                            |   | –       |                   |   |   | 1,779               |   |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | 1,779 |   |
| Comprehensive      income:Change      in unrealized appreciation on      available-for-sale securities, net of reclassification      and tax                                                                                                                                                                                                                              |                                               |    – |   |                            |   | –       |                   |   |   | –             |   |   |                                       | –  |   |                                               |   | – |   |   |   | 1,170 |   |   |   | 1,170 |   |
| Total      comprehensive      income                                                                                                                                                                                                                                                 |                                               | –                   |   |                            |   |  – |                   |   |   | –             |   |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | 2,949 |   |
| Purchase      of treasury      stock                                                             |                                               | –                   |   |                            |   | –       |                   |   |   | –             |   |   |                                       | (1,055   | )      |                                               |   | – |   |   |   | – |   |   |   | (1,055 | ) |
| Net      purchases of Rabbi Trust shares                                                                                                                                                                                                                                                                                                                                  |                                               | –                   |   |                            |   | –       |                   |   |   | –             |   |   |                                       | (7       | )      |                                               |   | – |   |   |   | – |   |   |   | (7 | ) |
| Shares      earned under      ESOP                                                               |                                               | –                   |   |                            |   | 33            |                   |   |   | –             |   |   |                                       | –  |   |                                               |   | 78      |   |   |   | – |   |   |   | 111 |   |
| Exercise      of stock      options                                                              |                                               | –                   |   |                            |   | 16            |                   |   |   | –             |   |   |                                       | 593      |   |                                               |   | – |   |   |   | – |   |   |   | 609 |   |
| Tax      benefit related to stock-based benefit plans                                                                                                                                                                                                                                                                                                                     |                                               | –                   |   |                            |   | 31            |                   |   |   | –             |   |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | 31 |   |
| Dividends      declared on common stock ($0.12per      share)                                                   |                                               | –                   |   |                            |   | –       |                   |   |   | (1,261              | )      |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | (1,261 | ) |
| Balance      at March 31,      2008                                                              | $                                                  | 234                       |   |                            | $      | 191,242       |                   |   | $      | 97,547              |   |   | $                                          | (157,130 | )      |                                               | $      | (3,048  | )      |   | $ | 2,946 |   |   | $ | 131,791 |   |
|                                                                                                                                                                                                                                                                                                                                                                      |                                               |                      |   |                            |   |          |                   |   |   |                |   |   |                                       |     |   |                                               |   |    |   |   |   |   |   |   |   |   |   |
| Balance      at January 1,      2009                                                             | $                                                  | 234                       |   |                            | $      | 189,211       |                   |   | $      | 81,525              |   |   | $                                          | (157,466 | )      |                                               | $      | (832    | )      |   | $ | (863 | ) |   | $ | 111,809 |   |
| Net      income                                                                                  |                                               | –                   |   |                            |   | –       |                   |   |   | 1,461               |   |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | 1,461 |   |
| Comprehensive      loss:Change      in unrealized depreciation on available-for-sale      securities, net of reclassification      and tax                                                                                                                                                                                                                                |                                               | –                   |   |                            |   | –       |                   |   |   | –             |   |   |                                       | –  |   |                                               |   | – |   |   |   | (2,854 | ) |   |   | (2,854 | ) |
| Total      comprehensive      loss                                                               |                                               | –                   |   |                            |   | –       |                   |   |   | –             |   |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | (1,393 | ) |
| Net      purchases of Rabbi Trust shares                                                                                                                                                                                                                                                                                                                                  |                                               | –                   |   |                            |   | –       |                   |   |   | –             |   |   |                                       | (4       | )      |                                               |   | – |   |   |   | – |   |   |   | (4 | ) |
| Shares      earned under      ESOP                                                               |                                               | –                   |   |                            |   | (401          | )                      |   |   | –             |   |   |                                       | –  |   |                                               |   | 832     |   |   |   | – |   |   |   | 431 |   |
| Forfeiture      of RRP      award                                                                |                                               | –                   |   |                            |   | 906           |                   |   |   | –             |   |   |                                       | (906     | )      |                                               |   | – |   |   |   | – |   |   |   | – |   |
| Unearned      compensation restricted stock awards                                                                                                                                                                                                                                                                                                                        |                                               | –                   |   |                            |   | (349          | )                      |   |   | –             |   |   |                                       | 349      |   |                                               |   | – |   |   |   | – |   |   |   | – |   |
| Dividends      declared on common stock ($0.01per      share)                                                   |                                               | –                   |   |                            |   | –       |                   |   |   | (92                 | )      |   |                                       | –  |   |                                               |   | – |   |   |   | – |   |   |   | (92 | ) |
| Balance      at March 31,      2009                                                              | $                                                  | 234                       |   |                            | $      | 189,367       |                   |   | $      | 82,894              |   |   | $                                          | (158,027 | )      |                                               | $      | – |   |   | $ | (3,717 | ) |   | $ | 110,751 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Three      Months EndedMarch 31, |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2009                             |     |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (Unaudited)                      |     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands)           |     |
| OPERATING      ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                             |     |   |   |   |
| Netincome                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                | 1,461    |   |   | $ | 1,779 |   |
| Adjustments to reconcile net      income to net cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             |     |   |   |   |   |   |
| Provision for losses on      loans                                                                                                                                           |   |                             | 624      |   |   |   | 742 |   |
| Depreciation and      amortization                                                                                                                                           |   |                             | 394      |   |   |   | 426 |   |
| Premium amortization on the      early extinguishment of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                             | 72       |   |   |   | 527 |   |
| Net discount accretion on      securities available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                             | (324     | ) |   |   | (280 | ) |
| Deferred income tax expense      (benefit)                                                                                                                                   |   |                             | 202      |   |   |   | (134 | ) |
| Tax benefit from stock-based      benefits                                                                                                                                   |   |                             | –  |   |   |   | (31 | ) |
| Amortization of cost of      stock-based benefit      plans                                                                                                                  |   |                             | 431      |   |   |   | 111 |   |
| Proceeds from sale of loans      held-for-sale                                                                                                                               |   |                             | –  |   |   |   | 45 |   |
| Securities gains,      net                                                                                                                                                   |   |                             | (720     | ) |   |   | (69 | ) |
| Net increase in cash surrender      value of bank-owned life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             | (178     | ) |   |   | (409 | ) |
| Decrease (increase) in other      assets                                                                                                                                     |   |                             | 1,754    |   |   |   | (487 | ) |
| Decrease in other      liabilities                                                                                                                                           |   |                             | (394     | ) |   |   | (2,454 | ) |
| Net cash provided by (used      for) operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                             | 3,322    |   |   |   | (234 | ) |
| INVESTING      ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                             |     |   |   |   |   |   |
| Securities,      available-for-sale:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                             |     |   |   |   |   |   |
| Proceeds from      sales                                                                                                                                      |   |                             | 9,906    |   |   |   | 1,992 |   |
| Proceeds from maturities and      paydowns                                                                                                                    |   |                             | 20,921   |   |   |   | 26,033 |   |
| Purchases                                                                                                                                                     |   |                             | (5,136   | ) |   |   | (48,616 | ) |
| Net loan fundings and principal      payments      received                                                                                         |   |                             | (7,055   | ) |   |   | 27,260 |   |
| Proceeds from sale of real      estate      owned                                                                                                   |   |                             | 15       |   |   |   | – |   |
| Purchases of property and      equipment                                                                                                            |   |                             | (301     | ) |   |   | (844 | ) |
| Net cash provided by investing      activities                                                                                                                               |   |                             | 18,350   |   |   |   | 5,825 |   |
| FINANCING      ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                             |     |   |   |   |   |   |
| Proceeds from exercise of stock      options                                                                                                        |   |                             | –  |   |   |   | 609 |   |
| Tax benefit from stock-based      benefits                                                                                                          |   |                             | –  |   |   |   | 31 |   |
| Dividends paid on common      stock                                                                                                                 |   |                             | (432     | ) |   |   | (1,301 | ) |
| Purchase of treasury      stock                                                                                                                     |   |                             | –  |   |   |   | (1,055 | ) |
| Net purchase of Rabbi Trust      shares                                                                                                             |   |                             | (4       | ) |   |   | (7 | ) |
| Net increase in deposit      accounts                                                                                                               |   |                             | 39,760   |   |   |   | 16,234 |   |
| Net increase in advance      payments by borrowers for taxes and insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                             | 274      |   |   |   | 994 |   |
| (Decrease) increase in      short-term      borrowings                                                                                              |   |                             | (18,195  | ) |   |   | 12,350 |   |
| Proceeds from Federal Home Loan      Bank      borrowings                                                                                           |   |                             | 73,000   |   |   |   | 60,000 |   |
| Repayments of Federal Home Loan      Bank borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                             | (103,044 | ) |   |   | (45,041 | ) |
| Net cash (used for) provided by      financing      activities                                                                                                     |   |                             | (8,641   | ) |   |   | 42,814 |   |
| Increase in cash and cash      equivalents                                                                                                          |   |                             | 13,031   |   |   |   | 48,405 |   |
| Cash and cash equivalents at      beginning of      period                                                                                          |   |                             | 19,106   |   |   |   | 38,909 |   |
| Cash and cash equivalents at      end of      period                                                                                                |   | $                                | 32,137   |   |   | $ | 87,314 |   |

| Supplemental      disclosures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |    |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Loans transferred to real      estate      owned                                                                                         |   | $      | 208     |   |   | $      | 5 |   |
| Cash paid for interest on      deposits                                                                                                  |   |   | 3,176   |   |   |   | 5,435 |   |
| Cash paid for interest on      borrowings                                                                                                |   |   | 895     |   |   |   | 1,508 |   |
| Cash paid for      taxes                                                                                                                 |   |   | – |   |   |   | 100 |   |

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| 1. | Basis      of Financial StatementsPresentation |
|----|------------------------------------------------|

| 2. | Fair      Value Measurements |
|----|------------------------------|

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|                               |   | Fair Value Measurements at March 31,      2009 |    |
|------------------------------------|--------|------------------------------------------------|---------|
|                               |   | Fair Value                                     |    |   | Quoted      Prices inActive      Markets for Identical Assets(Level 1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs(Level 3) |   |
|                               |   | (Dollars in thousands)                         |    |
| Securities      available-for-sale |   | $                                              | 222,080 |   |   | $ | – |   |   | $ | 201,120 |   |   | $ | 20,960 |   |

|                               |   | Fair Value Measurements at December 31,      2008 |    |
|------------------------------------|--------|---------------------------------------------------|---------|
|                               |   | Fair Value                                        |    |   | Quoted      Prices inActive      Markets for Identical Assets(Level 1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs(Level 3) |   |
|                               |   | (Dollars in thousands)                            |    |
| Securities      available-for-sale |   | $                                                 | 251,270 |   |   | $ | – |   |   | $ | 227,137 |   |   | $ | 24,133 |   |

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| ·   | the      few observable transactions and market quotations that are available are      not reliable for purposes of determining fair value at March 31, 2009;      and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      income valuation approach technique (present value technique) that      maximizes the use of relevant observable inputs and minimizes the use of      unobservable inputs will be equally or more representative of fair value      than the market approach valuationtechnique. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                                        |   | Available-for-sale    Securities |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands)           |    |
| Beginning      balance at December 31, 2008                                                                                                                                                                                                                                                                                                 |   | $                                | 24,133  |   |
| Total realized and unrealized      gains andlosses:                                                                                                                                                                                                                                                                                         |   |                             | – |   |
| Included in net      income                                                                      |   |                             | – |   |
| Included in accumulated      othercomprehensive      income                                                     |   |                             | (3,027  | ) |
| Purchases,      issuances and settlements                                                                                                                                                                                                                                                                                                   |   |                             | (146    | ) |
| Transfers      in and/or out of Level 3                                                                                                                                                                                                                                                                                                     |   |                             | – |   |
| Ending      balance                                                     |   | $                                | 20,960  |   |

|                                                                                                                                                                                                                                                    |   | Fair Value Measurements at March 31,      2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                                                                                                                                                                    |   | Fair Value                                     |   |   | Quoted      Prices inActive      Markets for Identical Assets(Level 1) |   |   | Significant      Other      Observable      Inputs      (Level 2) |   |   | Significant      Unobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                    |   | (Dollars in thousands)                         |   |
| Impaired      loans                                       |   | $                                              | 5,937  |   |   | $ | – |   |   | $ | – |   |   | $ | 5,937 |   |
| Other real estate      owned                                                                                                                                                                                                                            |   |                                           | 444    |   |   |   | – |   |   |   | – |   |   |   | 444 |   |

|                                                                                                                                                                                                                                                    |   | Fair Value Measurements at December 31,      2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                                                                                                                                                                                                    |   | Fair Value                                        |   |   | Quoted      Prices inActive      Markets for Identical Assets(Level 1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                    |   | (Dollars in thousands)                            |   |
| Impaired      loans                                       |   | $                                                 | 31,734 |   |   | $ | – |   |   | $ | – |   |   | $ | 31,734 |   |

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| 3. | Earnings      Per Share |
|----|-------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Three      Months EndedMarch 31,                   |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2009                                               |       |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | (Dollars in thousands, except per share      data) |       |
| Net      income                                                                                                                                                                  |   | $                                                  | 1,461      |   |   | $ | 1,779 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                               |       |   |   |   |   |   |
| Weighted-average      common shares      outstanding                                                                                                                             |   |                                               | 10,495,835 |   |   |   | 10,387,292 |   |
| Weighted-average      common share      equivalents                                                                                                                              |   |                                               | 133,066    |   |   |   | 270,734 |   |
| Weighted-average      common shares and commonshare equivalents      outstanding                                                                                                           |   |                                               | 10,628,901 |   |   |   | 10,658,026 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                               |       |   |   |   |   |   |
| Basic      earnings per      share                                                                                                                                               |   | $                                                  | 0.14       |   |   | $ | 0.17 |   |
| Diluted      earnings per      share                                                                                                                                             |   |                                               | 0.14       |   |   |   | 0.17 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                               |       |   |   |   |   |   |
| Number      of anti-dilutive stock options excluded from the dilutedearnings per share      calculation                                                                                    |   |                                               | 1,130,245  |   |   |   | 206,000 |   |
| Weighted-average      exercise price of anti-dilutive option shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                                  | 12.15      |   |   | $ | 14.59 |   |

| 4. | Share-Based      Compensation |
|----|-------------------------------|

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|                               |   |  Number      of Shares |    |   | Weighted-AverageGrant-Date      Fair Value |   |
|------------------------------------|--------|-----------------------------|---------|--------|--------------------------------------------|--------|
| Unvested      at December 31, 2008 |   |                        | 109,452 |   |                                       | $      | 14.02 |   |
| Granted                            |   |                        | 113,772 |   |                                       |   | 3.07 |   |
| Vested                             |   |                        | – |   |                                       |   | – |   |
| Forfeited                          |   |                        | (63,455 | )      |                                       |   | 14.27 |   |
| Unvested      as of March 31, 2009 |   |                        | 159,769 |   |                                       | $      | 6.12 |   |

|                                        |   | Number      ofShares |      |   | Weighted-AverageExercise Price |   |
|---------------------------------------------|--------|----------------------|-----------|--------|--------------------------------|--------|
| Options      outstanding at January 1, 2009 |   |                 | 1,130,245 |   |                           | $      | 12.15 |   |
| Granted                                     |   |                 | –   |   |                           |   | – |   |
| Exercised                                   |   |                 | –   |   |                           |   | – |   |
| Forfeited                                   |   |                 | –   |   |                           |   | – |   |
| Options      outstanding at March 31, 2009  |   |                 | 1,130,245 |   |                           | $      | 12.15 |   |
| Options      exercisable at March 31, 2009  |   |                 | 1,130,245 |   |                           | $      | 12.15 |   |

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| 5. | Other      Comprehensive Income (Loss) |
|----|----------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                 |   | Three      Months EndedMarch 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2009                             |   |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |   | (Dollars in thousands)           |   |
| Unrealized      holding gains (losses) arising during the period:                                                                                                                                                                                                                                                                                                                                    |   |                             |   |   |   |   |
| Unrealized net gains      (losses)                                                            |   | $                                | (3,823 | ) |   | $ | 1,912 |   |
| Related tax (expense)      benefit                                                            |   |                             | 1,424  |   |   |   | (699 | ) |
| Net                                                                                           |   |                             | (2,399 | ) |   |   | 1,213 |   |
| Less:  reclassification      adjustment for net gains realized during the period:                                                                                                                                                                                                                                                                                                     |   |                             |   |   |   |   |   |   |
| Realized net      gains                                                                       |   |                             | 720    |   |   |   | 69 |   |
| Related tax      expense                                                                      |   |                             | (265   | ) |   |   | (26 | ) |
| Net                                                                                           |   |                             | 455    |   |   |   | 43 |   |
| Total      other comprehensive income (loss)                                                                                                                                                                                                                                                                                                                                                         |   | $                                | (2,854 | ) |   | $ | 1,170 |   |

| 6. | Recent      Accounting Pronouncements |
|----|---------------------------------------|

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Item2.                      Management’sDiscussion and Analysis of Financial Condition and Results ofOperations

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|                                                                                                                                                                                                                                                                                                                                        |   | Three Months Ended March31, |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                        |   | 2009                        |      |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                        |   | Average      Balance        |      |   | Interest |   |   | AverageYield/Cost |   |   | Average      Balance |   |   | Interest |   |   | AverageYield/Cost |   |
|                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands)      |      |
| Interest-earning      assets:                                                                                                                                                                                                                                                                                                               |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable      (1)                                                                        |   | $                           | 751,910   |   |   | $ | 9,945 |   |   |   | 5.36 | % |   | $ | 786,877 |   |   | $ | 12,788 |   |   |   | 6.54 | % |
| Securities      (2)                                                                              |   |                        | 244,224   |   |   |   | 3,043 |   |   |   | 4.98 |   |   |   | 238,942 |   |   |   | 3,079 |   |   |   | 5.10 |   |
| Other interest-earning assets      (3)                                                                                                                                                                                                                                                                                                      |   |                        | 33,492    |   |   |   | 243 |   |   |   | 2.94 |   |   |   | 46,454 |   |   |   | 447 |   |   |   | 3.87 |   |
| Total interest-earning      assets                                                                                                                                                                                                                                                                                                          |   |                        | 1,029,626 |   |   |   | 13,231 |   |   |   | 5.21 |   |   |   | 1,072,273 |   |   |   | 16,314 |   |   |   | 6.12 |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      earning      assets                                                                                                                                                                                                                                           |   |                        | 84,881    |   |   |   |   |   |   |   |   |   |   |   | 89,627 |   |   |   |   |   |   |   |   |   |
| Total      assets                                                                 |   | $                           | 1,114,507 |   |   |   |   |   |   |   |   |   |   | $ | 1,161,900 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                                                                                                                                                                                                                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                   |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking      accounts                                                                                     |   | $                           | 111,664   |   |   |   | 92 |   |   |   | 0.33 |   |   | $ | 103,685 |   |   |   | 188 |   |   |   | 0.73 |   |
| Money market      accounts                                                                                 |   |                        | 161,770   |   |   |   | 332 |   |   |   | 0.83 |   |   |   | 181,692 |   |   |   | 1,253 |   |   |   | 2.77 |   |
| Savings      accounts                                                                                      |   |                        | 116,620   |   |   |   | 102 |   |   |   | 0.35 |   |   |   | 125,020 |   |   |   | 180 |   |   |   | 0.58 |   |
| Certificates of      deposit                                                                               |   |                        | 369,580   |   |   |   | 2,570 |   |   |   | 2.82 |   |   |   | 386,038 |   |   |   | 4,067 |   |   |   | 4.24 |   |
| Total      deposits                                                                                                       |   |                        | 759,634   |   |   |   | 3,096 |   |   |   | 1.65 |   |   |   | 796,435 |   |   |   | 5,688 |   |   |   | 2.87 |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowedmoney:                                                                                                                                                                                                                                                                                                                              |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other short-term borrowings      (4)                                                                                                                                                                                                                                                                                                        |   |                        | 17,458    |   |   |   | 33 |   |   |   | 0.77 |   |   |   | 17,478 |   |   |   | 114 |   |   |   | 2.62 |   |
| FHLB borrowings      (5)(6)                                                                                     |   |                        | 147,231   |   |   |   | 927 |   |   |   | 2.52 |   |   |   | 137,689 |   |   |   | 1,947 |   |   |   | 5.59 |   |
| Total borrowed      money                                                                                                 |   |                        | 164,689   |   |   |   | 960 |   |   |   | 2.33 |   |   |   | 155,167 |   |   |   | 2,061 |   |   |   | 5.25 |   |
| Total interest-earning      liabilities                                                                                                                                                                                                                                                                                                     |   |                        | 924,323   |   |   |   | 4,056 |   |   |   | 1.78 |   |   |   | 951,602 |   |   |   | 7,749 |   |   |   | 3.28 |   |
| Non-interest      bearing deposits                                                                                                                                                                                                                                                                                                          |   |                        | 63,849    |   |   |   |   |   |   |   |   |   |   |   | 62,025 |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing liabilities                                                                                                                                                                                                                                                                                                       |   |                        | 13,888    |   |   |   |   |   |   |   |   |   |   |   | 16,027 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                                            |   |                        | 1,002,060 |   |   |   |   |   |   |   |   |   |   |   | 1,029,654 |   |   |   |   |   |   |   |   |   |
| Shareholders’      equity                                                   |   |                        | 112,447   |   |   |   |   |   |   |   |   |   |   |   | 132,246 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and shareholders’ equity                                                                                                                                                                                                                                                                                       |   | $                           | 1,114,507 |   |   |   |   |   |   |   |   |   |   | $ | 1,161,900 |   |   |   |   |   |   |   |   |   |
| Net      interest-earning assets                                                                                                                                                                                                                                                                                                            |   | $                           | 105,303   |   |   |   |   |   |   |   |   |   |   | $ | 120,671 |   |   |   |   |   |   |   |   |   |
| Net      interest income / interest rate spread                                                                                                                                                                                                                                                                                             |   |                        |      |   |   | $ | 9,175 |   |   |   | 3.43 | % |   |   |   |   |   | $ | 8,565 |   |   |   | 2.84 | % |
| Net      interest      margin                                                     |   |                        |      |   |   |   |   |   |   |   | 3.61 | % |   |   |   |   |   |   |   |   |   |   | 3.21 | % |
| Ratio      of average interest-earning assetsto average interest-bearing      liabilities                                                                                                                                                                                                                                                   |   |                        |      |   |   |   |   |   |   |   | 111.39 | % |   |   |   |   |   |   |   |   |   |   | 112.68 | % |

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| (1) | The      average balance of loans receivable includes non-performing loans,      interest on which is recognized on a cashbasis. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (2) | Average      balances of securities are based on amortized  cost. |
|-----|-------------------------------------------------------------------|

| (3) | Includes      Federal Home Loan Bank (FHLB) stock, money      market accounts, federal funds sold and interest-earning bank      deposits. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes      federal funds purchased and repurchase agreements (Repo      Sweeps). |
|-----|-------------------------------------------------------------------------------------|

| (5) | The      2009 period includes an average of $147.4 million of contractual FHLB      borrowings reduced by an average of $142,000 of unamortized deferred      premium on the early extinguishment of debt.  Interest expense      on borrowed money includes $72,000 of amortization of the deferred premium      on the early extinguishment of debt.  The amortization of the      deferred premium increased the average cost of borrowed money by 18 basis      points to 2.33%. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The      2008 period includes an average of $156.6 million of contractual FHLB      borrowings reduced by an average of $1.4 million of unamortized deferred      premium on the early extinguishment of debt.  Interest expense      on borrowed money includes $527,000 of amortization of the deferred      premium on the early extinguishment of debt.  The amortization      of the deferred premium increased the average cost of borrowed money as      reported to 5.25% compared to an average contractual rate of      4.09%. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                                                                                                                                                                                                                                                                                                                                                        |   | Three      Months Ended March 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                        |   | 2009 compared to 2008             |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | Increase (decrease) due to        |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | Rate                              |   |   | Volume |   |   | Rate      /Volume |   |   | Total      Net Increase / (Decrease) |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | (Dollars in thousands)            |   |
| Interest-earning      assets:                                                                                                                                                                                                                                                                                                                                                               |   |                              |   |   |   |   |   |   |   |   |   |   |
| Loans      receivable                                                                                         |   | $                                 | (2,381 | ) |   | $ | (568 | ) |   | $ | 106 |   |   | $ | (2,843 | ) |
| Securities                                                                                                    |   |                              | (102   | ) |   |   | 68 |   |   |   | (2 | ) |   |   | (36 | ) |
| Other interest-earning      assets                                                                            |   |                              | (110   | ) |   |   | (125 | ) |   |   | 31 |   |   |   | (204 | ) |
| Total net change in income on      interest-earning      assets                                                                             |   |                              | (2,593 | ) |   |   | (625 | ) |   |   | 135 |   |   |   | (3,083 | ) |
| Interest-bearing      liabilities:                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                                                                   |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking      accounts                                                                                                       |   |                              | (102   | ) |   |   | 14 |   |   |   | (8 | ) |   |   | (96 | ) |
| Money market      accounts                                                                                                   |   |                              | (881   | ) |   |   | (137 | ) |   |   | 97 |   |   |   | (921 | ) |
| Savings      accounts                                                                                                        |   |                              | (71    | ) |   |   | (12 | ) |   |   | 5 |   |   |   | (78 | ) |
| Certificates of      deposit                                                                                                 |   |                              | (1,383 | ) |   |   | (173 | ) |   |   | 59 |   |   |   | (1,497 | ) |
| Total      deposits                                                                                                                    |   |                              | (2,437 | ) |   |   | (308 | ) |   |   | 153 |   |   |   | (2,592 | ) |
| Borrowed money:                                                                                                                                                                                                                                                                                                                                                                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other short-term      borrowings                                                                                             |   |                              | (81    | ) |   |   | – |   |   |   | – |   |   |   | (81 | ) |
| FHLB      borrowings                                                                                                         |   |                              | (1,080 | ) |   |   | 135 |   |   |   | (75 | ) |   |   | (1,020 | ) |
| Total borrowed      money                                                                                                              |   |                              | (1,161 | ) |   |   | 135 |   |   |   | (75 | ) |   |   | (1,101 | ) |
| Total net change in expense on      interest-bearing      liabilities                                                                       |   |                              | (3,598 | ) |   |   | (173 | ) |   |   | 78 |   |   |   | (3,693 | ) |
| Net      change in net interest      income                                                         |   | $                                 | 1,005  |   |   | $ | (452 | ) |   | $ | 57 |   |   | $ | 610 |   |

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|                                                                                                                                                                                                                                                                                                                                                                          | Three      Months Ended           |   |           | Change      from March 31, 2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|----------------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                          | March      31,                    |   | March      31, |                            |   | to      March 31, 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                          | 2009                              |   | 2008           |                            |   | $ |   |   | % |   |
|                                                                                                                                                                                                                                                                                                                                                                          |  (Dollars in      thousands) |   |
| Interest      expense on short-term borrowingsat contractual      rates                                                  | $                                 | 33     |           | $                               | 114    |   |   | $ | (81 | ) |   |   | (71.1 | )% |
| Interest      expense on FHLB borrowings atcontractual      rates                                                        |                              | 855    |           |                            | 1,420  |   |   |   | (565 | ) |   |   | (39.8 | ) |
| Amortization      of deferred premium                                                                                                                                                                                                                                                                                                                                         |                              | 72     |           |                            | 527    |   |   |   | (455 | ) |   |   | (86.3 | ) |
| Total      interest expense on borrowings                                                                                                                                                                                                                                                                                                                                     | $                                 | 960    |           | $                               | 2,061  |   |   | $ | (1,101 | ) |   |   | (53.4 | ) |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Quarters Ended              |   |   |           |   |   |     |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|----------------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | March 31, 2009              |   |   | March 31, 2008 |   |   | $ Change |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (Dollars      in thousands) |   |
| Service      charges and other      fees                                                                 |   | $                           | 1,299  |   |           | $      | 1,439  |     |   | $ | (140 | ) |   |   | (9.7 | )% |
| Card-based      fees                                                                                     |   |                        | 388    |   |           |   | 380    |     |   |   | 8 |   |   |   | 2.1 |   |
| Commission      income                                                                                   |   |                        | 71     |   |           |   | 58     |     |   |   | 13 |   |   |   | 22.4 |   |
| Subtotal fee based      revenues                                                                                   |   |                        | 1,758  |   |           |   | 1,877  |     |   |   | (119 | ) |   |   | (6.3 | ) |
| Income      from bank-owned life insurance                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 178    |   |           |   | 409    |     |   |   | (231 | ) |   |   | (56.5 | ) |
| Other      income                                                                                        |   |                        | 295    |   |           |   | 172    |     |   |   | 123 |   |   |   | 71.5 |   |
| Subtotal                                                                                                           |   |                        | 2,231  |   |           |   | 2,458  |     |   |   | (227 | ) |   |   | (9.2 | ) |
| Security      gains,      net                                                                            |   |                        | 720    |   |           |   | 69     |     |   |   | 651 |   |   | NM |   |
| Total non-interest      income                                                                                     |   | $                           | 2,951  |   |           | $      | 2,527  |     |   |   | 424 |   |   |   | 16.8 | % |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Quarters Ended              |   |   |           |   |   |     |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|----------------|--------|--------|----------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March 31, 2009              |   |   | March 31, 2008 |   |   | $ Change |   |   |        % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | (Dollars      in thousands) |   |   |
| Compensation      and mandatory benefits                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                           | 4,256  |   |           | $      | 3,719  |     |   | $      | 537 |   |   |   | 14.4 | % |
| Retirement      and stock related compensation                                                                                                                                                                                                                                                                                                                                                                                            |   |                        | 610    |   |           |   | 286    |     |   |   | 324 |   |   |   | 113.3 |   |
| Medical      and life      benefits                                                                       |   |                        | 290    |   |           |   | 300    |     |   |   | (10 | ) |   |   | (3.3 | ) |
| Other      employee      benefits                                                                         |   |                        | 19     |   |           |   | 31     |     |   |   | (12 | ) |   |   | (38.7 | ) |
| Subtotal compensation and employee      benefits                                                                                                                                                                                                                                                                                                                                                                                          |   |                        | 5,175  |   |           |   | 4,336  |     |   |   | 839 |   |   |   | 19.4 |   |
| Net      occupancy      expense                                                                           |   |                        | 897    |   |           |   | 833    |     |   |   | 64 |   |   |   | 7.7 |   |
| Furniture      and equipment      expense                                                                 |   |                        | 535    |   |           |   | 551    |     |   |   | (16 | ) |   |   | (2.9 | ) |
| Data      processing                                                                                      |   |                        | 419    |   |           |   | 458    |     |   |   | (39 | ) |   |   | (8.5 | ) |
| FDIC      insurance      premiums                                                                         |   |                        | 304    |   |           |   | 40     |     |   |   | 264 |   |   |  NM |   |
| Professional      fees                                                                                    |   |                        | 350    |   |           |   | 274    |     |   |   | 76 |   |   |   | 27.7 |   |
| Marketing                                                                                                 |   |                        | 198    |   |           |   | 208    |     |   |   | (10 | ) |   |   | (4.8 | ) |
| Other      general and administrative expense                                                                                                                                                                                                                                                                                                                                                                                             |   |                        | 1,550  |   |           |   | 1,345  |     |   |   | 205 |   |   |   | 15.2 |   |
| Total non-interest      expense                                                                                     |   | $                           | 9,428  |   |           | $      | 8,045  |     |   | $      | 1,383 |   |   |   | 17.2 | % |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ThreeMonthsEnded       |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | March31,               |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2009                   |    |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | (Dollars in thousands) |
|  Efficiency      Ratio:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   |    |   |   |   |   |   |
| Non-interest      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $                      | 9,428   |   |   | $ | 8,045 |   |
| Net interest income plus      non-interest      income                                                                                            | $                      | 12,126  |   |   | $ | 11,092 |   |
| Efficiency      ratio                                                                                                                             |                   | 77.8    | % |   |   | 72.5 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |    |   |   |   |   |   |
| Core      Efficiency Ratio:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   |    |   |   |   |   |   |
| Non-interest      expense                                                                                                                         | $                      | 9,428   |   |   | $ | 8,045 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |    |   |   |   |   |   |
| Net interest income plus      non-interest      income                                                                                            | $                      | 12,126  |   |   | $ | 11,092 |   |
| Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                   |    |   |   |   |   |   |
| Net realized gains on sales of      securities available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                   | (720    | ) |   |   | (69 | ) |
| Net realized gains on sales of      other      assets                                                                                                            |                   | – |   |   |   | – |   |
| Amortization of deferred premium      on the early extinguishment of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 72      |   |   |   | 527 |   |
| Net interest income plus      non-interest income – as adjusted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $                      | 11,478  |   |   | $ | 11,550 |   |
| Core efficiency      ratio                                                                                                                        |                   | 82.1    | % |   |   | 69.7 | % |

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|                                              |   | ParValue                    |    |   | Amortized      Cost |   |    | Gross      Unrealized Gains |   |   | Gross      Unrealized Losses |   |   | FairValue |    |
|---------------------------------------------------|--------|-----------------------------|---------|--------|---------------------|--------|---------|-----------------------------|--------|--------|------------------------------|--------|--------|-----------|---------|
|                                              |   | (Dollars      in thousands) |    |
| At      March 31, 2009:                           |   |                        |    |   |                |   |    |                        |   |   |                         |   |   |      |    |
| Government sponsored entity (GSE)      securities |   | $                           | 76,150  |   |                | $      | 75,888  |                        |   | $      | 2,676                        |   |   | $         | – |   |   | $ | 78,564 |   |
| Mortgage-backed      securities                   |   |                        | 10,568  |   |                |   | 10,460  |                        |   |   | 282                          |   |   |      | – |   |   |   | 10,742 |   |
| Collateralized mortgage      obligations          |   |                        | 73,620  |   |                |   | 71,942  |                        |   |   | 1,101                        |   |   |      | (2,400  | ) |   |   | 70,643 |   |
| Commercial mortgage-backed      securities        |   |                        | 42,744  |   |                |   | 42,145  |                        |   |   | 468                          |   |   |      | (1,545  | ) |   |   | 41,068 |   |
| Pooled trust preferred      securities            |   |                        | 30,782  |   |                |   | 27,522  |                        |   |   | –                      |   |   |      | (6,562  | ) |   |   | 20,960 |   |
| Equity securities                                 |   |                        | 5,837   |   |                |   | – |                        |   |   | 103                          |   |   |      | – |   |   |   | 103 |   |
|                                              |   | $                           | 239,701 |   |                | $      | 227,957 |                        |   | $      | 4,630                        |   |   | $         | (10,507 | ) |   | $ | 222,080 |   |
|                                              |   |                        |    |   |                |   |    |                        |   |   |                         |   |   |      |    |   |   |   |   |   |
| At      December 31, 2008:                        |   |                        |    |   |                |   |    |                        |   |   |                         |   |   |      |    |   |   |   |   |   |
| Government sponsored entity (GSE)      securities |   | $                           | 98,400  |   |                | $      | 97,987  |                        |   | $      | 4,358                        |   |   | $         | – |   |   | $ | 102,345 |   |
| Mortgage-backed      securities                   |   |                        | 10,881  |   |                |   | 10,774  |                        |   |   | 83                           |   |   |      | (1      | ) |   |   | 10,856 |   |
| Collateralized mortgage      obligations          |   |                        | 78,276  |   |                |   | 76,506  |                        |   |   | 919                          |   |   |      | (1,882  | ) |   |   | 75,543 |   |
| Commercial mortgage-backed      securities        |   |                        | 40,511  |   |                |   | 39,669  |                        |   |   | 203                          |   |   |      | (1,479  | ) |   |   | 38,393 |   |
| Pooled trust preferred      securities            |   |                        | 30,966  |   |                |   | 27,668  |                        |   |   | –                      |   |   |      | (3,535  | ) |   |   | 24,133 |   |
| Equity securities                                 |   |                        | 5,837   |   |                |   | – |                        |   |   | –                      |   |   |      | – |   |   |   | – |   |
|                                              |   | $                           | 264,871 |   |                | $      | 252,604 |                        |   | $      | 5,563                        |   |   | $         | (6,897  | ) |   | $ | 251,270 |   |

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table of contents

|                                                                                       |   | March 31, 2009              |    |   | December 31, 2008 |   |   |   |   |
|--------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                                                                                       |   | Amount                      |    |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                                                                                       |   | (Dollars      in thousands) |    |
| Commercial      loans:                                                                     |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |
| Commercial and      industrial                                                             |   | $                           | 69,412  |   |              |   | 9.2    | %      |   | $ | 64,021 |   |   |   | 8.5 | % |   |   | 8.4 | % |
| Commercial real      estate –      owner occupied                                    |   |                        | 88,379  |   |              |   | 11.7   |   |   |   | 85,565 |   |   |   | 11.4 |   |   |   | 3.3 |   |
| Commercial real estate –      non-owner occupied                                     |   |                        | 218,329 |   |              |   | 28.9   |   |   |   | 222,048 |   |   |   | 29.6 |   |   |   | (1.7 | ) |
| Commercial real estate –      multifamily                                            |   |                        | 47,054  |   |              |   | 6.2    |   |   |   | 40,503 |   |   |   | 5.4 |   |   |   | 16.2 |   |
| Commercial construction and      land       development |   |                        | 70,275  |   |              |   | 9.3    |   |   |   | 70,848 |   |   |   | 9.5 |   |   |   | (0.8 | ) |
|     Total      commercial and construction loans                       |   |                        | 493,449 |   |              |   | 65.3   |   |   |   | 482,985 |   |   |   | 64.4 |   |   |   | 2.2 |   |
|                                                                                       |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail      loans:                                                                         |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to-four family      residential                                                        |   |                        | 198,026 |   |              |   | 26.2   |   |   |   | 203,797 |   |   |   | 27.2 |   |   |   | (2.8 | ) |
| Home equity lines of      credit                                                           |   |                        | 59,826  |   |              |   | 7.9    |   |   |   | 58,918 |   |   |   | 7.8 |   |   |   | 1.5 |   |
| Retail construction and land      development                                              |   |                        | 2,690   |   |              |   | 0.3    |   |   |   | 2,650 |   |   |   | 0.4 |   |   |   | 1.5 |   |
| Other                                                                                      |   |                        | 2,143   |   |              |   | 0.3    |   |   |   | 1,623 |   |   |   | 0.2 |   |   |   | 32.0 |   |
| Total retail    loans                                                                      |   |                        | 262,685 |   |              |   | 34.7   |   |   |   | 266,988 |   |   |   | 35.6 |   |   |   | (1.6 | ) |
|                                                                                       |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans receivable, net of unearned fees                                          |   | $                           | 756,134 |   |              |   | 100.0  | %      |   | $ | 749,973 |   |   |   | 100.0 | % |   |   | 0.8 | % |

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table of contents

|                                       |   | March 31, 2009              |   |   | December 31, 2008 |   |   |   |   |
|--------------------------------------------|--------|-----------------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                                       |   | Amount                      |   |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                                       |   | (Dollars      in thousands) |   |
| Illinois                                   |   | $                           | 24,659 |   |              |   | 41.4   | %      |   | $ | 25,012 |   |   |   | 41.3 | % |   |   | (1.4 | )% |
| Indiana                                    |   |                        | 13,458 |   |              |   | 22.6   |   |   |   | 13,474 |   |   |   | 22.3 |   |   |   | (0.1 | ) |
| Ohio                                       |   |                        | 9,624  |   |              |   | 16.1   |   |   |   | 9,734 |   |   |   | 16.1 |   |   |   | (1.1 | ) |
| Florida                                    |   |                        | 6,388  |   |              |   | 10.7   |   |   |   | 6,590 |   |   |   | 10.9 |   |   |   | (3.1 | ) |
| Colorado                                   |   |                        | 2,880  |   |              |   | 4.8    |   |   |   | 3,103 |   |   |   | 5.1 |   |   |   | (7.2 | ) |
| Texas                                      |   |                        | 1,464  |   |              |   | 2.5    |   |   |   | 1,473 |   |   |   | 2.4 |   |   |   | (0.6 | ) |
| New      York                              |   |                        | 1,119  |   |              |   | 1.9    |   |   |   | 1,150 |   |   |   | 1.9 |   |   |   | (2.6 | ) |
| Total participations and      syndications |   | $                           | 59,592 |   |              |   | 100.0  | %      |   | $ | 60,536 |   |   |   | 100.0 | % |   |   | (1.6 | )% |

Allowance for Losses onLoans.  The Company maintains the allowance for losses on loansat a level that management believes is sufficient to absorb credit lossesinherent in the loan portfolio.  The allowance for losses on loansrepresents management’s estimate of inherent losses existing in the loanportfolio that are both probable and reasonable to estimate at each balancesheet date and is based on its review of available and relevantinformation.  While management believes that at March 31, 2009 theallowance for losses on loans was adequate, it is possible that furtherdeterioration in the economy, devaluations of collateral held or requirementsfrom regulatory agencies may require future provisions to theallowance.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Three      Months EndedMarch 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2009                             |   |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | (Dollars in thousands)           |   |
| Balance      at beginning of      period                                                                                             |   | $                                | 15,558 |   |   | $ | 8,026 |   |
| Loan      charge-offs                                                                                                                                    |   |                             | (723   | ) |   |   | (458 | ) |
| Recoveries of loans previously      charged-off                                                                                                          |   |                             | 13     |   |   |   | 37 |   |
| Net loan (charge-offs)      recoveries                                                                                                                                       |   |                             | (710   | ) |   |   | (421 | ) |
| Provision for losses on      loans                                                                                                                       |   |                             | 624    |   |   |   | 742 |   |
| Balance      at end of      period                                                                                                   |   | $                                | 15,472 |   |   | $ | 8,347 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | March      31, 2009 |    |   | December      31,2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (Dollars in thousands)   |
| Allowance      for losses on      loans                                                                                                                    |   | $                        | 15,472  |   |                  | $      | 15,558 |   |
| Total      loans receivable, net of unearned      fees                                                                                                     |   |                     | 756,134 |   |                  |   | 749,973 |   |
| Allowance      for losses on loans to total      loans                                                                                                     |   |                     | 2.05    | %      |                  |   | 2.07 | % |
| Allowance      for losses on loans to non-performing      loans                                                                                            |   |                     | 27.96   |   |                  |   | 28.44 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | March      31,2009     |   |   | December      31, 2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars in thousands) |   |
| Impaired      loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |   |   |                   |   |
| With a valuation      reserve                                                                                                                       |   | $                      | 18,690 |   |                   | $      | 20,219 |   |
| With no valuation reserve      required                                                                                                             |   |                   | 29,684 |   |                   |   | 27,259 |   |
| Total      impaired      loans                                                                                                       |   |                   | 48,374 |   |                   |   | 47,478 |   |
| Other      non-accrual      loans                                                                                                    |   |                   | 6,956  |   |                   |   | 7,223 |   |
| Total      non-accrual      loans                                                                                                    |   | $                      | 55,330 |   |                   | $      | 54,701 |   |
| Valuation      reserve relating to impaired      loans                                                                               |   | $                      | 6,006  |   |                   | $      | 5,930 |   |
| Average      outstanding impaired      loans                                                                                         |   |                   | 47,787 |   |                   |   | 32,676 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | March      31,2009     |   |   | December      31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (Dollars in thousands) |   |
| Non-accrual      loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |   |
| Commercial    loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                   |   |   |                  |   |
| Commercial and      industrial                                                                                                                                           |   | $                      | 2,520  |   |                  | $      | 2,551 |   |
| Commercial real estate – owner      occupied                                                                                                                       |   |                   | 4,082  |   |                  |   | 4,141 |   |
| Commercial real estate –      non-owner      occupied                                                                                                              |   |                   | 22,634 |   |                  |   | 22,337 |   |
| Commercial real estate –      multifamily                                                                                                                          |   |                   | 333    |   |                  |   | 342 |   |
| Commercial construction and      land      development                                                                                                                   |   |                   | 20,548 |   |                  |   | 20,428 |   |
| Total commercial      loans                                                                                                                                              |   |                   | 50,117 |   |                  |   | 49,799 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                   |   |   |                  |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   |   |   |                  |   |   |   |
| One-to-four family      residential                                                                                                                                      |   |                   | 3,189  |   |                  |   | 3,048 |   |
| Home equity lines of      credit                                                                                                                                         |   |                   | 1,738  |   |                  |   | 1,570 |   |
| Retail construction and land      development                                                                                                                            |   |                   | 279    |   |                  |   | 279 |   |
| Other                                                                                                                                                                    |   |                   | 7      |   |                  |   | 5 |   |
| Total retail      loans                                                                                                                                                  |   |                   | 5,213  |   |                  |   | 4,902 |   |
| Total non-accruing      loans                                                                                                                                            |   |                   | 55,330 |   |                  |   | 54,701 |   |
| Other      real estate owned,      net                                                                                                          |   |                   | 3,299  |   |                  |   | 3,242 |   |
| Total non-performing      assets                                                                                                                               |   |                   | 58,629 |   |                  |   | 57,943 |   |
| 90      days past due and still accruing      interest                                                                                          |   |                   | 52     |   |                  |   | 605 |   |
| Total non-performing assets      plus 90 days past due loans stillaccruing      interest                                                                                 |   | $                      | 58,681 |   |                  | $      | 58,548 |   |
| Non-performing      assets to total      assets                                                                                                 |   |                   | 5.27   | %      |                  |   | 5.16 | % |
| Non-performing      loans to total      loans                                                                                                   |   |                   | 7.32   | %      |                  |   | 7.29 | % |

|                                                                                                                                                                                                                                                                                                                                                                                                                     |   | March      31,  2009 |   |   | December      31, 2008 |   |   | % Change |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|------------------------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (Dollars in thousands)    |   |
| Illinois                                                                                                |   | $                         | 12,059 |   |                   | $      | 12,261 |     |   |   | (1.6 | )% |
| Indiana                                                                                                 |   |                      | 5,352  |   |                   |   | 5,423  |     |   |   | (1.3 | ) |
| Florida                                                                                                 |   |                      | 3,278  |   |                   |   | 3,643  |     |   |   | (10.0 | ) |
| Total non-performing      syndications and purchasedparticipations                                                          |   | $                         | 20,689 |   |                   | $      | 21,327 |     |   |   | (3.0 | ) |
| Percentage to total      non-performing loans                                                                                                                                                                                                                                                                                                                                                                            |   |                      | 37.4   | %      |                   |   | 39.0   | %        |   |   |   |   |
| Percentage to total syndications      and purchasedparticipations                                                           |   |                      | 34.7   |   |                   |   | 35.2   |     |   |   |   |   |

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table of contents

|                          |   | March 31, 2009         |    |   | December 31, 2008 |   |   |   |   |
|-------------------------------|--------|------------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                          |   | Amount                 |    |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                          |   | (Dollars in thousands) |    |
| Checking      accounts:       |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing     |   | $                      | 63,020  |   |              |   | 7.3    | %      |   | $ | 64,809 |   |   |   | 7.9 | % |   |   | (2.8 | )% |
| Interest-bearing              |   |                   | 139,463 |   |              |   | 16.1   |   |   |   | 105,758 |   |   |   | 12.8 |   |   |   | 31.9 |   |
| Money      market accounts    |   |                   | 172,602 |   |              |   | 20.0   |   |   |   | 163,205 |   |   |   | 19.8 |   |   |   | 5.8 |   |
| Savings      accounts         |   |                   | 118,249 |   |              |   | 13.7   |   |   |   | 114,633 |   |   |   | 13.9 |   |   |   | 3.2 |   |
| Core deposits                 |   |                   | 493,334 |   |              |   | 57.1   |   |   |   | 448,405 |   |   |   | 54.4 |   |   |   | 10.0 |   |
| Certificates      of deposit: |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less than    $100,000         |   |                   | 251,038 |   |              |   | 29.1   |   |   |   | 253,989 |   |   |   | 30.8 |   |   |   | (1.2 | ) |
| $100,000 or    greater        |   |                   | 119,512 |   |              |   | 13.8   |   |   |   | 121,703 |   |   |   | 14.8 |   |   |   | (1.8 | ) |
| Time deposits                 |   |                   | 370,550 |   |              |   | 42.9   |   |   |   | 375,692 |   |   |   | 45.6 |   |   |   | (1.4 | ) |
| Total deposits                |   | $                      | 863,884 |   |              |   | 100.0  | %      |   | $ | 824,097 |   |   |   | 100.0 | % |   |   | 4.8 |   |

|                          |   | March 31, 2009         |   |   | December 31, 2008 |   |   |   |   |
|-------------------------------|--------|------------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                          |   | Amount                 |   |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                          |   | (Dollars in thousands) |   |
| Checking      accounts:       |   |                   |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing     |   | $                      | 273    |   |              |   | 0.3    | %      |   | $ | 1,325 |   |   |   | 2.2 | % |   |   | (79.4 | )% |
| Interest-bearing              |   |                   | 40,747 |   |              |   | 44.6   |   |   |   | 9,688 |   |   |   | 16.5 |   |   |   | 320.6 |   |
| Money      market accounts    |   |                   | 36,813 |   |              |   | 40.3   |   |   |   | 28,208 |   |   |   | 48.1 |   |   |   | 30.5 |   |
| Core deposits                 |   |                   | 77,833 |   |              |   | 85.2   |   |   |   | 39,221 |   |   |   | 66.8 |   |   |   | 98.4 |   |
| Certificates      of deposit  |   |                   | 13,567 |   |              |   | 14.8   |   |   |   | 19,465 |   |   |   | 33.2 |   |   |   | (30.3 | ) |
| Total municipal      deposits |   | $                      | 91,400 |   |              |   | 100.0  | %      |   | $ | 58,686 |   |   |   | 100.0 | % |   |   | 55.7 | % |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | March 31, 2009                        |    |   | December 31, 2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Weighted-AverageContractual      Rate |    |   |  Amount      |   |   | Weighted-      AverageContractual      Rate |   |   |  Amount |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars in thousands)                |    |
| Short-term      variable-rate borrowings:                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                  |    |   |              |   |   |   |   |   |   |   |
| Repo Sweep      accounts                                                                                                    |   |                                  | 0.80    | %      |              | $      | 10,117 |   |   |   | 0.82 | % |   | $ | 17,512 |   |
| Overnight federal funds      purchased                                                                                      |   |                                  | – |   |              |   | – |   |   |   | 0.45 |   |   |   | 10,800 |   |
| Secured      borrowings from FHLB – Indianapolis:                                                                                                                                                                                                                                                                                                                                                                                      |   |                                  |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Maturing in 2009 –      variable-rate                                                                            |   |                                  | – |   |              |   | – |   |   |   | 0.65 |   |   |   | 30,000 |   |
| Maturing in 2009 –      fixed-rate                                                                               |   |                                  | 2.08    |   |              |   | 74,000 |   |   |   | 2.14 |   |   |   | 74,000 |   |
| Maturing      in 2010 –      fixed-rate                                                                          |   |                                  | 3.22    |   |              |   | 15,000 |   |   |   | 3.22 |   |   |   | 15,000 |   |
| Maturing in 2011 –      fixed-rate                                                                               |   |                                  | 3.75    |   |              |   | 15,000 |   |   |   | 3.75 |   |   |   | 15,000 |   |
| Maturing in 2014 – fixed-rate      (1)                                                                           |   |                                  | 6.71    |   |              |   | 1,146 |   |   |   | 6.71 |   |   |   | 1,146 |   |
| Maturing in 2018 – fixed-rate      (1)                                                                           |   |                                  | 5.54    |   |              |   | 2,647 |   |   |   | 5.54 |   |   |   | 2,647 |   |
| Maturing in 2019 – fixed-rate      (1)                                                                           |   |                                  | 6.31    |   |              |   | 6,962 |   |   |   | 6.30 |   |   |   | 7,007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                  |    |   |              |   | 114,755 |   |   |   |   |   |   |   | 144,800 |   |
| Less:  deferred premium      on early extinguishmentof      debt                                                            |   |                                  |    |   |              |   | (102 | ) |   |   |   |   |   |   | (175 | ) |
| Net FHLB – Indianapolis      borrowings                                                                                                                                                                                                                                                                                                                                                                                                |   |                                  |    |   |              |   | 114,653 |   |   |   |   |   |   |   | 144,625 |   |
| Total      borrowed      money                                                                               |   |                                  |    |   |              | $      | 124,770 |   |   |   |   |   |   | $ | 172,937 |   |
| Weighted-average      contractual interest rate                                                                                                                                                                                                                                                                                                                                                                                              |   |                                  | 2.66    | %      |              |   |   |   |   |   | 2.13 | % |   |   |   |   |

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

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table of contents

|                                                |   | Actual                 |    |   | For      Capital Adequacy Purposes |   |   | To      Be Well-Capitalized Under      Prompt Corrective      ActionProvisions |   |
|-----------------------------------------------------|--------|------------------------|---------|--------|------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
|                                                |   | Amount                 |    |   | Ratio                              |   |   | Amount                                                                         |   | Ratio |   |   | Amount |   | Ratio |   |
|                                                |   | (Dollars in thousands) |    |
| As      of March 31, 2009:                          |   |                   |    |   |                               |   |   |                                                                           |   |   |   |   |   |   |   |   |   |
| Total capital to risk-weighted      assets          |   | $                      | 113,479 |   |                               |   | 13.34  | %                                                                              |   | $ | 68,039 |   | >8.00 | % |   | $ | 85,049 |   | >10.00 | %  |
| Tier 1 (core) capital to      risk-weighted assets  |   |                   | 102,788 |   |                               |   | 12.09  |                                                                           |   |   | 34,020 |   | >4.00 |   |   |   | 51,029 |   | >6.00 |   |
| Tier 1 (core) capital to      adjusted total assets |   |                   | 102,788 |   |                               |   | 9.25   |                                                                           |   |   | 44,462 |   | >4.00 |   |   |   | 55,578 |   | >5.00 |   |
| Tangible capital to adjusted      total assets      |   |                   | 102,788 |   |                               |   | 9.25   |                                                                           |   |   | 16,673 |   | >1.50 |   |   |   | 22,231 |   | >2.00 |   |
|                                                |   |                   |    |   |                               |   |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As      of December 31, 2008:                       |   |                   |    |   |                               |   |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital to risk-weighted      assets          |   | $                      | 111,941 |   |                               |   | 13.21  | %                                                                              |   | $ | 67,777 |   | >8.00 | %  |   | $ | 84,722 |   | >10.00 | %  |
| Tier 1 (core) capital to      risk-weighted assets  |   |                   | 101,289 |   |                               |   | 11.96  |                                                                           |   |   | 33,889 |   | >4.00 |   |   |   | 50,833 |   | >6.00 |   |
| Tier 1 (core) capital to      adjusted total assets |   |                   | 101,289 |   |                               |   | 9.07   |                                                                           |   |   | 44,683 |   | >4.00 |   |   |   | 55,854 |   | >5.00 |   |
| Tangible capital to adjusted      total assets      |   |                   | 101,289 |   |                               |   | 9.07   |                                                                           |   |   | 16,756 |   | >1.50 |   |   |   | 22,341 |   | >2.00 |   |

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table of contents

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

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

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

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

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

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

|   | • | borrowings      from the FHLB and Federal ReserveBank. |
|--------|---------|--------------------------------------------------------|

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table of contents

|                                                                                                                                                                                                                                                                                                                          |   | Payments Due By Period |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                                                                                                                                                                          |   | One      YearOr Less   |    |   | Over      OneThroughThree Years |   |   | Over      Three ThroughFive Years |   |   | Over      FiveYears |   |   | Total |   |
|                                                                                                                                                                                                                                                                                                                          |   | (Dollars in thousands) |    |
| FHLB      borrowings      (1)                                                      |   | $                      | 89,293  |   |   | $ | 15,651 |   |   | $ | 745 |   |   | $ | 9,066 |   |   | $ | 114,755 |   |
| Short-term      borrowings      (2)                                                |   |                   | 10,117  |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 10,117 |   |
| Operating      leases                                                              |   |                   | 577     |   |   |   | 706 |   |   |   | 387 |   |   |   | 2,212 |   |   |   | 3,882 |   |
| Dividends      payable on common stock                                                                                                                                                                                                                                                                                        |   |                   | 109     |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 109 |   |
|                                                                                                                                                                                                                                                                                                                          |   | $                      | 100,096 |   |   | $ | 16,357 |   |   | $ | 1,132 |   |   | $ | 11,278 |   |   | $ | 128,863 |   |

| (1) | Does      not include interest expense at the weighted-average contractual rate of      2.83% for the periodspresented. |
|-----|-------------------------------------------------------------------------------------------------------------------------|

| (2) | Does      not include interest expense at the weighted-average contractual rate of      0.80% for the periods presented. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | One      Year or      Less  |    |   | Over      OnethroughThree      Years |   |    | OverThreethroughFive      Years |   |   | OverFiveYears |   |   | Total  |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|---------|--------|--------------------------------------|--------|---------|---------------------------------|--------|--------|---------------|--------|--------|--------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | (Dollars      in thousands) |    |
| Commitments      to extend credit:                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                        |    |   |                                 |   |    |                            |   |   |          |   |   |   |    |   |   |   |   |   |
|                  Commercial                                                                          | $                           | 5,530   |   |                                 | $      | 5       |                            |   | $      | 68            |   |   | $      | 150     |   |   | $ | 5,753 |   |
|        Commercial      real estate – non-owner occupied                                                                                                                                                                                                                                                                                                                                                                                                 |                        | 6,084   |   |                                 |   | 9       |                            |   |   | ―       |   |   |   | 8       |   |   |   | 6,101 |   |
|        Commercial      real estate – owner occupied                                                                                                                                                                                                                                                                                                                                                                                                     |                        | 2,911   |   |                                 |   | ― |                            |   |   | ―       |   |   |   | ― |   |   |   | 2,911 |   |
|        Commercial      real estate – multifamily                                                                                                                                                                                                                                                                                                                                                                                                        |                        | 1,046   |   |                                 |   | ― |                            |   |   | ―       |   |   |   | ― |   |   |   | 1,046 |   |
|        Commercial      construction and land development                                                                                                                                                                                                                                                                                                                                                                                                      |                        | 1,791   |   |                                 |   | ― |                            |   |   | 199           |   |   |   | ― |   |   |   | 1,990 |   |
|                  Retail                                                                              |                        | 1,863   |   |                                 |   | ― |                            |   |   | ―       |   |   |   | ― |   |   |   | 1,863 |   |
| Commitments      to fund unused construction loans                                                                                                                                                                                                                                                                                                                                                                                                                                               |                        | 15,400  |   |                                 |   | 1,006   |                            |   |   | ―       |   |   |   | 123     |   |   |   | 16,529 |   |
| Commitments      to fund unused lines of credit                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                        | 38,681  |   |                                 |   | 6,694   |                            |   |   | ―       |   |   |   | 45,464  |   |   |   | 90,839 |   |
| Letters      of      credit                                                                                              |                        | 8,236   |   |                                 |   | 101     |                            |   |   | 199           |   |   |   | 3,439   |   |   |   | 11,975 |   |
| Credit      enhancements                                                                                                 |                        | 21,628  |   |                                 |   | 203     |                            |   |   | ―       |   |   |   | 5,048   |   |   |   | 26,879 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $                           | 103,170 |   |                                 | $      | 8,018   |                            |   | $      | 466           |   |   | $      | 54,232  |   |   | $ | 165,886 |   |

Item3.                  Quantitative and Qualitative Disclosures about MarketRisk

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table of contents

|                                                 |   |   | Net Portfolio Value    |   |
|------------------------------------------------------|--------|--------|------------------------|--------|
|                                                 |   |   | At December 31, 2008   |   |   | At December 31, 2007 |   |
|                                                 |   |   | $ Amount               |   |   | $ Change |   |   | % Change |   |   | $ Amount |   |   | $ Change |   |   | % Change |   |
|                                                 |   |   | (Dollars in thousands) |   |
| Assumed      Change in Interest Rates (Basis Points) |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 | +300   |   |                   | $      | 164,766 |   |   | $ | 9,082 |   |   |   | 5.8 | % |   | $ | 148,908 |   |   | $ | (18,532 | ) |   |   | (11.1 | )% |
|                                                 | +200   |   |                   |   | 163,073 |   |   |   | 7,389 |   |   |   | 4.7 |   |   |   | 158,403 |   |   |   | (9,037 | ) |   |   | (5.4 | ) |
|                                                 | +100   |   |                   |   | 160,467 |   |   |   | 4,783 |   |   |   | 3.1 |   |   |   | 166,898 |   |   |   | (542 | ) |   |   | (0.3 | ) |
|                                                 | 0      |   |                   |   | 155,684 |   |   |   | – |   |   |   | – |   |   |   | 167,440 |   |   |   | – |   |   |   | – |   |
|                                                 | -100   |   |                   |   | 142,862 |   |   |   | (12,822 | ) |   |   | (8.2 | ) |   |   | 178,059 |   |   |   | 10,619 |   |   |   | 6.3 |   |
|                                                 | -200   |   |                   |   | 124,618 |   |   |   | (31,006 | ) |   |   | (20.0 | ) |   |   | 180,955 |   |   |   | 13,515 |   |   |   | 8.1 |   |

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table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Percentage      of Deposits MaturingIn First Year |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March 31, 2009                                    |   |   | December 31, 2008 |   |
| Deposit      Category:                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                              |   |   |   |   |
| Business checking      accounts                                                                       |   |                                              | 20     | % |   |   | 20 | % |
| Interest checking      accounts                                                                       |   |                                              | 20     |   |   |   | 20 |   |
| High-yield checking      accounts                                                                     |   |                                              | 95     |   |   |   | 95 |   |
| Savings      accounts                                                                                 |   |                                              | 30     |   |   |   | 30 |   |
| Money market      accounts                                                                            |   |                                              | 50     |   |   |   | 50 |   |

|                                                            |   |   | Percentage      Change inNet      Interest IncomeOver      a Twelve MonthTime Period |   |
|-----------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|
|                                                            |   |   | March 31, 2009                                                                       |   |   | December 31, 2008 |   |
| Assumed      Change in Interest Rates (Basis      Points): |   |   |                                                                                 |   |   |   |   |
|                                                            | +300   |   |                                                                                 |   | (5.6 | )% |   |   | (3.3 | )% |
|                                                            | +200   |   |                                                                                 |   | (3.4 | ) |   |   | (1.8 | ) |
|                                                            | +100   |   |                                                                                 |   | (1.8 | ) |   |   | (0.7 | ) |
|                                                            | -100   |   |                                                                                 |   | 5.3 |   |   |   | 1.2 |   |
|                                                            | -200   |   |                                                                                 |   | 8.8 |   |   |   | 1.6 |   |

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table of contents

Item4.                      Controlsand Procedures

Item1.                       LegalProceedings

Item1A.                    RiskFactors

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table of contents

Item2.               UnregisteredSales of Equity Securities and Use of Proceeds

|   | (c) | The      Company did not repurchase any shares of its common stock during the      quarter ended March 31, 2009 or during April 2009.  Under its      repurchase plan publicly announced on March 20, 2008 for 530,000 shares,      the Company has 448,612 shares that may yet be purchased.  The      Company is currently prohibited from repurchasing its common stock without      prior approval pursuant to an informal regulatory agreement with the      OTS. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item3.                DefaultsUpon Senior Securities

Item4.               Submission of Matters to a Vote of Security Holders

Item5.                OtherInformation

| Name                                                                                                                                                                                                                                                            |   | Maximum      Number of Performance-based      Shares |   |   | Number      of Service-based Shares |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|-------------------------------------|--------|
| Daryl      D.      Pomranke                                       |   |                                                 | 9,486  |   |                                |   | 4,800 |   |
| Charles      V.      Cole                                         |   |                                                 | 6,828  |   |                                |   | 2,000 |   |
| Dale      S.      Clapp                                           |   |                                                 | 6,186  |   |                                |   | 2,000 |   |
| Daniel      J.      Zimmer                                        |   |                                                 | 4,638  |   |                                |   | 2,000 |   |

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table of contents

|   Name                                                                                                                                                                               |   | TargetedIncentive as a Percentage of Base      Salary |   |   Performance Objective |                                                                                                                                                | Weighted      Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|--------|
| Thomas      F. Prisby                                                                                                                                                                          |   |                                                  | 45.0   | %                                 | Reduction      in Non-performing assets “Core”      diluted earnings per shareCore      Deposit GrowthCommercial      Loan Originations |                     |   | 50.025.015.010.0 | % |
| Daryl D.      Pomranke                             |   |                                                  | 30.0   |                              | Reduction      in Non-performing assets “Core”      diluted earnings per shareCore      Deposit GrowthCommercial      Loan Originations |                     |   | 50.025.015.010.0 |   |
| Charles V.      Cole                               |   |                                                  | 27.5   |                              | “Core”      diluted earnings per shareIndividual      Performance Objectives                                                            |                     |   | 75.025.0 |   |
| Dale S.      Clapp                                 |   |                                                  | 27.5   |                              | “Core”      diluted earnings per shareBusiness      Unit Performance Objectives                                                         |                     |   | 50.050.0 |   |
| Daniel J.      Zimmer                              |   |                                                  | 25.0   |                              | “Core”      diluted earnings per shareReduction      in Non-performing assetsIndividual      Performance Objectives                     |                     |   | 60.022.517.5 |   |

| Name                                                                                                                                                                                                                                                                                                |   | Threshold |   |   | Target |   |    | Maximum |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|--------|--------|---------|---------|--------|
| Thomas      F.      Prisby                                              |   | $         | 65,981 |   |   | $      | 175,950 |    |   | $ | 219,938 |   |
| Daryl      D.      Pomranke                                             |   |      | 27,444 |   |   |   | 73,184  |    |   |   | 91,479 |   |
| Charles      V.      Cole                                               |   |      | 9,877  |   |   |   | 52,679  |    |   |   | 72,433 |   |
| Dale      S.      Clapp                                                 |   |      | 11,454 |   |   |   | 47,727  |    |   |   | 59,659 |   |
| Daniel      J.      Zimmer                                              |   |      | 6,619  |   |   |   | 35,779  |    |   |   | 49,196 |   |

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table of contents

| Name                                                                                                                                                                                                                                                                                                         |   | Award  |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
| Thomas      F. Prisby      (1)                                              |   | $      | 154,400 |   |
| Daryl      D.      Pomranke                                                 |   |   | 74,000  |   |
| Charles      V.      Cole                                                   |   |   | 41,000  |   |
| Dale      S.      Clapp                                                     |   |   | 27,000  |   |
| Daniel      J.      Zimmer                                                  |   |   | 24,881  |   |

| (1)   | Award      includes $23,400 approved by the Compensation Committee in lieu of a      service-based restricted stock grant for Mr. Prisby in January      2009. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item6.                 Exhibits

|   | (a)    |   | List      of exhibits (filed herewith unless otherwise noted).                                                              |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|
|   | 3.1    |   | Articles      of Incorporation of CFS Bancorp, Inc. (1)                                                                     |
|   | 3.2    |   | Bylaws      of CFS Bancorp, Inc. (2)                                                                                        |
|   | 4.0    |   | Form      of Stock Certificate of CFS Bancorp, Inc. (3)                                                                     |
|   | 10.1*  |   | Employment      Agreement entered into between Citizens Financial Bank and Thomas F.      Prisby (4)                        |
|   | 10.2*  |   | Employment      Agreement entered into between CFS Bancorp, Inc. and Thomas F. Prisby      (4)                              |
|   | 10.3*  |   | CFS      Bancorp, Inc. Amended and Restated 1998 Stock Option Plan    (5)                                                   |
|   | 10.4*  |   | CFS      Bancorp, Inc. Amended and Restated 1998 Recognition and Retention Plan and      Trust Agreement (5)                |
|   | 10.5*  |   | CFS      Bancorp, Inc. 2003 Stock Option Plan (6)                                                                           |
|   | 10.6*  |   | Employment      Agreement entered into between Citizens Financial Bank and Charles V. Cole      (4)                         |
|   | 10.7*  |   | Employment      Agreement entered into between CFS Bancorp, Inc. and Charles V. Cole      (4)                               |
|   | 10.8*  |   | Amended      and Restated Supplemental ESOP Benefit Plan of CFS Bancorp, Inc. and      Citizens Financial Services, FSB (7) |
|   | 10.9*  |   | CFS      Bancorp, Inc. Directors’ Deferred Compensation Plan (8)                                                      |
|   | 10.10* |   | CFS      Bancorp, Inc. 2008 Omnibus Equity Incentive Plan (9)                                                               |
|   | 10.11* |   | Employment      Agreement entered into between Citizens Financial Bank and Daryl D.      Pomranke (4)                       |
|   | 10.12* |   | Employment      Agreement entered into between CFS Bancorp, Inc. and Daryl D. Pomranke      (4)                             |
|   | 10.13* |   | CFS      Bancorp, Inc. 2009 Cash Incentive Program                                                                     |
|   | 10.14* |   | CFS      Bancorp, Inc. 2009 Service Retention Program Agreement                                                             |
|   | 31.1   |   | Rule      13a-14(a) Certification of Chief Executive  Officer                                                               |

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table of contents

|   | 31.2 |   | Rule      13a-14(a) Certification of Chief Financial Officer |
|--------|------|--------|--------------------------------------------------------------|
|   | 32.0 |   | Section      1350 Certifications                             |

| (1) | Incorporated      by Reference from the Company’s Definitive Proxy Statement from the Annual      Meeting of Shareholders filed with the SEC on March 25,    2005. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated      by Reference from the Company’s Form 8-K filed on October 25,      2007. |
|-----|--------------------------------------------------------------------------------------------------|

| (3) | Incorporated      by Reference from the Company’s Annual Report on Form 10-K for the year      ended December 31, 2006. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated      by Reference from the Company’s Quarterly Report on Form 10-Q for the      quarter ended March 31, 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated      by Reference from the Company’s Definitive Proxy Statement for the Annual      Meeting of Shareholders filed with the SEC on March 23,    2001. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated      by Reference from the Company’s Definitive Proxy Statement for the Annual      Meeting of Shareholders filed with the SEC on March 31,    2003. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated      by Reference from the Company’s Annual Report on Form 10-K for the year      ended December 31, 2004. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated      by Reference from the Company’s Form 8-K filed on November 16,      2007. |
|-----|---------------------------------------------------------------------------------------------------|

| (9) | Incorporated      by Reference from the Company’s Definitive Proxy Statement from the Annual      Meeting of Shareholders filed with the SEC on March 17,    2008. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Indicates      management contract or compensatory plan or arrangement required to be      filed as an exhibit to this report. |
|---|--------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

| Date:  May      4, 2009 | By:    | /s/ Thomas F. Prisby                               |
|-----------------------------------|--------|----------------------------------------------------|
|                              |   | Thomas      F. Prisby, Chairman of the Board and   |
|                              |   | Chief      Executive Officer                       |
|                              |   |                                               |
| Date:  May      4, 2009 | By:    | /s/ Charles V. Cole                                |
|                              |   | Charles      V. Cole, Executive Vice President and |
|                              |   | Chief      Financial Officer                       |

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