----

----

| 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.) |   |

----

----

----

CFS BANCORP, INC.

|                                                                                     |                                                                                            | Page   |
|------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|--------|
|                                                                                     | PART      I - FINANCIAL INFORMATION                                                             |   |
|                                                                                     |                                                                                            |   |
| Item 1.                                                                                  | Financial      Statements (Unaudited)                                                           |   |
|                                                                                     | Condensed      Consolidated Statements of Condition                                             | 3      |
|                                                                                     | Condensed      Consolidated Statements of Income                                                | 4      |
|                                                                                     | Condensed      Consolidated Statements of Changes in Stockholders’ 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 | 13     |
|                                                                                     |                                                                                            |   |
| Item 3.                                                                                  | Quantitative      and Qualitative Disclosures about Market Risk                                 | 32     |
|                                                                                     |                                                                                            |   |
| Item 4.                                                                                  | Controls      and Procedures                                                                    | 34     |
|                                                                                     |                                                                                            |   |
|                                                                                     |                                                                                            |   |
|                                                                                     | PART      II - OTHER INFORMATION                                                                |   |
|                                                                                     |                                                                                            |   |
| Item 1.                                                                                  | Legal      Proceedings                                                                          | 34     |
|                                                                                     |                                                                                            |   |
| Item 1A.                                                                                 | Risk      Factors                                                                               | 34     |
|                                                                                     |                                                                                            |   |
| Item 2.                                                                                  | Unregistered      Sales of Equity Securities and Use of Proceeds                                | 35     |
|                                                                                     |                                                                                            |   |
| Item 3.                                                                                  | Defaults      Upon Senior Securities                                                            | 35     |
|                                                                                     |                                                                                            |   |
| Item 4.                                                                                  | Submission      of Matters to a Vote of Security Holders                                        | 35     |
|                                                                                     |                                                                                            |   |
| Item 5.                                                                                  | Other      Information                                                                          | 35     |
|                                                                                     |                                                                                            |   |
| Item 6.                                                                                  | Exhibits                                                                                        | 39     |
|                                                                                     |                                                                                            |   |
| Signature Page                                                                           | 41                                                                                              |
|                                                                                     |                                                                                            |   |
| Certifications      for Principal Executive Officer and Principal Financial      Officer | 42                                                                                              |

Exhibit31.1

Exhibit 31.2

Exhibit 32.0

----

table of contents

CFS BANCORP, INC.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | March 31, 2008              |      |   | December 31, 2007 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Unaudited)                 |      |   |              |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (Dollars      in thousands) |      |
| Cash      and amounts due from depository      institutions                                                                                        |   | $                           | 17,314    |   |              | $      | 25,825 |   |
| Interest-bearing      deposits                                                                                                                     |   |                        | 55,078    |   |              |   | 9,744 |   |
| Federal      funds      sold                                                                                                                       |   |                        | 14,922    |   |              |   | 3,340 |   |
| Cash and cash      equivalents                                                                                                                                    |   |                        | 87,314    |   |              |   | 38,909 |   |
| Securities      available-for-sale, at fair      value                                                                                             |   |                        | 247,380   |   |              |   | 224,594 |   |
| Securities      held-to-maturity, at      cost                                                                                                     |   |                        | 3,940     |   |              |   | 3,940 |   |
| Investment      in Federal Home Loan Bank stock, at cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | 23,944    |   |              |   | 23,944 |   |
| Loans      receivable                                                                                                                              |   |                        | 765,476   |   |              |   | 793,136 |   |
| Allowance for losses on      loans                                                                                                                                |   |                        | (8,347    | )      |              |   | (8,026 | ) |
| Net      loans                                                                                                                                                              |   |                        | 757,129   |   |              |   | 785,110 |   |
| Interest      receivable                                                                                                                           |   |                        | 5,035     |   |              |   | 5,505 |   |
| Other      real estate      owned                                                                                                                  |   |                        | 1,038     |   |              |   | 1,162 |   |
| Office      properties and      equipment                                                                                                          |   |                        | 19,760    |   |              |   | 19,326 |   |
| Investment      in bank-owned life      insurance                                                                                                  |   |                        | 36,884    |   |              |   | 36,475 |   |
| Other      assets                                                                                                                                  |   |                        | 10,434    |   |              |   | 10,079 |   |
| Goodwill      and intangible      assets                                                                                                           |   |                        | 1,218     |   |              |   | 1,234 |   |
| Total      assets                                                                                                                                                           |   | $                           | 1,194,076 |   |              | $      | 1,150,278 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                        |      |   |              |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        |      |   |              |   |   |   |
| Deposits                                                                                                                                           |   | $                           | 879,543   |   |              | $      | 863,272 |   |
| Borrowed      money                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        | 163,295   |   |              |   | 136,459 |   |
| Advance      payments by borrowers for taxes and insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        | 4,335     |   |              |   | 3,341 |   |
| Other      liabilities                                                                                                                             |   |                        | 15,112    |   |              |   | 17,792 |   |
| Total      liabilities                                                                                                                                                      |   |                        | 1,062,285 |   |              |   | 1,019,864 |   |
| Commitments      and      contingencies                                                                                                            |   |                        | –   |   |              |   | – |   |
| Stockholders’      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;      10,679,611 and 10,705,510 sharesoutstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        | 234       |   |              |   | 234 |   |
| Additional      paid-in      capital                                                                                                               |   |                        | 191,242   |   |              |   | 191,162 |   |
| Retained      earnings                                                                                                                             |   |                        | 97,547    |   |              |   | 97,029 |   |
| Treasury      stock, at cost; 12,609,251 and 12,583,856 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | (155,357  | )      |              |   | (154,895 | ) |
| Treasury      stock held in Rabbi Trust, at cost; 134,444 and 133,940    shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        | (1,773    | )      |              |   | (1,766 | ) |
| Unallocated      common stock held by Employee Stock Ownership Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        | (3,048    | )      |              |   | (3,126 | ) |
| Accumulated      other comprehensive income, net of tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 2,946     |   |              |   | 1,776 |   |
| Total stockholders’      equity                                                                                                                                       |   |                        | 131,791   |   |              |   | 130,414 |   |
| Total liabilities and      stockholders’      equity                                                                                                                  |   | $                           | 1,194,076 |   |              | $      | 1,150,278 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Three      Months EndedMarch 31,                             |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2008                                                         |       |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (Unaudited)                                                  |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (Dollars      in thousands, except share and per share data) |       |
| Interest      income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                         |       |   |   |   |
| Loans                                                                                                                                                   |   | $                                                            | 12,788     |   |   | $ | 14,052 |   |
| Securities                                                                                                                                              |   |                                                         | 3,079      |   |   |   | 3,523 |   |
| Other                                                                                                                                                   |   |                                                         | 447        |   |   |   | 1,076 |   |
| Total interest      income                                                                                                                                        |   |                                                         | 16,314     |   |   |   | 18,651 |   |
| Interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                         |       |   |   |   |   |   |
| Deposits                                                                                                                                                |   |                                                         | 5,688      |   |   |   | 6,694 |   |
| Borrowed      money                                                                                                                                     |   |                                                         | 2,061      |   |   |   | 3,433 |   |
| Total interest      expense                                                                                                                                       |   |                                                         | 7,749      |   |   |   | 10,127 |   |
| Net      interest      income                                                                                                            |   |                                                         | 8,565      |   |   |   | 8,524 |   |
| Provision      for losses on      loans                                                                                                  |   |                                                         | 742        |   |   |   | 187 |   |
| Net      interest income after provision for losses on loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                         | 7,823      |   |   |   | 8,337 |   |
| Non-interest      income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                         |       |   |   |   |   |   |
| Service charges and other      fees                                                                                                                     |   |                                                         | 1,439      |   |   |   | 1,569 |   |
| Card-based      fees                                                                                                                                    |   |                                                         | 380        |   |   |   | 341 |   |
| Commission      income                                                                                                                                  |   |                                                         | 58         |   |   |   | 31 |   |
| Security gains,net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                         | 69         |   |   |   | 11 |   |
| Other asset gains,      net                                                                                                                             |   |                                                         | –    |   |   |   | 11 |   |
| Income from bank-owned life      insurance                                                                                                              |   |                                                         | 409        |   |   |   | 405 |   |
| Other      income                                                                                                                                       |   |                                                         | 172        |   |   |   | 241 |   |
| Total non-interest      income                                                                                                                                    |   |                                                         | 2,527      |   |   |   | 2,609 |   |
| Non-interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                         |       |   |   |   |   |   |
| Compensation and employee      benefits                                                                                                                 |   |                                                         | 4,336      |   |   |   | 5,255 |   |
| Net occupancy      expense                                                                                                                              |   |                                                         | 833        |   |   |   | 753 |   |
| Furniture and equipment      expense                                                                                                                    |   |                                                         | 551        |   |   |   | 534 |   |
| Data      processing                                                                                                                                    |   |                                                         | 458        |   |   |   | 563 |   |
| Professional      fees                                                                                                                                  |   |                                                         | 274        |   |   |   | 570 |   |
| Marketing                                                                                                                                               |   |                                                         | 208        |   |   |   | 211 |   |
| Amortization of core deposit      intangibles                                                                                                           |   |                                                         | 16         |   |   |   | 16 |   |
| Other general and      administrative      expenses                                                                                                     |   |                                                         | 1,369      |   |   |   | 1,365 |   |
| Total non-interest      expense                                                                                                                                   |   |                                                         | 8,045      |   |   |   | 9,267 |   |
| Income      before income      taxes                                                                                                     |   |                                                         | 2,305      |   |   |   | 1,679 |   |
| Income      tax      expense                                                                                                             |   |                                                         | 526        |   |   |   | 366 |   |
| Net      income                                                                                                                                                   |   | $                                                            | 1,779      |   |   | $ | 1,313 |   |
| Per      share data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                         |       |   |   |   |   |   |
| Basic earnings per      share                                                                                                                           |   | $                                                            | 0.17       |   |   | $ | 0.12 |   |
| Diluted earnings per      share                                                                                                                         |   |                                                         | 0.17       |   |   |   | 0.12 |   |
| Cash dividends declared per      share                                                                                                                  |   |                                                         | 0.12       |   |   |   | 0.12 |   |
| Weighted-average      shares      outstanding                                                                                            |   |                                                         | 10,387,292 |   |   |   | 10,726,506 |   |
| Weighted-average      diluted shares      outstanding                                                                                    |   |                                                         | 10,658,026 |   |   |   | 11,036,978 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Common      Stock |    |   | Additional      Paid-In Capital |   |    | Retained      Earnings |   |   | Treasury      Stock |   |   | Unallocated      CommonStock      HeldBy ESOP |     |   | Accumulated      Other Compre-hensive Income (Loss) |   |    | Total  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|---------------------------------|--------|---------|------------------------|--------|--------|---------------------|--------|--------|-----------------------------------------------|----------|--------|-----------------------------------------------------|--------|---------|--------|--------|
|                                                                                                                                                                                   (Unaudited)                       |   |
|                                                                                                                                                                                 (Dollars in thousands, except per share data) |   |
| Balance      at January 1,      2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                 | 234     |   |                            | $      | 190,825 |                   |   | $      | 94,344              |   |   | $                                             | (149,735 | )      |                                                | $      | (3,564  | )      |   | $ | (298 | ) |   | $ | 131,806 |   |
| Net      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |              | – |   |                            |   | – |                   |   |   | 1,313               |   |   |                                          | –  |   |                                                |   | – |   |   |   | – |   |   |   | 1,313 |   |
| Comprehensive      income:Change      in unrealized appreciation on available-for-sale securities, net of      reclassification and tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              |    |   |                            |   |    |                   |   |   |                |   |   |                                          |     |   |                                                |   |    |   |   |   |     604 |   |   |   |     604 |   |
| Total      comprehensive      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              |    |   |                            |   |    |                   |   |   |                |   |   |                                          |     |   |                                                |   |    |        |        |   |   |   |   |   | 1,917 |   |
| Purchase      of treasury      stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |              | – |   |                            |   | – |                   |   |   | –             |   |   |                                          | (3,898   | )      |                                                |   | – |   |   |   | – |   |   |   | (3,898 | ) |
| Net      purchases of Rabbi Trust shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |              | – |   |                            |   | – |                   |   |   | –             |   |   |                                          | (7       | )      |                                                |   | – |   |   |   | – |   |   |   | (7 | ) |
| Shares      earned under      ESOP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |              | – |   |                            |   | 111     |                   |   |   | –             |   |   |                                          | –  |   |                                                |   | 204     |   |   |   | – |   |   |   | 315 |   |
| Cumulative      effect of change in accounting principle upon the adoption of FIN      48                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |              | – |   |                            |   | – |                   |   |   | 240                 |   |   |                                          | –  |   |                                                |   | – |   |   |   | – |   |   |   | 240 |   |
| Exercise      of stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              | – |   |                            |   | (176    | )                      |   |   | –             |   |   |                                          | 1,334    |   |                                                |   | – |   |   |   | – |   |   |   | 1,158 |   |
| Tax      benefit related to stock options exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | – |   |                            |   | 171     |                   |   |   | –             |   |   |                                          | –  |   |                                                |   | – |   |   |   | – |   |   |   | 171 |   |
| Dividends      declared on common stock ($0.12per      share)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              | – |   |                            |   | – |                   |   |   | (1,289              | )      |   |                                          | –  |   |                                                |   | – |   |   |   | – |   |   |   | (1,289 | ) |
| Balance      at March 31,      2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                 | 234     |   |                            | $      | 190,931 |                   |   | $      | 94,608              |   |   | $                                             | (152,306 | )      |                                                | $      | (3,360  | )      |   | $ | 306 |   |   | $ | 130,413 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |              |    |   |                            |   |    |                   |   |   |                |   |   |                                          |     |   |                                                |   |    |   |   |   |   |   |   |   |   |   |
| 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 options exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | – |   |                            |   | 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 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Three      Months EndedMarch 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008                             |    |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Unaudited)                      |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars      in thousands)      |    |
| OPERATING      ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             |    |   |   |   |
| Netincome                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                | 1,779   |   |   | $ | 1,313 |   |
| Adjustments to reconcile net      income to net cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                             |    |   |   |   |   |   |
| Provision for losses on      loans                                                                                                                                              |   |                             | 742     |   |   |   | 187 |   |
| Depreciation and      amortization                                                                                                                                              |   |                             | 426     |   |   |   | 420 |   |
| Premium amortization on the      early extinguishment of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                             | 527     |   |   |   | 1,352 |   |
| Net premium amortization on      securities available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                             | (280    | ) |   |   | (152 | ) |
| Deferred income tax (benefit)      expense                                                                                                                                      |   |                             | (134    | ) |   |   | 515 |   |
| Tax benefit from exercises of      non-qualified stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                             | (31     | ) |   |   | (171 | ) |
| Amortization of cost of stock      benefit      plans                                                                                                                           |   |                             | 111     |   |   |   | 315 |   |
| Proceeds from sale of loans      held-for-sale                                                                                                                                  |   |                             | 45      |   |   |   | 2,371 |   |
| Origination of loans      held-for-sale                                                                                                                                         |   |                             | – |   |   |   | (2,416 | ) |
| Net realized gains on sale of      securities available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                             | (69     | ) |   |   | (11 | ) |
| Net realized gains on sale of      other      assets                                                                                                                            |   |                             | – |   |   |   | (11 | ) |
| Net increase in cash surrender      value of bank-owned life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                             | (409    | ) |   |   | (405 | ) |
| Increase in other      assets                                                                                                                                                   |   |                             | (487    | ) |   |   | (1,311 | ) |
| (Decrease) increase in other      liabilities                                                                                                                                   |   |                             | (2,454  | ) |   |   | 1,025 |   |
| Net cash (used for) provided      by operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             | (234    | ) |   |   | 3,021 |   |
| INVESTING      ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             |    |   |   |   |   |   |
| Securities,      available-for-sale:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                             |    |   |   |   |   |   |
| Proceeds from      sales                                                                                                                                         |   |                             | 1,992   |   |   |   | 2,366 |   |
| Proceeds from maturities and      paydowns                                                                                                                       |   |                             | 26,033  |   |   |   | 29,370 |   |
| Purchases                                                                                                                                                        |   |                             | (48,616 | ) |   |   | (32,927 | ) |
| Net loan fundings and principal      payments      received                                                                                            |   |                             | 27,260  |   |   |   | (2,286 | ) |
| Proceeds from sales of loans      and loan      participations                                                                                         |   |                             | – |   |   |   | 21 |   |
| Proceeds from sale of real      estate      owned                                                                                                      |   |                             | – |   |   |   | 171 |   |
| Purchases of property and      equipment                                                                                                               |   |                             | (844    | ) |   |   | (1,383 | ) |
| Net cash provided by (used for)      investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             | 5,825   |   |   |   | (4,668 | ) |
| FINANCING      ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             |    |   |   |   |   |   |
| Proceeds from exercise of stock      options                                                                                                           |   |                             | 609     |   |   |   | 1,158 |   |
| Tax benefit from exercises of      nonqualified stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                             | 31      |   |   |   | 171 |   |
| Dividends paid on common      stock                                                                                                                    |   |                             | (1,301  | ) |   |   | (1,356 | ) |
| Purchase of treasury      stock                                                                                                                        |   |                             | (1,055  | ) |   |   | (3,898 | ) |
| Net purchase of Rabbi Trust      shares                                                                                                                |   |                             | (7      | ) |   |   | (7 | ) |
| Net increase (decrease) in      deposit      accounts                                                                                                  |   |                             | 16,234  |   |   |   | (12,720 | ) |
| Net increase in advance      payments by borrowers for taxes and insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                             | 994     |   |   |   | 955 |   |
| Increase (decrease) in short      term      borrowings                                                                                                 |   |                             | 12,350  |   |   |   | (5,569 | ) |
| Proceeds from Federal Home Loan      Bank      debt                                                                                                    |   |                             | 60,000  |   |   |   | – |   |
| Repayments of Federal Home Loan      Bank      debt                                                                                                    |   |                             | (45,041 | ) |   |   | (39 | ) |
| Net cash flows provided by (used      for) financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                             | 42,814  |   |   |   | (21,305 | ) |
| Increase (decrease) in cash and      cash      equivalents                                                                                             |   |                             | 48,405  |   |   |   | (22,952 | ) |
| Cash and cash equivalents at      beginning of      period                                                                                             |   |                             | 38,909  |   |   |   | 67,167 |   |
| Cash and cash equivalents at      end of      period                                                                                                   |   | $                                | 87,314  |   |   | $ | 44,215 |   |
| Supplemental      disclosures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                             |    |   |   |   |   |   |
| Loans transferred to real      estate      owned                                                                                                       |   | $                                | 5       |   |   | $ | 503 |   |
| Cash paid for interest on      deposits                                                                                                                |   |                             | 5,435   |   |   |   | 6,782 |   |
| Cash paid for interest on      borrowings                                                                                                              |   |                             | 1,508   |   |   |   | 2,085 |   |
| Cash paid for      taxes                                                                                                                               |   |                             | 100     |   |   |   | – |   |

----

table of contents

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

|   | 2.          Fair Value Measurements – Adoption of SFAS 157 and SFAS  159 |
|--------|----------------------------------------------------------------------------------------------------|

----

table of contents

|                               |   | Fair Value Measurements    Using |    |
|------------------------------------|--------|----------------------------------|---------|
|                               |   | 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)      |    |
| Recurring:                         |   |                             |    |   |   |   |   |   |   |   |   |   |
| Securities      available-for-sale |   | $                                | 247,380 |   |   | $ | – |   |   | $ | 247,380 |   |   | $ | – |   |

----

table of contents

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Three      Months EndedMarch 31,                   |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2008                                               |       |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (Dollars      in thousands, except per share data) |       |
| Net      income                                                                                                |   | $                                                  | 1,779      |   |   | $ | 1,313 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                               |       |   |   |   |   |   |
| Weighted      average common shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                               | 10,387,292 |   |   |   | 10,726,506 |   |
| Common      share equivalents      (1)                                                                         |   |                                               | 270,734    |   |   |   | 310,472 |   |
| Weighted      average common shares and common shareequivalents    outstanding                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                               | 10,658,026 |   |   |   | 11,036,978 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                               |       |   |   |   |   |   |
| Basic      earnings per      share                                                                             |   | $                                                  | 0.17       |   |   | $ | 0.12 |   |
| Diluted      earnings per      share                                                                           |   |                                               | 0.17       |   |   |   | 0.12 |   |

| (1) | Assumes      exercise of dilutive stock options, a portion of the unearned awards under      the Recognition and Retirement Plan (RRP) and treasury      shares held in Rabbi Trustaccounts. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

table of contents

|  Date       |   | Cumulative      Percent Vested |   |
|------------------|--------|--------------------------------|--------|
| May      1, 2010 |   |                           | 33     | % |
| May      1, 2011 |   |                           | 66     |   |
| May      1, 2012 |   |                           | 100    |   |

----

table of contents

|                                        |   | Number      ofShares |    |   | Weighted-AverageExercise Price |   |
|---------------------------------------------|--------|----------------------|---------|--------|--------------------------------|--------|
| Options      outstanding at January 1, 2008 |   |                 | 1,253   |   |                           | $      | 12.23 |   |
| Granted                                     |   |                 | – |   |                           |   | – |   |
| Exercised                                   |   |                 | (48     | )      |                           |   | 12.64 |   |
| Forfeited                                   |   |                 | (22     | )      |                           |   | 14.38 |   |
| Options      outstanding at March 31, 2008  |   |                 | 1,183   |   |                           |   | 12.17 |   |
| Options      exercisable at March 31, 2008  |   |                 | 1,183   |   |                           |   |   |   |

----

table of contents

|                               |   |  Number      ofShares |    |   | Weighted-AverageGrant-Date      Fair Value |   |
|------------------------------------|--------|----------------------------|---------|--------|--------------------------------------------|--------|
| Unvested      at December 31, 2007 |   |                       | 2,610   |   |                                       | $      | 13.87 |   |
| Granted                            |   |                       | – |   |                                       |   | – |   |
| Vested                             |   |                       | – |   |                                       |   | – |   |
| Forfeited                          |   |                       | – |   |                                       |   | – |   |
| Unvested      as of March 31, 2008 |   |                       | 2,610   |   |                                       | $      | 13.87 |   |

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

|                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Three      Months EndedMarch 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008                             |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars      in thousands)      |   |
| Unrealized      holding gains arising during the period:                                                                                                                                                                                                                                                                                                                                                                       |   |                             |   |   |   |   |
| Unrealized net      gains                                                                                               |   | $                                | 1,912  |   |   | $ | 979 |   |
| Related tax      expense                                                                                                |   |                             | (699   | ) |   |   | (368 | ) |
| Net                                                                                                                     |   |                             | 1,213  |   |   |   | 611 |   |
| Less:  reclassification      adjustment for net gains realized during the period:                                                                                                                                                                                                                                                                                                                                    |   |                             |   |   |   |   |   |   |
| Realized net      gains                                                                                                 |   |                             | 69     |   |   |   | 11 |   |
| Related tax      expense                                                                                                |   |                             | (26    | ) |   |   | (4 | ) |
| Net                                                                                                                     |   |                             | 43     |   |   |   | 7 |   |
| Total      other comprehensive      income                                                               |   | $                                | 1,170  |   |   | $ | 604 |   |

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

----

table of contents

Item 2.

----

table of contents

----

table of contents

----

table of contents

|                                                                                                                                                                                                                                                                                                                                  |   | Three Months Ended March31, |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                  |   | 2008                        |      |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                  |   | Average      Balance        |      |   | Interest |   |   | AverageYield/Cost |   |   | Average      Balance |   |   | Interest |   |   | AverageYield/Cost |   |
|                                                                                                                                                                                                                                                                                                                                  |   | (Dollars      in thousands) |      |
| Interest-earning      assets:                                                                                                                                                                                                                                                                                                         |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable      (1)                                                                       |   | $                           | 786,877   |   |   | $ | 12,788 |   |   |   | 6.54 | % |   | $ | 793,852 |   |   | $ | 14,052 |   |   |   | 7.18 | % |
| Securities      (2)                                                                             |   |                        | 238,942   |   |   |   | 3,079 |   |   |   | 5.10 |   |   |   | 302,405 |   |   |   | 3,523 |   |   |   | 4.66 |   |
| Other interest-earning assets      (3)                                                                                                                                                                                                                                                                                                |   |                        | 46,454    |   |   |   | 447 |   |   |   | 3.87 |   |   |   | 83,119 |   |   |   | 1,076 |   |   |   | 5.25 |   |
| Total interest-earning      assets                                                                                                                                                                                                                                                                                                    |   |                        | 1,072,273 |   |   |   | 16,314 |   |   |   | 6.12 |   |   |   | 1,179,376 |   |   |   | 18,651 |   |   |   | 6.41 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      earning      assets                                                 |   |                        | 89,627    |   |   |   |   |   |   |   |   |   |   |   | 76,944 |   |   |   |   |   |   |   |   |   |
| Total      assets                                                                     |   | $                           | 1,161,900 |   |   |   |   |   |   |   |   |   |   | $ | 1,256,320 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                  |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                                                                                                                                                                                                                                    |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                             |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking      accounts                                                                                         |   | $                           | 103,685   |   |   |   | 188 |   |   |   | 0.73 |   |   | $ | 101,009 |   |   |   | 249 |   |   |   | 1.00 |   |
| Money market      accounts                                                                                     |   |                        | 181,692   |   |   |   | 1,253 |   |   |   | 2.77 |   |   |   | 191,296 |   |   |   | 1,670 |   |   |   | 3.54 |   |
| Savings      accounts                                                                                          |   |                        | 125,020   |   |   |   | 180 |   |   |   | 0.58 |   |   |   | 149,715 |   |   |   | 233 |   |   |   | 0.63 |   |
| Certificates of      deposit                                                                                   |   |                        | 386,038   |   |   |   | 4,067 |   |   |   | 4.24 |   |   |   | 403,518 |   |   |   | 4,542 |   |   |   | 4.56 |   |
| Total      deposits                                                                                                           |   |                        | 796,435   |   |   |   | 5,688 |   |   |   | 2.87 |   |   |   | 845,538 |   |   |   | 6,694 |   |   |   | 3.21 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowedmoney:                                                                                                                                                                                                                                                                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other short-term borrowings      (4)                                                                                                                                                                                                                                                                                                  |   |                        | 17,478    |   |   |   | 114 |   |   |   | 2.62 |   |   |   | 24,895 |   |   |   | 258 |   |   |   | 4.20 |   |
| FHLB debt      (5)(6)                                                                                          |   |                        | 137,689   |   |   |   | 1,947 |   |   |   | 5.59 |   |   |   | 179,722 |   |   |   | 3,175 |   |   |   | 7.07 |   |
| Total borrowed      money                                                                                                     |   |                        | 155,167   |   |   |   | 2,061 |   |   |   | 5.25 |   |   |   | 204,617 |   |   |   | 3,433 |   |   |   | 6.71 |   |
| Total interest-bearing      liabilities                                                                                                                                                                                                                                                                                               |   |                        | 951,602   |   |   |   | 7,749 |   |   |   | 3.28 |   |   |   | 1,050,155 |   |   |   | 10,127 |   |   |   | 3.91 |   |
| Non-interest      bearing deposits                                                                                                                                                                                                                                                                                                    |   |                        | 62,025    |   |   |   |   |   |   |   |   |   |   |   | 59,483 |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing liabilities                                                                                                                                                                                                                                                                                                 |   |                        | 16,027    |   |   |   |   |   |   |   |   |   |   |   | 15,609 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                                                |   |                        | 1,029,654 |   |   |   |   |   |   |   |   |   |   |   | 1,125,247 |   |   |   |   |   |   |   |   |   |
| Stockholders'      equity                                                             |   |                        | 132,246   |   |   |   |   |   |   |   |   |   |   |   | 131,073 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                                                                                                                                                                                                                                                                  |   | $                           | 1,161,900 |   |   |   |   |   |   |   |   |   |   | $ | 1,256,320 |   |   |   |   |   |   |   |   |   |
| Net      interest-earning      assets                                                 |   | $                           | 120,671   |   |   |   |   |   |   |   |   |   |   | $ | 129,221 |   |   |   |   |   |   |   |   |   |
| Net      interest income/interest rate spread                                                                                                                                                                                                                                                                                         |   |                        |      |   |   | $ | 8,565 |   |   |   | 2.84 | % |   |   |   |   |   | $ | 8,524 |   |   |   | 2.50 | % |
| Net      interest      margin                                                         |   |                        |      |   |   |   |   |   |   |   | 3.21 | % |   |   |   |   |   |   |   |   |   |   | 2.93 | % |
| Ratio      of average interest-earning assetsto average interest-bearing      liabilities                                                                                                                                                                                                                                             |   |                        |      |   |   |   |   |   |   |   | 112.68 | % |   |   |   |   |   |   |   |   |   |   | 112.30 | % |

----

table of contents

| (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 stock, money market accounts, federal funds sold      and interest-earning bank deposits. |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

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

| (5) | 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%. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The      2007 period includes an average of $185.3 million of contractual FHLB      borrowings reduced by an average of $5.6 million of unamortized deferred      premium on the early extinguishment of debt.  Interest expense      on borrowed money includes $1.4 million 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 6.71% compared to an average contractual rate of      3.96%. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                                                                                                                                                                                                                                                                                                                                                        |   | Three      Months Ended March 31, 2008 Compared |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                        |   | to Three Months Ended March 31,      2007       |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | Increase (Decrease) Due to                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | Rate                                            |   |   | Volume |   |   | Rate/Volume |   |   | Total      Net Increase / (Decrease) |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   | (Dollars      in thousands)                     |   |
| Interest-earning      assets:                                                                                                                                                                                                                                                                                                                                                               |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Loans      receivable                                                                                         |   | $                                               | (1,151 | ) |   | $ | (123 | ) |   | $ | 10 |   |   | $ | (1,264 | ) |
| Securities                                                                                                    |   |                                            | 373    |   |   |   | (739 | ) |   |   | (78 | ) |   |   | (444 | ) |
| Other interest-earning      assets                                                                            |   |                                            | (276   | ) |   |   | (475 | ) |   |   | 122 |   |   |   | (629 | ) |
| Total net change in income on      interest-earning      assets                                                                             |   |                                            | (1,054 | ) |   |   | (1,337 | ) |   |   | 54 |   |   |   | (2,337 | ) |
| Interest-bearing      liabilities:                                                                                                                                                                                                                                                                                                                                                          |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                                                                   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking      accounts                                                                                                       |   |                                            | (66    | ) |   |   | 7 |   |   |   | (2 | ) |   |   | (61 | ) |
| Money market      accounts                                                                                                   |   |                                            | (351   | ) |   |   | (84 | ) |   |   | 18 |   |   |   | (417 | ) |
| Savings      accounts                                                                                                        |   |                                            | (18    | ) |   |   | (38 | ) |   |   | 3 |   |   |   | (53 | ) |
| Certificates of      deposit                                                                                                 |   |                                            | (291   | ) |   |   | (197 | ) |   |   | 13 |   |   |   | (475 | ) |
| Total      deposits                                                                                                                    |   |                                            | (726   | ) |   |   | (312 | ) |   |   | 32 |   |   |   | (1,006 | ) |
| Borrowed money:                                                                                                                                                                                                                                                                                                                                                                             |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other short-term      borrowings                                                                                             |   |                                            | (95    | ) |   |   | (77 | ) |   |   | 28 |   |   |   | (144 | ) |
| FHLB      debt                                                                                                               |   |                                            | (633   | ) |   |   | (743 | ) |   |   | 148 |   |   |   | (1,228 | ) |
| Total borrowed      money                                                                                                              |   |                                            | (728   | ) |   |   | (820 | ) |   |   | 176 |   |   |   | (1,372 | ) |
| Total net change in expense on      interest-bearing      liabilities                                                                       |   |                                            | (1,454 | ) |   |   | (1,132 | ) |   |   | 208 |   |   |   | (2,378 | ) |
| Net      change in net interest      income                                                         |   | $                                               | 400    |   |   | $ | (205 | ) |   | $ | (154 | ) |   | $ | 41 |   |

----

table of contents

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                          |           |                        |   |           | Change      from    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|-----------------------------|--------|----------------|---------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                          |           | Three Months Ended          |   |           | March      31, 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                          | March      31, |                        |   | March      31, |                |   | to March 31, 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                          |           | 2008                        |   |           | 2007                |   |   |  $ |   |   |   | % |   |
|                                                                                                                                                                                                                                                                                                                                                                          |           | (Dollars      in thousands) |   |
| Interest      expense on short-term borrowingsat contractual      rates                                                  |           | $                           | 114    |           |                | $      | 258 |   |   | $ | (144 | ) |   |   | (55.8 | )% |
| Interest      expense on FHLB borrowings atcontractual      rates                                                        |           |                        | 1,420  |           |                |   | 1,823 |   |   |   | (403 | ) |   |   | (22.1 | ) |
| Amortization      of deferred premium                                                                                                                                                                                                                                                                                                                                         |           |                        | 527    |           |                |   | 1,352 |   |   |   | (825 | ) |   |   | (61.0 | ) |
| Total      interest expense on borrowings                                                                                                                                                                                                                                                                                                                                     |           | $                           | 2,061  |           |                | $      | 3,433 |   |   | $ | (1,372 | ) |   |   | (40.0 | ) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Quarters Ended              |    |   |           |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|----------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | March 31, 2008              |    |   | March 31, 2007 |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (Dollars      in thousands) |    |
| Service      charges and other      fees                                                                 |   | $                           | 1,439   |   |           | $      | 1,569 |   |   |   | (8.3 | )% |
| Card-based      fees                                                                                     |   |                        | 380     |   |           |   | 341 |   |   |   | 11.4 |   |
| Commission      income                                                                                   |   |                        | 58      |   |           |   | 31 |   |   |   | 87.1 |   |
| Subtotal fee based      revenues                                                                                   |   |                        | 1,877   |   |           |   | 1,941 |   |   |   | (3.3 | ) |
| Income      from bank-owned life insurance                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 409     |   |           |   | 405 |   |   |   | 1.0 |   |
| Other      income                                                                                        |   |                        | 172     |   |           |   | 241 |   |   |   | (28.6 | ) |
| Subtotal                                                                                                           |   |                        | 2,458   |   |           |   | 2,587 |   |   |   | (5.0 | ) |
| Security      gains (losses),      net                                                                   |   |                        | 69      |   |           |   | 11 |   |   | NM |   |
| Other      asset gains,      net                                                                         |   |                        | – |   |           |   | 11 |   |   | NM |   |
| Total non-interest      income                                                                                     |   | $                           | 2,527   |   |           | $      | 2,609 |   |   |   | (3.1 | )% |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Quarters Ended              |   |   |           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|----------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   | March 31, 2008              |   |   | March 31, 2007 |   |   | % Change |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (Dollars      in thousands) |   |
| Compensation      and mandatory benefits                                                                                                                                                                                                                                                                                                                                                                                            |   | $                           | 3,719  |   |           | $      | 4,662 |   |   |   | (20.2 | )% |
| Retirement      and stock related compensation                                                                                                                                                                                                                                                                                                                                                                                      |   |                        | 286    |   |           |   | 337 |   |   |   | (15.1 | ) |
| Medical      and life      benefits                                                                 |   |                        | 300    |   |           |   | 225 |   |   |   | 33.3 |   |
| Other      employee      benefits                                                                   |   |                        | 31     |   |           |   | 31 |   |   |   | – |   |
| Subtotal compensation and employee      benefits                                                                                                                                                                                                                                                                                                                                                                                    |   |                        | 4,336  |   |           |   | 5,255 |   |   |   | (17.5 | ) |
| Net      occupancy      expense                                                                     |   |                        | 833    |   |           |   | 753 |   |   |   | 10.6 |   |
| Furniture      and equipment      expense                                                                                         |   |                        | 551    |   |           |   | 534 |   |   |   | 3.2 |   |
| Data      processing                                                                                |   |                        | 458    |   |           |   | 563 |   |   |   | (18.7 | ) |
| Professional      fees                                                                              |   |                        | 274    |   |           |   | 570 |   |   |   | (51.9 | ) |
| Marketing                                                                                           |   |                        | 208    |   |           |   | 211 |   |   |   | (1.2 | ) |
| Other      general and administrative expense                                                                                                                                                                                                                                                                                                                                                                                       |   |                        | 1,385  |   |           |   | 1,381 |   |   |   | 0.2 |   |
| Total non-interest      expense                                                                               |   | $                           | 8,045  |   |           | $      | 9,267 |   |   |   | (13.2 | )% |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three      Months EndedMarch 31, |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |        2008                 | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars      in thousands)      |
| Efficiency      Ratio:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                             |   |   |   |
| Non-interest      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                | 8,045 |   |   | $ | 9,267 |   |
| Net interest income plus      non-interest      income                                                                                                                                           |   | $                                | 11,092 |   |   | $ | 11,133 |   |
| Efficiency      ratio                                                                                                 |   |                             | 72.5 | % |   |   | 83.2 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                             |   |   |   |   |   |   |
| Core      Efficiency Ratio:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                             |   |   |   |   |   |   |
| Non-interest      expense                                                                                             |   | $                                | 8,045 |   |   | $ | 9,267 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                             |   |   |   |   |   |   |
| Net interest income plus      non-interest      income                                                                                                                                                                                                                 |   | $                                | 11,092 |   |   | $ | 11,133 |   |
| Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                             |   |   |   |   |   |   |
| Net realized gains on sales of      securities available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                             | (69 | ) |   |   | (11 | ) |
| Net realized gains on sales of      other      assets                                                                                                                                                                                                             |   |                             | – |   |   |   | (11 | ) |
| Amortization of deferred premium      on the early extinguishment of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                             | 527 |   |   |   | 1,352 |   |
| Net interest income plus      non-interest income – as adjusted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                | 11,550 |   |   | $ | 12,463 |   |
| Core efficiency      ratio                                                                                            |   |                             | 69.7 | % |   |   | 74.4 | % |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Amortized      Cost         |    |   | Gross Unrealized      Gains |   |    | Gross      Unrealized      Losses |   |   | FairValue |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|----------------------------------|--------|---------|-----------------------------------|--------|--------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars      in thousands) |    |
| At      March 31, 2008:                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |    |   |                             |   |    |                              |   |   |      |   |
| Government sponsored entity (GSE)      securities                                                                                                                                                                                                                                                                                                                                                                            |   | $                           | 119,629 |   |                             | $      | 4,797   |                              |   | $      | –   |   |   | $ | 124,426 |   |
| Mortgage-backed      securities                                                                        |   |                        | 16,741  |   |                             |   | 84      |                              |   |   | (52       | )      |   |   | 16,773 |   |
| Collateralized mortgage      obligations                                                               |   |                        | 75,015  |   |                             |   | 993     |                              |   |   | (277      | )      |   |   | 75,731 |   |
| Trust      preferred      securities                                                                   |   |                        | 28,018  |   |                             |   | 289     |                              |   |   | (827      | )      |   |   | 27,480 |   |
| Equity      securities                                                                                 |   |                        | 3,344   |   |                             |   | 60      |                              |   |   | (434      | )      |   |   | 2,970 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                           | 242,747 |   |                             | $      | 6,223   |                              |   | $      | (1,590    | )      |   | $ | 247,380 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        |    |   |                             |   |    |                              |   |   |      |   |   |   |   |   |
| At      December 31, 2007:                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        |    |   |                             |   |    |                              |   |   |      |   |   |   |   |   |
| Government sponsored entity (GSE)      securities                                                                                                                                                                                                                                                                                                                                                                            |   | $                           | 140,301 |   |                             | $      | 2,859   |                              |   | $      | (14       | )      |   | $ | 143,146 |   |
| Mortgage-backed      securities                                                                        |   |                        | 12,587  |   |                             |   | 15      |                              |   |   | (39       | )      |   |   | 12,563 |   |
| Collateralized mortgage      obligations                                                               |   |                        | 56,672  |   |                             |   | 525     |                              |   |   | (17       | )      |   |   | 57,180 |   |
| Trust      preferred      securities                                                                   |   |                        | 8,900   |   |                             |   | – |                              |   |   | –   |   |   |   | 8,900 |   |
| Equity      securities                                                                                 |   |                        | 3,344   |   |                             |   | 5       |                              |   |   | (544      | )      |   |   | 2,805 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                           | 221,804 |   |                             | $      | 3,404   |                              |   | $      | (614      | )      |   | $ | 224,594 |   |

----

table of contents

|                                             |   | March 31, 2008              |    |   | December 31, 2007 |   |   |   |   |
|--------------------------------------------------|--------|-----------------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                                             |   | Amount                      |    |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                                             |   | (Dollars      in thousands) |    |
| Commercial      and construction loans:          |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |
| Commercial real      estate                      |   | $                           | 326,850 |   |              |   | 42.7   | %      |   | $ | 328,427 |   |   |   | 41.4 | % |   |   | (0.5 | )% |
| Construction and land      development           |   |                        | 117,686 |   |              |   | 15.4   |   |   |   | 128,584 |   |   |   | 16.2 |   |   |   | (8.5 | ) |
| Commercial and      industrial                   |   |                        | 50,947  |   |              |   | 6.6    |   |   |   | 60,398 |   |   |   | 7.6 |   |   |   | (15.6 | ) |
| Total commercial and construction      loans     |   |                        | 495,483 |   |              |   | 64.7   |   |   |   | 517,409 |   |   |   | 65.2 |   |   |   | (4.2 | ) |
|                                             |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail      loans:                               |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to-four family      residential              |   |                        | 207,603 |   |              |   | 27.1   |   |   |   | 212,598 |   |   |   | 26.8 |   |   |   | (2.3 | ) |
| Home equity lines of      credit                 |   |                        | 59,661  |   |              |   | 7.8    |   |   |   | 60,326 |   |   |   | 7.6 |   |   |   | (1.1 | ) |
| Other                                            |   |                        | 2,729   |   |              |   | 0.4    |   |   |   | 2,803 |   |   |   | 0.4 |   |   |   | (2.6 | ) |
| Total retail    loans                            |   |                        | 269,993 |   |              |   | 35.3   |   |   |   | 275,727 |   |   |   | 34.8 |   |   |   | (2.1 | ) |
|                                             |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans receivable, net of unearnedfees |   | $                           | 765,476 |   |              |   | 100.0  | %      |   | $ | 793,136 |   |   |   | 100.0 | % |   |   | (3.5 | )% |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Three      Months EndedMarch 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008                             |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars      in thousands)      |   |
| Balance      at beginning of      period                                                                          |   | $                                | 8,026  |   |   | $ | 11,184 |   |
| Loans      charged-off                                                                                                      |   |                             | (458   | ) |   |   | (120 | ) |
| Recoveries of loans previously      charged-off                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                             | 37     |   |   |   | 149 |   |
| Net loan (charge-offs)      recoveries                                                                                                     |   |                             | (421   | ) |   |   | 29 |   |
| Provision for losses on      loans                                                                                          |   |                             | 742    |   |   |   | 187 |   |
| Balance      at end of      period                                                                                |   | $                                | 8,347  |   |   | $ | 11,400 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                             |   |   |   |   |   |   |

|                                                       |   | March      31, 2008 |    |   | December      31, 2007 |   |    | March      31,2007 |   |
|------------------------------------------------------------|--------|--------------------------|---------|--------|------------------------|--------|---------|--------------------|--------|
| Allowance      for losses on loans                         |   | $                        | 8,347   |   |                   | $      | 8,026   |               |   | $ | 11,400 |   |
| Total      loans receivable, net of unearned fees          |   |                     | 765,476 |   |                   |   | 793,136 |               |   |   | 804,242 |   |
| Allowance      for losses on loans to total loans          |   |                     | 1.09    | %      |                   |   | 1.01    | %                  |   |   | 1.42 | % |
| Allowance      for losses on loans to non-performing loans |   |                     | 27.59   |   |                   |   | 27.11   |               |   |   | 41.40 |   |

----

table of contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | March      31, 2008    |   |   | December      31, 2007 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (Dollars      in thousands) |   |
| Impaired      loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        |   |   |                   |   |
| With a valuation      reserve                                                                                                                       |   | $                           | 11,362 |   |                   | $      | 10,190 |   |
| With no valuation reserve      required                                                                                                             |   |                        | 13,967 |   |                   |   | 14,441 |   |
| Total      impaired      loans                                                                                                       |   |                        | 25,329 |   |                   |   | 24,631 |   |
| Other      non-accrual      loans                                                                                                    |   |                        | 4,930  |   |                   |   | 4,969 |   |
| Total      non-accrual      loans                                                                                                    |   | $                           | 30,259 |   |                   | $      | 29,600 |   |
| Valuation      reserve relating to impaired      loans                                                                               |   | $                           | 1,263  |   |                   | $      | 1,202 |   |
| Average      impaired      loans                                                                                                     |   |                        | 24,869 |   |                   |   | 20,675 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | March      31,2008          |    |   | December      31,2007 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (Dollars      in thousands) |    |
| Non-accrual      loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |    |
| Commercial and construction      loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |    |   |                  |   |
| Commercial real      estate                                                                                                                                     |   | $                           | 9,805   |   |                  | $      | 9,605 |   |
| Construction and land      development                                                                                                                          |   |                        | 16,533  |   |                  |   | 16,240 |   |
| Commercial and      industrial                                                                                                                                  |   |                        | 276     |   |                  |   | 281 |   |
| Total commercial and      construction      loans                                                                                                               |   |                        | 26,614  |   |                  |   | 26,126 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |    |   |                  |   |   |   |
| Retail loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |    |   |                  |   |   |   |
| One-to-four family      residential                                                                                                                             |   |                        | 2,836   |   |                  |   | 2,706 |   |
| Home equity lines of      credit                                                                                                                                |   |                        | 770     |   |                  |   | 749 |   |
| Other                                                                                                                                                           |   |                        | 39      |   |                  |   | 19 |   |
| Total retail      loans                                                                                                                                         |   |                        | 3,645   |   |                  |   | 3,474 |   |
| Total non-accruing      loans                                                                                                                                   |   |                        | 30,259  |   |                  |   | 29,600 |   |
| Other      real estate owned,      net                                                                                                 |   |                        | 1,038   |   |                  |   | 1,162 |   |
| Total non-performing      assets                                                                                                                 |   |                        | 31,297  |   |                  |   | 30,762 |   |
| 90      days past due and still accruing      interest                                                                                 |   |                        | – |   |                  |   | – |   |
| Total non-performing assets      plus 90 days past due loans stillaccruing      interest                                                                        |   | $                           | 31,297  |   |                  | $      | 30,762 |   |
| Non-performing      assets to total      assets                                                                                        |   |                        | 2.62    | %      |                  |   | 2.67 | % |
| Non-performing      loans to total      loans                                                                                          |   |                        | 3.95    | %      |                  |   | 3.73 | % |

----

table of contents

|                          |   | March 31, 2008              |    |   | December 31, 2007 |   |   |   |   |
|-------------------------------|--------|-----------------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                          |   | Amount                      |    |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                          |   | (Dollars      in thousands) |    |
| Checking      accounts:       |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing     |   | $                           | 60,890  |   |              |   | 6.9    | %      |   | $ | 62,306 |   |   |   | 7.2 | % |   |   | (2.3 | )% |
| Interest-bearing              |   |                        | 112,112 |   |              |   | 12.7   |   |   |   | 107,467 |   |   |   | 12.5 |   |   |   | 4.3 |   |
| Money      market accounts    |   |                        | 203,043 |   |              |   | 23.1   |   |   |   | 171,470 |   |   |   | 19.9 |   |   |   | 18.4 |   |
| Savings      accounts         |   |                        | 124,588 |   |              |   | 14.2   |   |   |   | 127,297 |   |   |   | 14.7 |   |   |   | (2.1 | ) |
| Core deposits                 |   |                        | 500,633 |   |              |   | 56.9   |   |   |   | 468,540 |   |   |   | 54.3 |   |   |   | 6.9 |   |
| Certificates      of deposit: |   |                        |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less than    $100,000         |   |                        | 256,615 |   |              |   | 29.2   |   |   |   | 263,134 |   |   |   | 30.5 |   |   |   | (2.5 | ) |
| $100,000 or    greater        |   |                        | 122,295 |   |              |   | 13.9   |   |   |   | 131,598 |   |   |   | 15.2 |   |   |   | (7.1 | ) |
| Time deposits                 |   |                        | 378,910 |   |              |   | 43.1   |   |   |   | 394,732 |   |   |   | 45.7 |   |   |   | (4.0 | ) |
| Total deposits                |   | $                           | 879,543 |   |              |   | 100.0  | %      |   | $ | 863,272 |   |   |   | 100.0 | % |   |   | 1.9 |   |

----

table of contents

|                          |   | March 31, 2008              |   |   | December 31, 2007 |   |   |   |   |
|-------------------------------|--------|-----------------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                          |   | Amount                      |   |   | % of Total        |   |   | Amount |   |   | % of Total |   |   | % Change |   |
|                          |   | (Dollars      in thousands) |   |
| Checking      accounts:       |   |                        |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing     |   | $                           | 436    |   |              |   | 0.5    | %      |   | $ | 1,028 |   |   |   | 1.6 | % |   |   | (57.6 | )% |
| Interest-bearing              |   |                        | 17,651 |   |              |   | 20.6   |   |   |   | 13,022 |   |   |   | 20.9 |   |   |   | 33.5 |   |
| Money market      accounts    |   |                        | 53,824 |   |              |   | 62.6   |   |   |   | 31,610 |   |   |   | 50.6 |   |   |   | 70.3 |   |
| Core deposits                 |   |                        | 71,911 |   |              |   | 83.7   |   |   |   | 45,660 |   |   |   | 73.1 |   |   |   | 57.5 |   |
| Certificates      of deposit  |   |                        | 14,016 |   |              |   | 16.3   |   |   |   | 16,803 |   |   |   | 26.9 |   |   |   | (16.6 | ) |
| Total municipal      deposits |   | $                           | 85,927 |   |              |   | 100.0  | %      |   | $ | 62,463 |   |   |   | 100.0 | % |   |   | 37.6 | % |

|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | March 31, 2008                       |    |   | December 31, 2007 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | WeightedAverageContractual      Rate |    |   |  Amount      |   |   | Weighted      AverageContractual      Rate |   |   |  Amount |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars      in thousands)          |    |
| Short-term      variable-rate borrowings:                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |              |   |   |   |   |   |   |   |
| Repo Sweep      accounts                                                                                                    |   |                                 | 1.80    | %      |              | $      | 36,365 |   |   |   | 3.42 | % |   | $ | 18,014 |   |
| Overnight federal funds      purchased                                                                                      |   |                                 | – |   |              |   | – |   |   |   | 4.50 | % |   |   | 6,000 |   |
| Secured      advances from FHLB – Indianapolis:                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Maturing in 2008 –      fixed-rate                                                                               |   |                                 | 3.89    |   |              |   | 72,000 |   |   |   | 3.89 |   |   |   | 72,000 |   |
| Maturing in 2009 –      fixed-rate                                                                               |   |                                 | 3.99    |   |              |   | 30,000 |   |   |   | 3.99 |   |   |   | 30,000 |   |
| Maturing in 2011 –      fixed-rate                                                                               |   |                                 | 3.75    |   |              |   | 15,000 |   |   |   | – |   |   |   | – |   |
| Maturing in 2014 – fixed-rate      (1)                                                                           |   |                                 | 6.71    |   |              |   | 1,169 |   |   |   | 6.71 |   |   |   | 1,169 |   |
| Maturing in 2018 – fixed-rate      (1)                                                                           |   |                                 | 5.54    |   |              |   | 2,707 |   |   |   | 5.54 |   |   |   | 2,707 |   |
| Maturing in 2019 – fixed-rate      (1)                                                                           |   |                                 | 6.31    |   |              |   | 7,154 |   |   |   | 6.31 |   |   |   | 7,196 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 |    |   |              |   | 128,030 |   |   |   |   |   |   |   | 113,072 |   |
| Less:  deferred premium      on early extinguishmentof      debt                                                            |   |                                 |    |   |              |   | (1,100 | ) |   |   |   |   |   |   | (1,627 | ) |
| Net FHLB – Indianapolis      advances                                                                                 |   |                                 |    |   |              |   | 126,930 |   |   |   |   |   |   |   | 111,445 |   |
| Total      borrowed      money                                                                               |   |                                 |    |   |              | $      | 163,295 |   |   |   |   |   |   | $ | 135,459 |   |
| Weighted-average      contractual interest rate                                                                                                                                                                                                                                                                                                                                                                                              |   |                                 | 3.59    | %      |              |   |   |   |   |   | 4.06 | % |   |   |   |   |

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

----

table of contents

|   | • | net      income of $1.8 million; |
|--------|---------|----------------------------------|

|   | • | repurchases      of shares of the Company’s common stock during 2008 totaling $1.1 million;      and |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | • | cash      dividends declared during 2008 totaling $1.3  million. |
|--------|---------|------------------------------------------------------------------|

----

table of contents

|                                                |   | Actual                      |    |   | For      Capital Adequacy Purposes |   |         To      Be Well-Capitalized Under Prompt Corrective Action Provisions |   |
|-----------------------------------------------------|--------|-----------------------------|---------|--------|------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|
|                                                |   | Amount                      |    | Ratio  |                               |   | Amount                                                                                  |   | Ratio |   |   | Amount |   |        Ratio |  |
|                                                |   | (Dollars      in thousands) |
| As      of March 31, 2008:                          |   |                        |    |   |                               |   |                                                                                    |   |   |   |   |   |   |   |   |
| Total capital to risk-weighted      assets          |   | $                           | 128,199 |   |                               | 14.06  | %                                                                                       |   | $ | 72,953 |   | >8.00 |  % |   | $ | 91,191 |   | >10.00 |  % |
| Tier 1 (core) capital to      risk-weighted assets  |   |                        | 119,879 |   |                               | 13.15  |                                                                                    |   |   | 36,476 |   | >4.00 |   |   |   | 45,596 |   | >5.00 |   |
| Tier 1 (core) capital to      adjusted total assets |   |                        | 119,879 |   |                               | 10.11  |                                                                                    |   |   | 47,445 |   | >4.00 |   |   |   | 59,307 |   | >5.00 |   |
| Tangible capital to adjusted      total assets      |   |                        | 119,879 |   |                               | 10.11  |                                                                                    |   |   | 17,792 |   | >1.50 |   |   |   | 23,723 |   | >2.00 |   |
|                                                |   |                        |    |   |                               |   |                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| As      of December 31, 2007:                       |   |                        |    |   |                               |   |                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital to risk-weighted      assets          |   | $                           | 128,225 |   |                               | 13.93  | %                                                                                       |   | $ | 73,661 |   | >8.00 |  % |   | $ | 92,077 |   | >10.00 | % |
| Tier 1 (core) capital to      risk-weighted assets  |   |                        | 120,227 |   |                               | 13.06  |                                                                                    |   |   | 36,831 |   | >4.00 |   |   |   | 55,246 |   | >5.00 |   |
| Tier 1 (core) capital to      adjusted total assets |   |                        | 120,227 |   |                               | 10.50  |                                                                                    |   |   | 45,782 |   | >4.00 |   |   |   | 57,227 |   | >5.00 |   |
| Tangible capital to adjusted      total assets      |   |                        | 120,227 |   |                               | 10.50  |                                                                                    |   |   | 17,168 |   | >1.50 |   |   |   | 22,891 |   | >2.00 |   |

| ·   | 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; and  |
|--------------------------|------------------------------------------------|

| ·    | borrowings      from the FHLB. |
|--------------------------|--------------------------------|

|   | • | proceeds      from sales, maturities and paydowns of securities aggregating $28.0      million; |
|--------|---------|-------------------------------------------------------------------------------------------------|

|   | • | net      repayments of loans totaling $27.3million; |
|--------|---------|-----------------------------------------------------|

|   | • | increases      in the balance of deposit accounts totaling $16.2  million; |
|--------|---------|----------------------------------------------------------------------------|

|   | • | net      proceeds from FHLB debt totaling $15.0 million;  and |
|--------|---------|---------------------------------------------------------------|

|   | • | increases      in short-term borrowings totaling $12.5million. |
|--------|---------|----------------------------------------------------------------|

----

table of contents

|                                                                                                                                                                                                                                                                                                                          |   | Payments Due By Period      |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                                                                                                                                                                                                                          |   | One      YearOr Less        |    |   | Over      OneThroughThree Years |   |   | Over      Three ThroughFive Years |   |   | Over      FiveYears |   |   | Total |   |
|                                                                                                                                                                                                                                                                                                                          |   | (Dollars      in thousands) |    |
| FHLB      advances      (1)                                                        |   | $                           | 72,274  |   |   | $ | 45,608 |   |   | $ | 697 |   |   | $ | 9,451 |   |   | $ | 128,030 |   |
| Short      term borrowings      (2)                                                |   |                        | 36,365  |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 36,365 |   |
| Operating      leases                                                              |   |                        | 549     |   |   |   | 440 |   |   |   | 111 |   |   |   | – |   |   |   | 1,100 |   |
| Dividends      payable on common stock                                                                                                                                                                                                                                                                                        |   |                        | 1,298   |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 1,298 |   |
|                                                                                                                                                                                                                                                                                                                          |   | $                           | 110,486 |   |   | $ | 46,048 |   |   | $ | 808 |   |   | $ | 9,451 |   |   | $ | 166,793 |   |

| (1) | Does      not include interest expense at the weighted-average contractual rate of      4.09% for the periods presented. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

| (2) | Does      not include interest expense at the weighted-average contractual rate of      1.80% for the periods presented. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

----

table of contents

|                                               |   | One      Yearor Less        |   |   | Over      OneThroughThree Years |   |    | Over      Three ThroughFive Years |   |   | Over      Five Years |   |   | Total  |    |
|----------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------------|--------|---------|-----------------------------------|--------|--------|----------------------|--------|--------|--------|---------|
|                                               |   | (Dollars      in thousands) |   |
| Commitments      to extend credit:            |   |                        |   |   |                            |   |    |                              |   |   |                 |   |   |   |    |
| Commercial                                         |   | $                           | 12,570 |   |                            | $      | 2,202   |                              |   | $      | 2,255                |   |   | $      | 78      |   |   | $ | 17,105 |   |
| Retail                                             |   |                        | 4,267  |   |                            |   | – |                              |   |   | –              |   |   |   | – |   |   |   | 4,267 |   |
| Commitments      to fund unused construction loans |   |                        | 16,112 |   |                            |   | 19,996  |                              |   |   | 473                  |   |   |   | 742     |   |   |   | 37,323 |   |
| Commitments      to fund unused lines of credit:   |   |                        |   |   |                            |   |    |                              |   |   |                 |   |   |   |    |   |   |   |   |   |
| Commercial                                         |   |                        | 21,584 |   |                            |   | 7,923   |                              |   |   | –              |   |   |   | 247     |   |   |   | 29,754 |   |
| Retail                                             |   |                        | 11,880 |   |                            |   | 10      |                              |   |   | 250                  |   |   |   | 51,939  |   |   |   | 64,079 |   |
| Letters      of credit                             |   |                        | 5,388  |   |                            |   | 459     |                              |   |   | 699                  |   |   |   | – |   |   |   | 6,546 |   |
| Credit      enhancements                           |   |                        | 8,487  |   |                            |   | 22,380  |                              |   |   | –              |   |   |   | – |   |   |   | 30,867 |   |
|                                               |   | $                           | 80,288 |   |                            | $      | 52,970  |                              |   | $      | 3,677                |   |   | $      | 53,006  |   |   | $ | 189,941 |   |

----

table of contents

Item3.

----

table of contents

|                                                 |   |   | Net Portfolio Value         |   |
|------------------------------------------------------|--------|--------|-----------------------------|--------|
|                                                 |   |   | At December 31, 2007        |   |   | At December 31, 2006 |   |
|                                                 |   |   | $ Amount                    |   |   | $ Change |   |   | % Change |   |   | $ Amount |   |   | $ Change |   |   | % Change |   |
|                                                 |   |   | (Dollars      in thousands) |   |
| Assumed      Change in Interest Rates (Basis Points) |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 | +300   |   |                        | $      | 148,908 |   |   | $ | (18,532 | ) |   |   | (11.1 | )% |   | $ | 145,688 |   |   | $ | (32,565 | ) |   |   | (18.3 | )% |
|                                                 | +200   |   |                        |   | 158,403 |   |   |   | (9,037 | ) |   |   | (5.4 | ) |   |   | 157,889 |   |   |   | (20,364 | ) |   |   | (11.4 | ) |
|                                                 | +100   |   |                        |   | 166,898 |   |   |   | (542 | ) |   |   | (0.3 | ) |   |   | 168,493 |   |   |   | (9,760 | ) |   |   | (5.5 | ) |
|                                                 | 0      |   |                        |   | 167,440 |   |   |   | – |   |   |   | – |   |   |   | 178,253 |   |   |   | – |   |   |   | – |   |
|                                                 | -100   |   |                        |   | 178,059 |   |   |   | 10,619 |   |   |   | 6.3 |   |   |   | 185,481 |   |   |   | 7,228 |   |   |   | 4.1 |   |
|                                                 | -200   |   |                        |   | 180,955 |   |   |   | 13,515 |   |   |   | 8.1 |   |   |   | 192,248 |   |   |   | 13,995 |   |   |   | 7.9 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Percentage      of Deposits MaturingIn First Year |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March 31, 2008                                    |   |   | December 31, 2007 |   |
| 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, 2008                                                                       |   |   | December 31, 2007 |   |
| Assumed      Change in Interest Rates (Basis      Points): |   |   |                                                                                 |   |   |   |   |
|                                                            | +300   |   |                                                                                 |   | 1.9 | % |   |   | (0.8 | )% |
|                                                            | +200   |   |                                                                                 |   | 1.8 |   |   |   | – |   |
|                                                            | +100   |   |                                                                                 |   | 1.0 |   |   |   | 0.3 |   |
|                                                            | -100   |   |                                                                                 |   | (1.5 | ) |   |   | (1.3 | ) |
|                                                            | -200   |   |                                                                                 |   | (2.8 | ) |   |   | (4.3 | ) |

----

table of contents

Item4.

Item1.

Item 1A.

----

table of contents

Item2.

| Period                 |   | Total      Number of Shares Purchased |    |   | Average      Price Paid Per Share |   |    | Total      Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | Maximum      Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) |   |
|------------------------|--------|---------------------------------------|---------|--------|-----------------------------------|--------|---------|---------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------|--------|
| January 1-31,    2008  |   |                                  | – |   |                              | $      | – |                                                                                  |   |   | –                                                                                      |   |   |   | 126,725 |   |
| February 1-29,    2008 |   |                                  | 60,400  |   |                              |   | 14.36   |                                                                                  |   |   | 60,400                                                                                       |   |   |   | 66,325 |   |
| March 1-31, 2008       |   |                                  | 13,195  |   |                              |   | 14.27   |                                                                                  |   |   | 13,195                                                                                       |   |   |   | 53,130 |   |
| Total                  |   |                                  | 73,595  |   |                              |   | 14.34   |                                                                                  |   |   | 73,595                                                                                       |   |   |   | 53,130 |   |

| (1) | The      Company publicly announced on February 27, 2007 a repurchase program for      600,000 shares.  Prior to January 1, 2008, 473,275 shares had      been repurchased under that program.  A total of 73,595 shares      were repurchased under this program during the first quarter of      2008.  On March 20, 2008, the Company publicly announced a new      share repurchase plan for an additional 530,000 shares.  The      Company did not repurchase any shares during April 2008 under either      program. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item3.

Item4.

Item5.

----

table of contents

| Name                                                                                                                                                                                                                                                           |   | Maximum      Number of Performance-Based      Shares |   |   | Number      of Service-Based Shares |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|-------------------------------------|--------|
| Thomas      F.      Prisby                                       |   |                                                 | 11,577 |   |                                |   | 11,100 |   |
| Daryl      D. Pomranke (1)                                                                                                                                                                                                                                     |   |                                                 | 5,863  |   |                                |   | 6,600 |   |
| Charles      V.      Cole                                        |   |                                                 | 4,620  |   |                                |   | 3,000 |   |
| Gregg      L.      Holley                                        |   |                                                 | 1,500  |   |                                |   | — |   |
| Jeffrey      C.      Stur                                        |   |                                                 | 2,846  |   |                                |   | 1,200 |   |

----

table of contents

| Name                                                                                                                                                                                                                                                           |   | Threshold |    |   | Target |   |    | Maximum |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------|--------|---------|---------|--------|
| Thomas      F.      Prisby                                       |   |      | — |   |   | $      | 115,769 |    |   | $ | 173,653 |   |
| Daryl      D. Pomranke (1)                                                                                                                                                                                                                                     |   |      | — |   |   |   | 58,629  |    |   |   | 87,944 |   |
| Charles      V.      Cole                                        |   |      | — |   |   |   | 46,200  |    |   |   | 69,299 |   |
| Gregg      L.      Holley                                        |   |      | — |   |   |   | 15,000  |    |   |   | 22,500 |   |
| Jeffrey      C.      Stur                                        |   |      | — |   |   |   | 21,348  |    |   |   | 32,022 |   |

----

table of contents

----

table of contents

Item6.

|   | (a)    |   | List      of exhibits (filed herewith unless otherwise noted).                                                              |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|
|   | 3.1    |   | Certificate      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                            |
|   | 10.2*  |   | Employment      Agreement entered into between CFS Bancorp, Inc. and Thomas F.      Prisby                                  |
|   | 10.3*  |   | CFS      Bancorp, Inc. Amended and Restated 1998 Stock Option Plan    (4)                                                   |
|   | 10.4*  |   | CFS      Bancorp, Inc. Amended and Restated 1998 Recognition and Retention Plan and      Trust Agreement (4)                |
|   | 10.5*  |   | CFS      Bancorp, Inc. 2003 Stock Option Plan (5)                                                                           |
|   | 10.6*  |   | Employment      Agreement entered into between Citizens Financial Bank and Charles V.      Cole                             |
|   | 10.7*  |   | Employment      Agreement entered into between CFS Bancorp, Inc. and Charles V.      Cole                                   |
|   | 10.8*  |   | Amended      and Restated Supplemental ESOP Benefit Plan of CFS Bancorp, Inc. and      Citizens Financial Services, FSB (6) |
|   | 10.9*  |   | CFS      Bancorp, Inc. Directors’ Deferred Compensation Plan (7)                                                      |
|   | 10.10* |   | Separation      Agreement entered into between CFS Bancorp, Inc., Citizens Financial Bank      and Zoran Koricanac (7)      |
|   | 10.11* |   | Separation      Agreement entered into between CFS Bancorp, Inc., Citizens Financial Bank      and Thomas L. Darovic (8)    |
|   | 10.12* |   | CFS      Bancorp, Inc. 2008 Omnibus Equity Incentive Plan (9)                                                               |
|   | 10.13* |   | Employment      Agreement entered into between Citizens Financial Bank and Daryl D.      Pomranke                           |
|   | 10.14* |   | Employment      Agreement entered into between CFS Bancorp, Inc. and Daryl D.      Pomranke                                 |
|   | 10.15* |   | CFS      Bancorp, Inc. 2008 Cash Incentive Compensation Program                                                             |
|   | 31.1   |   | Rule      13a-14(a) Certification of Chief Executive Officer                                                                |
|   | 31.2   |   | Rule      13a-14(a) Certification of Chief Financial Officer                                                                |
|   | 32.0   |   | Section      1350 Certifications                                                                                            |

| (1) | Incorporated      by Reference from the Company's Definitive Proxy Statement from the Annual      Meeting of Stockholders 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 Definitive Proxy Statement for the Annual      Meeting of Stockholders filed with the SEC on March 23,    2001. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated      by Reference from the Company’s Definitive Proxy Statement for the Annual      Meeting of Stockholders filed with the SEC on March 31,    2003. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated      by Reference from the Company’s Annual Report on Form 10-K for the year      ended December 31, 2004. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated      by Reference from the Company’s Form 8-K filed on November 16,      2007. |
|-----|---------------------------------------------------------------------------------------------------|

| (8) | Incorporated      by Reference from the Company’s Form 8-K filed on January 3,      2008. |
|-----|-------------------------------------------------------------------------------------------------|

----

table of contents

| (9) | Incorporated      by Reference from the Company’s Definitive Proxy Statement from the Annual |
|-----|----------------------------------------------------------------------------------------------------|

----

table of contents

SIGNATURES

| Date:  May      5, 2008 | By:    | /s/ Thomas F. Prisby                               |
|-----------------------------------|--------|----------------------------------------------------|
|                              |   | Thomas      F. Prisby, Chairman of the Board and   |
|                              |   | Chief      Executive Officer                       |
|                              |   |                                               |
| Date:  May      5, 2008 | By:    | /s/ Charles V. Cole                                |
|                              |   | Charles      V. Cole, Executive Vice President and |
|                              |   | Chief      Financial Officer                       |

----