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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

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

For the quarterly period ended March 31, 2010.

OR



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

For the transition period from              to
            .

Commission File No. 0-22288





Fidelity Bancorp, Inc.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Pennsylvania                                                   |  | 25-1705405                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

1009 Perry Highway, Pittsburgh, Pennsylvania 15237

(Address of principal executive offices)

412-367-3300

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.



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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).:     ̈  Yes    x  No

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 3,047,196 shares,
par value $0.01, at April 30, 2010.









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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Index



|                               |  |                                                                                                     |  |      
|------------------------------ |  | --------------------------------------------------------------------------------------------------- |  | -----
|                               |  | Page                                                                                               
|Part I - Financial Information |  |                                                                                                    
|                               |  |                                                                                                    
|Item 1.                        |  | Financial Statements (Unaudited)                                                                    |  | 3    
|                               |  |                                                                                                    
|                               |  | Consolidated Statements of Financial Condition as of March 31, 2010 and September 30,
2009          |  | 3    
|                               |  |                                                                                                    
|                               |  | Consolidated Statements of Income (Loss) for the Three and Six Months Ended March 31, 2010 and
2009 |  | 4-5  
|                               |  |                                                                                                    
|                               |  | Consolidated Statements of Changes in Stockholders Equity for the Six Months Ended March 31, 2010  |  | 6    
|                               |  |                                                                                                    
|                               |  | Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2010 and 2009              |  | 7-8  
|                               |  |                                                                                                    
|                               |  | Notes to Consolidated Financial Statements                                                          |  | 9    
|                               |  |                                                                                                    
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations               |  | 33   
|                               |  |                                                                                                    
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                          |  | 46   
|                               |  |                                                                                                    
|Item 4T.                       |  | Controls and Procedures                                                                             |  | 46   
|                               | 
|Part II - Other Information    |  |                                                                                                    
|                               |  |                                                                                                    
|Item 1.                        |  | Legal Proceedings                                                                                   |  | 46   
|                               |  |                                                                                                    
|Item 1A.                       |  | Risk Factors                                                                                        |  | 46   
|                               |  |                                                                                                    
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                         |  | 46   
|                               |  |                                                                                                    
|Item 3.                        |  | Defaults Upon Senior Securities                                                                     |  | 46   
|                               |  |                                                                                                    
|Item 4.                        |  | [Removed and Reserved]                                                                              |  | 46   
|                               |  |                                                                                                    
|Item 5.                        |  | Other Information                                                                                   |  | 46   
|                               |  |                                                                                                    
|Item 6.                        |  | Exhibits                                                                                            |  | 47-48
|                               | 
|Signatures                     |  | 49                                                                                                 



2



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##### Table of Contents

Part IFinancial Information



|Item 1. | Financial Statements
|------- | --------------------

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data)



|                                                                                                                            |  |           |         |   |               |   |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | - | ------------- | - | ------- | -
|                                                                                                                            |  | March 31, |         |   | September 30, |  
|                                                                                                                            |  | 2010      |         |   | 2009          |  
|Assets                                                                                                                      |  |           |         |   |               |   |         |  
|Cash and due from banks                                                                                                     |  | $         | 5,496   |   |               | $ | 20,601  |  
|Interest-bearing demand deposits with other institutions                                                                    |  |           | 23,686  |   |               |   | 21,879  |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|Cash and Cash Equivalents                                                                                                   |  |           | 29,182  |   |               |   | 42,480  |  
|                                                                                                                            |  |          
|Securities available-for-sale (amortized cost of $166,360 and $172,229)                                                     |  |           | 161,366 |   |               |   | 166,115 |  
|Securities held-to-maturity (fair value of $85,287 and $72,737)                                                             |  |           | 85,037  |   |               |   | 72,448  |  
|Loans held for sale                                                                                                         |  |           | 517     |   |               |   | 694     |  
|Loans receivable, net of allowance of $5,487 and $5,702                                                                     |  |           | 389,829 |   |               |   | 409,787 |  
|Foreclosed real estate, net                                                                                                 |  |           | 269     |   |               |   | 103     |  
|Federal Home Loan Bank stock, at cost                                                                                       |  |           | 10,034  |   |               |   | 10,034  |  
|Office premises and equipment, net                                                                                          |  |           | 9,117   |   |               |   | 8,470   |  
|Accrued interest receivable                                                                                                 |  |           | 2,731   |   |               |   | 2,900   |  
|Cash surrender value of life insurance                                                                                      |  |           | 4,983   |   |               |   | 4,872   |  
|Goodwill                                                                                                                    |  |           | 2,653   |   |               |   | 2,653   |  
|Other assets                                                                                                                |  |           | 12,271  |   |               |   | 9,475   |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|Total Assets                                                                                                                |  | $         | 707,989 |   |               | $ | 730,031 |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|                                                                                                                            |  |          
|Liabilities and Stockholders Equity                                                                                        |  |           |         |   |               |   |         |  
|                                                                                                                            |  |          
|Liabilities:                                                                                                                |  |           |         |   |               |   |         |  
|Deposits:                                                                                                                   |  |           |         |   |               |   |         |  
|Non-interest bearing                                                                                                        |  | $         | 47,238  |   |               | $ | 41,362  |  
|Interest bearing                                                                                                            |  |           | 398,892 |   |               |   | 402,518 |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|Total Deposits                                                                                                              |  |           | 446,130 |   |               |   | 443,880 |  
|                                                                                                                            |  |          
|Securities sold under agreement to repurchase                                                                               |  |           | 105,080 |   |               |   | 106,244 |  
|Short-term borrowings                                                                                                       |  |           | 131     |   |               |   | 104     |  
|Long-term debt                                                                                                              |  |           | 93,443  |   |               |   | 118,541 |  
|Subordinated debt                                                                                                           |  |           | 7,732   |   |               |   | 7,732   |  
|Advance payments by borrowers for taxes and insurance                                                                       |  |           | 2,482   |   |               |   | 1,274   |  
|Other liabilities                                                                                                           |  |           | 4,681   |   |               |   | 5,144   |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|Total Liabilities                                                                                                           |  |           | 659,679 |   |               |   | 682,919 |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|                                                                                                                            |  |          
|Stockholders equity:                                                                                                       |  |           |         |   |               |   |         |  
|Preferred stock, $0.01 par value per share, liquidation preference $1,000; 5,000,000 shares authorized; 7,000 shares
issued |  |           | 6,773   |   |               |   | 6,743   |  
|Common stock, $0.01 par value per share, 10,000,000 shares authorized; 3,666,325 and 3,664,947 shares issued,
respectively  |  |           | 37      |   |               |   | 37      |  
|Paid-in-capital                                                                                                             |  |           | 46,433  |   |               |   | 46,390  |  
|Retained earnings                                                                                                           |  |           | 9,068   |   |               |   | 8,685   |  
|Accumulated other comprehensive loss, net of tax                                                                            |  |           | (3,619  | ) |               |   | (4,361  | )
|Treasury stock, at cost  619,129 shares                                                                                    |  |           | (10,382 | ) |               |   | (10,382 | )
|                                                                                                                            |  |           |         |   |               |   |         |  
|Total Stockholders Equity                                                                                                  |  |           | 48,310  |   |               |   | 47,112  |  
|                                                                                                                            |  |           |         |   |               |   |         |  
|Total Liabilities and Stockholders Equity                                                                                  |  | $         | 707,989 |   |               | $ | 730,031 |  
|                                                                                                                            |  |           |         |   |               |   |         |  

See accompanying notes to unaudited consolidated financial statements.



3



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Loss) (Unaudited)

(in thousands, except per share data)



|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                       |  | Three MonthsEnded March 31, |        |   | Six Months EndedMarch 31, |  
|                                                                       |  | 2010                        |        |   | 2009                      |   |        | 2010 |  |   | 2009   |  
|Interest income:                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Loans                                                                  |  | $                           | 5,457  |   |                           | $ | 6,871  |      |  | $ | 11,260 |   |  | $ | 13,945 |  
|Mortgage-backed securities                                             |  |                             | 738    |   |                           |   | 1,009  |      |  |   | 1,519  |   |  |   | 2,146  |  
|Investment securities-taxable                                          |  |                             | 753    |   |                           |   | 1,036  |      |  |   | 1,532  |   |  |   | 2,170  |  
|Investment securities-tax-exempt                                       |  |                             | 442    |   |                           |   | 438    |      |  |   | 888    |   |  |   | 871    |  
|Other                                                                  |  |                             | 13     |   |                           |   | 2      |      |  |   | 26     |   |  |   | 4      |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Total interest income                                                  |  |                             | 7,403  |   |                           |   | 9,356  |      |  |   | 15,225 |   |  |   | 19,136 |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Interest expense:                                                      |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Deposits                                                               |  |                             | 1,398  |   |                           |   | 2,177  |      |  |   | 2,980  |   |  |   | 4,528  |  
|Securities sold under agreement to repurchase                          |  |                             | 1,248  |   |                           |   | 1,259  |      |  |   | 2,525  |   |  |   | 2,548  |  
|Short-term borrowings                                                  |  |                             | 2      |   |                           |   | 41     |      |  |   | 3      |   |  |   | 120    |  
|Long-term debt                                                         |  |                             | 1,134  |   |                           |   | 1,195  |      |  |   | 2,356  |   |  |   | 2,478  |  
|Subordinated debt                                                      |  |                             | 100    |   |                           |   | 102    |      |  |   | 204    |   |  |   | 206    |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Total interest expense                                                 |  |                             | 3,882  |   |                           |   | 4,774  |      |  |   | 8,068  |   |  |   | 9,880  |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|                                                                       |  |                             |        |  
|Net interest income                                                    |  |                             | 3,521  |   |                           |   | 4,582  |      |  |   | 7,157  |   |  |   | 9,256  |  
|                                                                       |  |                             |        |  
|Provision for loan losses                                              |  |                             | 300    |   |                           |   | 320    |      |  |   | 600    |   |  |   | 875    |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|                                                                       |  |                             |        |  
|Net interest income after provision for loan losses                    |  |                             | 3,221  |   |                           |   | 4,262  |      |  |   | 6,557  |   |  |   | 8,381  |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|                                                                       |  |                             |        |  
|Non-interest income:                                                   |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Loan service charges and fees                                          |  |                             | 125    |   |                           |   | 140    |      |  |   | 278    |   |  |   | 266    |  
|Realized gain on sales of securities, net                              |  |                             | 387    |   |                           |   |       |      |  |   | 1,037  |   |  |   |       |  
|                                                                       |  |                             |        |  
|Total other-than-temporary impairment losses                           |  |                             | (1,517 | ) |                           |   | (1,645 | )    |  |   | (6,012 | ) |  |   | (1,720 | )
|Portion of loss recognized in other comprehensive income, before taxes |  |                             | 1,221  |   |                           |   |       |      |  |   | 4,482  |   |  |   |       |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Net Impairment losses recognized in earnings                           |  |                             | (296   | ) |                           |   | (1,645 | )    |  |   | (1,530 | ) |  |   | (1,720 | )
|                                                                       |  |                             |        |  
|Gain on sales of loans                                                 |  |                             | 86     |   |                           |   | 124    |      |  |   | 221    |   |  |   | 154    |  
|(Loss) gain on loan interest rate swaps                                |  |                             | (1     | ) |                           |   | 1      |      |  |   | 5      |   |  |   | (17    | )
|Deposit service charges and fees                                       |  |                             | 334    |   |                           |   | 342    |      |  |   | 719    |   |  |   | 730    |  
|ATM fees                                                               |  |                             | 214    |   |                           |   | 171    |      |  |   | 457    |   |  |   | 357    |  
|Non-insured investment products                                        |  |                             | 34     |   |                           |   | 23     |      |  |   | 83     |   |  |   | 49     |  
|Earnings on cash surrender value of life insurance                     |  |                             | 58     |   |                           |   | 66     |      |  |   | 119    |   |  |   | 138    |  
|Other                                                                  |  |                             | 64     |   |                           |   | 76     |      |  |   | 100    |   |  |   | 116    |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Total non-interest income                                              |  |                             | 1,005  |   |                           |   | (702   | )    |  |   | 1,489  |   |  |   | 73     |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Non-interest expense:                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Compensation and benefits                                              |  |                             | 2,021  |   |                           |   | 2,091  |      |  |   | 4,079  |   |  |   | 4,018  |  
|Office occupancy and equipment expense                                 |  |                             | 274    |   |                           |   | 276    |      |  |   | 528    |   |  |   | 512    |  
|Depreciation and amortization                                          |  |                             | 133    |   |                           |   | 120    |      |  |   | 267    |   |  |   | 242    |  
|Advertising                                                            |  |                             | 82     |   |                           |   | 90     |      |  |   | 182    |   |  |   | 190    |  
|Professional fees                                                      |  |                             | 130    |   |                           |   | 105    |      |  |   | 270    |   |  |   | 257    |  
|Service bureau expense                                                 |  |                             | 145    |   |                           |   | 113    |      |  |   | 307    |   |  |   | 219    |  
|Federal deposit insurance premiums                                     |  |                             | 322    |   |                           |   | 75     |      |  |   | 631    |   |  |   | 94     |  
|Other                                                                  |  |                             | 651    |   |                           |   | 550    |      |  |   | 1,195  |   |  |   | 1,120  |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Total non-interest expense                                             |  |                             | 3,758  |   |                           |   | 3,420  |      |  |   | 7,459  |   |  |   | 6,652  |  
|                                                                       |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Loss) (Unaudited) (Contd.)

(in thousands, except per share data)



|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|----------------------------------------------------- |  | --------------------------- | ---- | - | ------------------------- | - | ----- | ---- |  | - | ---- | - |  | - | ----- | -
|                                                      |  | Three Months EndedMarch 31, |      |   | Six Months EndedMarch 31, |  
|                                                      |  | 2010                        |      |   | 2009                      |   |       | 2010 |  |   | 2009 |  
|Income before (Benefit of) Provision for Income Taxes |  | $                           | 468  |   |                           | $ | 140   |      |  | $ | 587  |   |  | $ | 1,802 |  
|(Benefit of) Provision for Income Taxes               |  |                             | (11  | ) |                           |   | 269   |      |  |   | (124 | ) |  |   | 244   |  
|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|Net Income (Loss)                                     |  |                             | 479  |   |                           |   | (129  | )    |  |   | 711  |   |  |   | 1,558 |  
|Preferred stock dividend                              |  |                             | (88  | ) |                           |   | (106  | )    |  |   | (175 | ) |  |   | (106  | )
|Accretion of preferred stock discount                 |  |                             | (15  | ) |                           |   | (15   | )    |  |   | (30  | ) |  |   | (15   | )
|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|Net income (loss) available to common stockholders    |  | $                           | 376  |   |                           | $ | (250  | )    |  | $ | 506  |   |  | $ | 1,437 |  
|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|                                                      |  |                             |      |  
|Earnings per Share                                    |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|Basic earnings per common share                       |  | $                           | 0.12 |   |                           | $ | (0.08 | )    |  | $ | 0.17 |   |  | $ | 0.47  |  
|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|Diluted earnings per common share                     |  | $                           | 0.12 |   |                           | $ | (0.08 | )    |  | $ | 0.17 |   |  | $ | 0.45  |  
|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  
|Dividends per common share                            |  | $                           | 0.02 |   |                           | $ | 0.14  |      |  | $ | 0.04 |   |  | $ | 0.28  |  
|                                                      |  |                             |      |   |                           |   |       |      |  |   |      |   |  |   |       |  

See accompanying notes to unaudited consolidated financial statements.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders Equity (Unaudited)

(in thousands, except share data)



|                                                                                                                                   |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- |  | -------------- | ----- | ----------- | - | -------------- |  | - | ---------------- | - |  | ----------------------------------------- | ----- | - | ------------- | - | ------ | ----- |  | - | ------- | - |  | - | ------ | -
|                                                                                                                                   |  | Numberof CommonSharesIssued |  | PreferredStock |       | CommonStock |   | Paid-inCapital |  |   | RetainedEarnings |   |  | AccumulatedOtherComprehensiveIncome(Loss) |       |   | TreasuryStock |   |        | Total | 
|Balance at September 30, 2009                                                                                                      |  | 3,664,947                   |  | $              | 6,743 |             | $ | 37             |  | $ | 46,390           |   |  | $                                         | 8,685 |   |               | $ | (4,361 | )     |  | $ | (10,382 | ) |  | $ | 47,112 |  
|Comprehensive income:                                                                                                              |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   |        |  
|Net income                                                                                                                         |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           | 711   |   |               |   |        |       |  |   |         |   |  |   | 711    |  
|Comprehensive gain on cash flow hedges net of tax of $1                                                                            |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   | 2      |       |  |   |         |   |  |   | 2      |  
|Comprehensive gain on investment securities, net of tax of $1,737                                                                  |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   | 3,372  |       |  |   |         |   |  |   | 3,372  |  
|Reclassification adjustment on investment securities, net of tax of ($353)                                                         |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   | (684   | )     |  |   |         |   |  |   | (684   | )
|Comprehensive loss on securities for which other-than-temporary impairment has been recognized in earnings, net of tax of
($1,524) |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   | (2,958 | )     |  |   |         |   |  |   | (2,958 | )
|Reclassification adjustment for other-than-temporary impairment losses on debt securities, net of tax of $520                      |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   | 1,010  |       |  |   |         |   |  |   | 1,010  |  
|                                                                                                                                   |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   |        |  
|Total comprehensive gain                                                                                                           |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   | 1,453  |  
|                                                                                                                                   |  |                             |  |                |       |             |   |               
|Accretion of preferred stock discount                                                                                              |  |                             |  |                | 30    |             |   |                |  |   |                  |   |  |                                           | (30   | ) |               |   |        |       |  |   |         |   |  |   |       |  
|Cumulative dividends on preferred stock                                                                                            |  |                             |  |                |       |             |   |                |  |   | (175             | ) |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   | (175   | )
|Stock-based compensation expense                                                                                                   |  |                             |  |                |       |             |   |                |  |   | 35               |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   | 35     |  
|Cash dividends declared                                                                                                            |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           | (123  | ) |               |   |        |       |  |   |         |   |  |   | (123   | )
|Shares issued through Dividend                                                                                                     |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   |        |  
|Reinvestment Plan                                                                                                                  |  | 1,378                       |  |                |       |             |   |                |  |   | 8                |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   | 8      |  
|                                                                                                                                   |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   |        |  
|                                                                                                                                   |  |                             |  |                |       |             |   |               
|Balance at March 31, 2010                                                                                                          |  | 3,666,325                   |  | $              | 6,773 |             | $ | 37             |  | $ | 46,433           |   |  | $                                         | 9,068 |   |               | $ | (3,619 | )     |  | $ | (10,382 | ) |  | $ | 48,310 |  
|                                                                                                                                   |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |       |   |               |   |        |       |  |   |         |   |  |   |        |  

See accompanying notes to unaudited consolidated financial statements.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)



|                                                                                            |  |                            |         |   |      |   |         |  
|------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                            |  | Six Months Ended March 31, |        
|                                                                                            |  | 2010                       |         |   | 2009 |  
|Operating Activities:                                                                       |  |                            |         |   |      |   |         |  
|Net income                                                                                  |  | $                          | 711     |   |      | $ | 1,558   |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities: |  |                            |         |   |      |   |         |  
|Provision for loan losses                                                                   |  |                            | 600     |   |      |   | 875     |  
|Provision for depreciation and amortization                                                 |  |                            | 267     |   |      |   | 242     |  
|Amortization of investment and mortgage-backed securities                                   |  |                            |         |   |      |   |         |  
|(discounts) premiums, net                                                                   |  |                            | 511     |   |      |   | 35      |  
|Realized gains on sales of securities, net                                                  |  |                            | (1,037  | ) |      |   |        |  
|Impairment losses on securities                                                             |  |                            | 1,530   |   |      |   | 1,720   |  
|Loans originated for sale                                                                   |  |                            | (14,221 | ) |      |   | (11,823 | )
|Sales of loans held for sale                                                                |  |                            | 14,619  |   |      |   | 11,641  |  
|Net gains on sales of loans                                                                 |  |                            | (221    | ) |      |   | (154    | )
|Earnings on cash surrender value of life insurance policies                                 |  |                            | (119    | ) |      |   | (138    | )
|Expenses related to cash surrender value of life insurance policies                         |  |                            | 8       |   |      |   | 32      |  
|Decrease in interest receivable                                                             |  |                            | 169     |   |      |   | 320     |  
|Decrease in interest payable                                                                |  |                            | (176    | ) |      |   | (27     | )
|Decrease in prepaid taxes                                                                   |  |                            | 1,159   |   |      |   | 39      |  
|Noncash compensation expense related to stock benefit plans                                 |  |                            | 35      |   |      |   | 55      |  
|Changes in other assets                                                                     |  |                            | (4,376  | ) |      |   | (934    | )
|Changes in other liabilities                                                                |  |                            | (287    | ) |      |   | (22     | )
|                                                                                            |  |                            |         |   |      |   |         |  
|                                                                                            |  |                           
|Net cash (used in) provided by operating activities                                         |  |                            | (828    | ) |      |   | 3,419   |  
|                                                                                            |  |                            |         |   |      |   |         |  
|                                                                                            |  |                           
|Investing Activities:                                                                       |  |                            |         |   |      |   |         |  
|Proceeds from sales of securities available-for-sale                                        |  |                            | 16,284  |   |      |   |        |  
|Proceeds from maturities and principal repayments of securities available-for-sale          |  |                            | 31,934  |   |      |   | 10,611  |  
|Purchases of securities available-for-sale                                                  |  |                            | (42,543 | ) |      |   | (10,124 | )
|Proceeds from maturities and principal repayments of securities held-to-maturity            |  |                            | 18,235  |   |      |   | 14,347  |  
|Purchases of securities held-to-maturity                                                    |  |                            | (31,612 | ) |      |   | (5,450  | )
|Net decrease in loans                                                                       |  |                            | 19,176  |   |      |   | 2,889   |  
|Proceeds from sales of foreclosed real estate                                               |  |                            | 37      |   |      |   | 171     |  
|Additions to office premises and equipment                                                  |  |                            | (914    | ) |      |   | (846    | )
|Purchases of Federal Home Loan Bank (FHLB) stock                                            |  |                            |        |   |      |   | (2,424  | )
|Redemptions of FHLB stock                                                                   |  |                            |        |   |      |   | 333     |  
|Purchases of cash surrender value life insurance                                            |  |                            |        |   |      |   | (698    | )
|                                                                                            |  |                            |         |   |      |   |         |  
|                                                                                            |  |                           
|Net cash provided by investing activities                                                   |  |                            | 10,597  |   |      |   | 8,809   |  
|                                                                                            |  |                            |         |   |      |   |         |  



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited) (Contd.)

(in thousands)



|                                                                         |  |                            |         |   |      |   |         |  
|------------------------------------------------------------------------ |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                         |  | Six Months Ended March 31, |        
|                                                                         |  | 2010                       |         |   | 2009 |  
|Financing Activities:                                                    |  |                            |         |   |      |   |         |  
|Net increase in deposits                                                 |  | $                          | 2,250   |   |      | $ | 14,633  |  
|Net (decrease) increase in securities sold under agreement to repurchase |  |                            | (1,164  | ) |      |   | 1,387   |  
|Net increase (decrease) in short-term borrowings                         |  |                            | 27      |   |      |   | (32,132 | )
|Increase in advance payments by borrowers for taxes and insurance        |  |                            | 1,208   |   |      |   | 1,515   |  
|Proceeds from long-term debt                                             |  |                            |        |   |      |   | 30,000  |  
|Repayments of long-term debt                                             |  |                            | (25,098 | ) |      |   | (30,128 | )
|Cash dividends paid                                                      |  |                            | (298    | ) |      |   | (956    | )
|Preferred stock issued                                                   |  |                            |        |   |      |   | 6,942   |  
|Stock options exercised                                                  |  |                            |        |   |      |   | 1       |  
|Proceeds from sale of stock through Dividend Reinvestment Plan           |  |                            | 8       |   |      |   | 57      |  
|                                                                         |  |                            |         |   |      |   |         |  
|                                                                         |  |                           
|Net cash used in financing activities                                    |  |                            | (23,067 | ) |      |   | (8,681  | )
|                                                                         |  |                            |         |   |      |   |         |  
|                                                                         |  |                           
|Net (decrease) increase in cash and cash equivalents                     |  |                            | (13,298 | ) |      |   | 3,547   |  
|                                                                         |  |                           
|Cash and cash equivalents at beginning of period                         |  |                            | 42,480  |   |      |   | 10,772  |  
|                                                                         |  |                            |         |   |      |   |         |  
|                                                                         |  |                           
|Cash and cash equivalents at end of period                               |  | $                          | 29,182  |   |      | $ | 14,319  |  
|                                                                         |  |                            |         |   |      |   |         |  
|                                                                         |  |                           
|Supplemental Disclosure of Cash Flow Information                         |  |                            |         |   |      |   |         |  
|Cash paid during the period for:                                         |  |                            |         |   |      |   |         |  
|Interest paid on deposits and other borrowings                           |  | $                          | 8,244   |   |      | $ | 9,907   |  
|                                                                         |  |                            |         |   |      |   |         |  
|Income taxes paid                                                        |  | $                          |        |   |      | $ | 856     |  
|                                                                         |  |                            |         |   |      |   |         |  
|                                                                         |  |                           
|Supplemental Schedule of Noncash Investing and Financing Activities      |  |                            |         |   |      |   |         |  
|                                                                         |  |                           
|Transfer of loans to foreclosed real estate                              |  | $                          | 202     |   |      | $ | 117     |  
|                                                                         |  |                            |         |   |      |   |         |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)

March 31, 2010

(1) Consolidation

The consolidated
financial statements contained herein for Fidelity Bancorp, Inc. (the Company) include the accounts of Fidelity Bancorp, Inc. and its wholly-owned subsidiary, Fidelity Bank, PaSB (the Bank). All inter-company balances and
transactions have been eliminated.

(2) Basis of Presentation

The accompanying consolidated financial statements were prepared in accordance with instructions to Form 10-Q, and therefore, do not include information
or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States. However, all adjustments (consisting of normal
recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the financial statements, have been included. These financial statements should be read in conjunction with the audited financial statements and
the accompanying notes thereto included in the Companys Annual Report for the fiscal year ended September 30, 2009. The results for the three and six month periods ended March 31, 2010 are not necessarily indicative of the results
that may be expected for the fiscal year ending September 30, 2010 or any future interim period.

Certain amounts in the 2009 financial
statements have been reclassified to conform with the 2010 presentation format. These reclassifications had no effect on stockholders equity or net income.

(3) New Accounting Standards

In
September 2009, the FASB issued new guidance impacting Topic 820. This creates a practical expedient to measure the fair value of an alternative investment that does not have a readily determinable fair value. This guidance also requires certain
additional disclosures. This guidance is effective for interim and annual periods ending after December 15, 2009. The adoption of this guidance did not have a material impact on the Companys financial position or results of operation.

In December 2009, the FASB issued ASU 2009-16, Accounting for Transfer of Financial Assets. ASU 2009-16 provides guidance
to improve the relevance, representational faithfulness, and comparability of the information that an entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors continuing involvement, if any, in transferred financial assets. ASU 2009-16 is effective for annual periods beginning after November 15, 2009 and for interim periods within those fiscal
years. The adoption of this guidance is not expected to have a significant impact on the Companys financial statements.

In
January 2010, the FASB issued ASU 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash  a Consensus of the FASB Emerging Issues Task Force. ASU 2010-01 clarifies that the stock
portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is
reflected in EPS prospectively and is not a stock dividend. ASU 2010-01 is effective for interim and annual periods ending on or after December 15, 2009 and should be applied on a retrospective basis. The adoption of this guidance did not have
a material impact on the Companys financial position or results of operation.

In January 2010, the FASB issued ASU 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary  a Scope Clarification. ASU 2010-02 amends Subtopic 810-10 to address implementation issues related to changes in ownership provisions
including clarifying the scope of the decrease in ownership and additional disclosures. ASU 2010-02 is effective beginning in the period that an entity adopts Statement 160. If an entity has previously adopted Statement 160, ASU 2010-02 is effective
beginning in the first interim or annual reporting period ending on or after December 15, 2009 and should be applied retrospectively to the first period Statement 160 was adopted. The adoption of this guidance did not have a material impact on
the Companys financial position or results of operation.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



In January 2010, the FASB issued ASU 2010-04, Accounting for Various Topics  Technical
Corrections to SEC Paragraphs. ASU 2010-04 makes technical corrections to existing SEC guidance including the following topics: accounting for subsequent investments, termination of an interest rate swap, issuance of financial statements 
subsequent events, use of residential method to value acquired assets other than goodwill, adjustments in assets and liabilities for holding gains and losses, and selections of discount rate used for measuring defined benefit obligation. ASU 2010-04
is effective January 15, 2010. The adoption of this guidance did not have a material impact on the Companys financial position.

In
January 2010, the FASB issued ASU 2010-05, Compensation  Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation. ASU 2010-05 updates existing guidance to address the SEC staffs views on
overcoming the presumption that for certain shareholders escrowed share arrangements represent compensation. ASU 2010-05 is effective January 15, 2010. The adoption of this guidance did not have a material impact on the Companys financial
position or results of operation.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic
820): Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends Subtopic 820-10 to clarify existing disclosures, require new disclosures, and includes conforming amendments to guidance on employers disclosures about
postretirement benefit plan assets. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3
fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of this guidance is not expected to have a significant impact on the
Companys financial statements.

In February 2010, the FASB issued ASU 2010-08, Technical Corrections to Various Topics. ASU
2010-08 clarifies guidance on embedded derivatives and hedging. ASU 2010-08 is effective for interim and annual periods beginning after December 15, 2009. The adoption of this guidance did not have a material impact on the Companys
financial position or results of operation.

In March 2010, the FASB issued ASU 2010-11, Derivatives and Hedging. ASU 2010-11 provides
clarification and related additional examples to improve financial reporting by resolving potential ambiguity about the breadth of the embedded credit derivative scope exception in ASC 815-15-15-8. ASU 2010-11 is effective at the beginning of the
first fiscal quarter beginning after June 15, 2010. The adoption of this guidance is not expected to have a significant impact on the Companys financial statements.

In April 2010, the FASB issued ASU 2010-13, Compensation  Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a
Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment that
contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after
December 15, 2010 and is not expected to have a significant impact on the Companys financial statements.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(4) Stock Based Compensation

On March 31, 2010, the Company had six share-based compensation plans, for which stock options and restricted stock were outstanding as of
March 31, 2010. However, the plan described below is the only plan for which stock options and restricted stock are available for grant. The compensation cost that has been charged against income for those plans was $35,000 and $53,000 for the
six months ended March 31, 2010 and 2009, respectively.

The Companys 2005 Stock-Based Incentive Plan (the Plan), which was
shareholder-approved, permits the grant of stock options and restricted stock to its employees and non-employee directors for up to 165,000 shares of common stock, of which a maximum of 55,000 may be restricted stock. Option awards are granted with
an exercise price equal to the market value of the common stock on the date of the grant, the options vest over a three-year period, and have a contractual term of seven years, although the Plan permits contractual terms of up to ten years. Option
awards provide for accelerated vesting if there is a change in control, as defined in the Plan. Additionally, at November 30, 2008, the Company awarded 7,100 shares of restricted stock from the unallocated shares under the Plan having a market
value of approximately $49,700. Compensation expense on the restricted stock awards equals the market value of the Companys stock on the grant date and will be amortized ratably over the three-year vesting period. As of March 31, 2010,
12,850 share awards were available for grant under this program.

As of March 31, 2010 there was approximately $63,000 of unrecognized
compensation costs related to unvested share-based compensation awards granted.

Stock option transactions for the six months ended
March 31, 2010 were as follows:



|                                         |  |         |   |  |                                         |      
|---------------------------------------- |  | ------- | - |  | --------------------------------------- | -----
|                                         |  | Options |   |  | Weighted-AverageExercisePrice Per Share
|Outstanding at the beginning of the year |  | 400,187 |   |  | $                                       | 14.77
|Granted                                  |  |        |   |  |                                         |     
|Exercised                                |  |        |   |  |                                         |     
|Forfeited                                |  | (45,936 | ) |  |                                         | 11.74
|                                         |  |         |   |  |                                         |      
|Outstanding as of March 31, 2010         |  | 354,251 |   |  | $                                       | 15.16
|                                         |  |         |   |  |                                         |      
|Exercisable as of March 31, 2010         |  | 319,884 |   |  | $                                       | 16.03
|                                         |  |         |   |  |                                         |      

The options outstanding and exercisable as of March 31, 2010 have
a weighted average remaining term of 2.8 years.

No options were granted for the six-month period ended March 31, 2010. The fair value of
options granted for the six-month period ended March 31, 2009 was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:



|                                               |  |                               
|---------------------------------------------- |  | ------------------------------
|                                               |  | Six Months EndedMarch 31, 2009
|                                               | 
|Dividend yield                                 |  | 8.99%                         
|Expected life                                  |  | 5.5 years                     
|Expected volatility                            |  | 31.23%                        
|Risk-free interest rate                        |  | 2.08%                         
|Weighted average fair value of options granted |  | $0.62                         



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



Compensation cost related to restricted stock is recognized based on the market price of the stock at
the grant date over the vesting period. Compensation expense related to restricted stock was $18,000 and $22,000 for the six months ended March 31, 2010 and 2009, respectively. The following table summarizes restricted stock awards for the six
months ended March 31, 2009.



|                                       |  |                                |      
|-------------------------------------- |  | ------------------------------ | -----
|                                       |  | Six Months EndedMarch 31, 2009
|Number of shares awarded               |  |                                | 7,100
|Market price of stock on date of grant |  | $                              | 7.00 

(5) Earnings Per Share

Basic earnings per share (EPS) excludes dilution and is computed by dividing net income by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then
shared in the earnings of the Company. The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands, except per share data):



|                                                                                             |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|-------------------------------------------------------------------------------------------- |  | --------------------------- | ----- | ---- | ------------------------- | ----- | ---- |  | ---- | ----- |  | - | -----
|                                                                                             |  | Three Months EndedMarch 31, |       |      | Six Months EndedMarch 31,
|                                                                                             |  | 2010                        |       | 2009 |                           |       | 2010 |  | 2009
|Numerator:                                                                                   |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|Net income (loss) available to common stockholders                                           |  | $                           | 376   |      | $                         | (250  | )    |  | $    | 506   |  | $ | 1,437
|Denominator:                                                                                 |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|Denominator for basic earnings per share  weighted average shares outstanding               |  |                             | 3,041 |      |                           | 3,041 |      |  |      | 3,041 |  |   | 3,038
|Effect of dilutive securities:                                                               |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|Common stock equivalents                                                                     |  |                             |      |      |                           |      |      |  |      |      |  |   | 132  
|                                                                                             |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|Denominator for diluted earnings per share  weighted average shares and assumed conversions |  |                             | 3,041 |      |                           | 3,041 |      |  |      | 3,041 |  |   | 3,170
|                                                                                             |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|Basic earnings per common share                                                              |  | $                           | 0.12  |      | $                         | (0.08 | )    |  | $    | 0.17  |  | $ | 0.47 
|                                                                                             |  |                             |       |      |                           |       |      |  |      |       |  |   |      
|Diluted earnings per common share                                                            |  | $                           | 0.12  |      | $                         | (0.08 | )    |  | $    | 0.17  |  | $ | 0.45 
|                                                                                             |  |                             |       |      |                           |       |      |  |      |       |  |   |      

None of the options, restricted stock, and warrants that were
outstanding during the three months ended March 31, 2010 and 2009 were included in the computation of diluted EPS because to do so would have been anti-dilutive.

None of the options, restricted stock, and warrants that were outstanding during the six months ended March 31, 2010 were included in the
computation of diluted EPS because to do so would have been anti-dilutive. Similarly, options to purchase 314,675 shares of common stock ranging from $11.06 to $22.91 per share, 3,200 shares of restricted stock at $13.06 per share, and 121,387
shares of warrants at $8.65 per share were outstanding during the six months ended March 31, 2009, but were not included in the computation of diluted EPS because to do so would have been anti-dilutive.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(6) Securities

The amortized cost and fair value of securities are as follows:



|                                                                   |  |               |         |                 |   |                  |  |            |       |  |   |        
|------------------------------------------------------------------ |  | ------------- | ------- | --------------- | - | ---------------- |  | ---------- | ----- |  | - | -------
|                                                                   |  | AmortizedCost |         | UnrealizedGains |   | UnrealizedLosses |  | Fair Value
|(Dollar amounts in thousands)                                      |  |               |         |                 |   |                  |  |            |       |  |   |        
|Available-for-sale:                                                |  |               |         |                 |   |                  |  |            |       |  |   |        
|As of March 31, 2010:                                              |  |               |         |                 |   |                  |  |            |       |  |   |        
|U.S. government and agency obligations                             |  | $             | 46,550  |                 | $ | 444              |  | $          | 65    |  | $ | 46,929 
|Municipal obligations                                              |  |               | 25,505  |                 |   | 777              |  |            | 52    |  |   | 26,230 
|Corporate obligations                                              |  |               | 9,985   |                 |   | 246              |  |            | 772   |  |   | 9,459  
|Equity securities                                                  |  |               | 4,027   |                 |   | 80               |  |            | 724   |  |   | 3,383  
|Mutual funds                                                       |  |               | 9,160   |                 |   | 302              |  |            | 9     |  |   | 9,453  
|Trust preferred securities                                         |  |               | 18,707  |                 |   | 33               |  |            | 6,160 |  |   | 12,580 
|Freddie Mac preferred stock                                        |  |               |        |                 |   | 48               |  |            |      |  |   | 48     
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 52,426  |                 |   | 1,257            |  |            | 399   |  |   | 53,284 
|                                                                   |  |               |         |                 |   |                  |  |            |       |  |   |        
|                                                                   |  | $             | 166,360 |                 | $ | 3,187            |  | $          | 8,181 |  | $ | 161,366
|                                                                   |  |               |         |                 |   |                  |  |            |       |  |   |        
|Held-to-maturity:                                                  |  |               |         |                 |   |                  |  |            |       |  |   |        
|As of March 31, 2010:                                              |  |               |         |                 |   |                  |  |            |       |  |   |        
|U.S. government and agency obligations                             |  | $             | 22,089  |                 | $ | 60               |  | $          | 65    |  | $ | 22,084 
|Municipal obligations                                              |  |               | 18,689  |                 |   | 491              |  |            | 86    |  |   | 19,094 
|Corporate obligations                                              |  |               | 999     |                 |   | 4                |  |            |      |  |   | 1,003  
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 43,260  |                 |   | 578              |  |            | 732   |  |   | 43,106 
|                                                                   |  |               |         |                 |   |                  |  |            |       |  |   |        
|                                                                   |  | $             | 85,037  |                 | $ | 1,133            |  | $          | 883   |  | $ | 85,287 
|                                                                   |  |               |         |                 |   |                  |  |            |       |  |   |        



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



|                                                                   |  |               |         |                 |   |                  |  |            |        |  |   |        
|------------------------------------------------------------------ |  | ------------- | ------- | --------------- | - | ---------------- |  | ---------- | ------ |  | - | -------
|                                                                   |  | AmortizedCost |         | UnrealizedGains |   | UnrealizedLosses |  | Fair Value
|(Dollar amounts in thousands)                                      |  |               |         |                 |   |                  |  |            |        |  |   |        
|Available-for-sale:                                                |  |               |         |                 |   |                  |  |            |        |  |   |        
|As of September 30, 2009:                                          |  |               |         |                 |   |                  |  |            |        |  |   |        
|U.S. government and agency obligations                             |  | $             | 50,999  |                 | $ | 1,023            |  | $          | 23     |  | $ | 51,999 
|Municipal obligations                                              |  |               | 22,708  |                 |   | 803              |  |            | 47     |  |   | 23,464 
|Corporate obligations                                              |  |               | 14,563  |                 |   | 525              |  |            | 914    |  |   | 14,174 
|Equity securities                                                  |  |               | 4,144   |                 |   |                 |  |            | 846    |  |   | 3,298  
|Mutual funds                                                       |  |               | 9,605   |                 |   | 299              |  |            | 4      |  |   | 9,900  
|Trust preferred securities                                         |  |               | 21,394  |                 |   | 157              |  |            | 8,024  |  |   | 13,527 
|Freddie Mac preferred stock                                        |  |               |        |                 |   | 91               |  |            |       |  |   | 91     
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 48,816  |                 |   | 1,413            |  |            | 567    |  |   | 49,662 
|                                                                   |  |               |         |                 |   |                  |  |            |        |  |   |        
|                                                                   |  | $             | 172,229 |                 | $ | 4,311            |  | $          | 10,425 |  | $ | 166,115
|                                                                   |  |               |         |                 |   |                  |  |            |        |  |   |        
|Held-to-maturity:                                                  |  |               |         |                 |   |                  |  |            |        |  |   |        
|As of September 30, 2009:                                          |  |               |         |                 |   |                  |  |            |        |  |   |        
|U.S. government and agency obligations                             |  | $             | 15,106  |                 | $ | 92               |  | $          |       |  | $ | 15,198 
|Municipal obligations                                              |  |               | 19,387  |                 |   | 644              |  |            | 66     |  |   | 19,965 
|Corporate obligations                                              |  |               | 1,718   |                 |   | 20               |  |            |       |  |   | 1,738  
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 36,237  |                 |   | 483              |  |            | 884    |  |   | 35,836 
|                                                                   |  |               |         |                 |   |                  |  |            |        |  |   |        
|                                                                   |  | $             | 72,448  |                 | $ | 1,239            |  | $          | 950    |  | $ | 72,737 
|                                                                   |  |               |         |                 |   |                  |  |            |        |  |   |        

The following table presents the amortized cost and fair value of debt
securities by contractual maturity dates as of March 31, 2010:



|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       
|-------------------------------------- |  | ----------------------------- | ------- | --------------------------- | - | ------------- |  | --------- | ------ |  | - | ------
|                                       |  | Securities Available-for-Sale |         | Securities Held-to-Maturity
|                                       |  | AmortizedCost                 |         | Fair Value                  |   | AmortizedCost |  | FairValue
|                                       |  | (In Thousands)               
|As of March 31, 2010:                  |  |                               |         |                             |   |               |  |           |        |  |   |       
|Due in one year or less                |  | $                             | 3,736   |                             | $ | 3,793         |  | $         | 999    |  | $ | 1,004 
|Due after one year through five years  |  |                               | 50,617  |                             |   | 51,361        |  |           | 12,045 |  |   | 12,157
|Due after five years through ten years |  |                               | 22,410  |                             |   | 23,009        |  |           | 23,619 |  |   | 23,783
|Due after ten years                    |  |                               | 76,410  |                             |   | 70,319        |  |           | 48,374 |  |   | 48,343
|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       
|                                       |  | $                             | 153,173 |                             | $ | 148,482       |  | $         | 85,037 |  | $ | 85,287
|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       

The proceeds from the sale of securities for the three months ended
March 31, 2010 were $10.7 million. Gross gains of $407,000 and gross losses of $20,000 were realized on sales of securities during the three months ended March 31, 2010. There were no sales of securities during the three months ended
March 31, 2009. The proceeds from the sale of securities for the six months ended March 31, 2010 were $16.3 million. Gross gains of $1,057,000 and gross losses of $20,000 were realized on sales of securities during the six months ended
March 31, 2010. There were no sales of securities during the six months ended March 31, 2009.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



The Company recognized other-than-temporary impairment losses on securities of $296,000 and $1.6 million
for the three-month periods ended March 31, 2010 and 2009, respectively. The impairment charges for the three-month period ended March 31, 2010 relate to two pooled trust preferred securities. The impairment charges for the three-month
period ended March 31, 2009 relate to the Companys holdings of the AMF Ultra Short Mortgage Fund and its investment in a pooled trust preferred security. The Company recognized other-than-temporary impairment losses on securities of $1.5
million and $1.7 million for the six-month period ended March 31, 2010 and 2009, respectively. The impairment charges for the six-month period ended March 31, 2010 relate to six pooled trust preferred securities. The impairment charges for
the six-month period ended March 31, 2009 relate to the Companys holdings of Freddie Mac preferred stock, the AMF Ultra Short Mortgage Fund, and its investment in a pooled trust preferred security.

At March 31, 2010, the unrealized losses on the securities portfolio were primarily attributable to wider credit spreads, reflecting market
illiquidity. The Company does not intend to sell these securities and it is not more-likely than-not that the Company will have to sell these securities.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



The following tables show the aggregate related fair value of investments with a continuous unrealized
loss position for less than twelve months and those that have been in a continuous unrealized loss position for greater than twelve months.



|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|------------------------------------------------------------------ |  | ------------------- |  | ----------------- | ------ | ---------------- | - | -------------- |  | --------- |  | ---------------- | ------ | -------------- | - | --------- |  | ---------------- |  | - | ------ |  | - | -----
|                                                                   |  | Less than 12 Months |  | 12 Months or More |        | Total           
|                                                                   |  | # ofSecurities      |  | FairValue         |        | UnrealizedLosses |   | # ofSecurities |  | FairValue |  | UnrealizedLosses |        | # ofSecurities |   | FairValue |  | UnrealizedLosses
|As of March 31, 2010:                                              |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|(Dollar amounts in thousands)                                      |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|Available-for-sale:                                                |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|U.S. government and agency obligations                             |  | 5                   |  | $                 | 7,932  |                  | $ | 65             |  |          |  | $                |       |                | $ |          |  | 5                |  | $ | 7,932  |  | $ | 65   
|Municipal obligations                                              |  | 2                   |  |                   | 758    |                  |   | 5              |  | 3         |  |                  | 1,893  |                |   | 47        |  | 5                |  |   | 2,651  |  |   | 52   
|Corporate obligations                                              |  |                    |  |                   |       |                  |   |               |  | 2         |  |                  | 1,223  |                |   | 772       |  | 2                |  |   | 1,223  |  |   | 772  
|Equity securities                                                  |  |                    |  |                   |       |                  |   |               |  | 8         |  |                  | 3,146  |                |   | 724       |  | 8                |  |   | 3,146  |  |   | 724  
|Mutual funds                                                       |  |                    |  |                   |       |                  |   |               |  | 1         |  |                  | 1,292  |                |   | 9         |  | 1                |  |   | 1,292  |  |   | 9    
|Trust preferred securities                                         |  |                    |  |                   |       |                  |   |               |  | 15        |  |                  | 10,927 |                |   | 6,160     |  | 15               |  |   | 10,927 |  |   | 6,160
|Mortgage-backed securities and collateralized mortgage obligations |  | 6                   |  |                   | 15,460 |                  |   | 72             |  | 5         |  |                  | 4,241  |                |   | 327       |  | 11               |  |   | 19,701 |  |   | 399  
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|Total temporarily impaired available-for-sale securities           |  | 13                  |  |                   | 24,150 |                  |   | 142            |  | 34        |  |                  | 22,722 |                |   | 8,039     |  | 47               |  |   | 46,872 |  |   | 8,181
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|Held-to-maturity:                                                  |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|U.S. government and agency obligations                             |  | 3                   |  |                   | 5,933  |                  |   | 65             |  |          |  |                  |       |                |   |          |  | 3                |  |   | 5,933  |  |   | 65   
|Municipal obligations                                              |  |                    |  |                   |       |                  |   |               |  | 4         |  |                  | 2,649  |                |   | 86        |  | 4                |  |   | 2,649  |  |   | 86   
|Mortgage-backed securities and collateralized mortgage obligations |  | 4                   |  |                   | 6,022  |                  |   | 36             |  | 4         |  |                  | 2,150  |                |   | 696       |  | 8                |  |   | 8,172  |  |   | 732  
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|Total temporarily impaired held-to-maturity securities             |  | 7                   |  |                   | 11,955 |                  |   | 101            |  | 8         |  |                  | 4,799  |                |   | 782       |  | 15               |  |   | 16,754 |  |   | 883  
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      
|Total temporarily impaired securities                              |  | 20                  |  | $                 | 36,105 |                  | $ | 243            |  | 42        |  | $                | 27,521 |                | $ | 8,821     |  | 62               |  | $ | 63,626 |  | $ | 9,064
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |      



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|------------------------------------------------------------------ |  | ------------------- |  | ----------------- | ------ | ---------------- | - | -------------- |  | --------- |  | ---------------- | ------ | -------------- | - | --------- |  | ---------------- |  | - | ------ |  | - | ------
|                                                                   |  | Less than 12 Months |  | 12 Months or More |        | Total           
|                                                                   |  | # ofSecurities      |  | FairValue         |        | UnrealizedLosses |   | # ofSecurities |  | FairValue |  | UnrealizedLosses |        | # ofSecurities |   | FairValue |  | UnrealizedLosses
|As of September 30, 2009:                                          |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|(Dollar amounts in thousands)                                      |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Available-for-sale:                                                |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|U.S. government and agency obligations                             |  | 1                   |  | $                 | 3,045  |                  | $ | 23             |  |          |  | $                |       |                | $ |          |  | 1                |  | $ | 3,045  |  | $ | 23    
|Municipal obligations                                              |  | 1                   |  |                   | 408    |                  |   | 1              |  | 3         |  |                  | 1,894  |                |   | 46        |  | 4                |  |   | 2,302  |  |   | 47    
|Corporate obligations                                              |  |                    |  |                   |       |                  |   |               |  | 3         |  |                  | 1,569  |                |   | 914       |  | 3                |  |   | 1,569  |  |   | 914   
|Equity securities                                                  |  | 5                   |  |                   | 2,160  |                  |   | 428            |  | 3         |  |                  | 1,138  |                |   | 418       |  | 8                |  |   | 3,298  |  |   | 846   
|Mutual funds                                                       |  |                    |  |                   |       |                  |   |               |  | 1         |  |                  | 1,265  |                |   | 4         |  | 1                |  |   | 1,265  |  |   | 4     
|Trust preferred securities                                         |  |                    |  |                   |       |                  |   |               |  | 18        |  |                  | 11,286 |                |   | 8,024     |  | 18               |  |   | 11,286 |  |   | 8,024 
|Mortgage-backed securities and collateralized mortgage obligations |  | 5                   |  |                   | 3,054  |                  |   | 31             |  | 7         |  |                  | 5,916  |                |   | 536       |  | 12               |  |   | 8,970  |  |   | 567   
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Total temporarily impaired available-for-sale securities           |  | 12                  |  | $                 | 8,667  |                  | $ | 483            |  | 35        |  | $                | 23,068 |                | $ | 9,942     |  | 47               |  | $ | 31,735 |  | $ | 10,425
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Held-to-maturity:                                                  |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Municipal obligations                                              |  | 1                   |  |                   | 353    |                  |   | 6              |  | 3         |  |                  | 2,321  |                |   | 60        |  | 4                |  |   | 2,674  |  |   | 66    
|Mortgage-backed securities and collateralized mortgage obligations |  | 8                   |  |                   | 15,315 |                  |   | 162            |  | 6         |  |                  | 3,250  |                |   | 722       |  | 14               |  |   | 18,565 |  |   | 884   
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Total temporarily impaired held-to-maturity securities             |  | 9                   |  |                   | 15,668 |                  |   | 168            |  | 9         |  |                  | 5,571  |                |   | 782       |  | 18               |  |   | 21,239 |  |   | 950   
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Total temporarily impaired securities                              |  | 21                  |  | $                 | 24,335 |                  | $ | 651            |  | 44        |  | $                | 28,639 |                | $ | 10,724    |  | 65               |  | $ | 52,974 |  | $ | 11,375
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       

The Company conducts periodic reviews to identify and evaluate each
investment that has an unrealized loss, in accordance with U.S. generally accepted accounting principles. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that
are determined to be temporary in nature are recorded, net of tax, in Accumulated Other Comprehensive Income(AOCI) for available-for-sale securities, while such losses related to held-to-maturity securities are not recorded, as these
investments are carried at their amortized cost.

Regardless of the classification of the securities as available-for-sale or
held-to-maturity, the Company has assessed each position for other than temporary impairment.

Factors considered in determining whether a
loss is temporary include:



| |  |  | the length of time and the extent to which fair value has been below cost;
| | - |  | --------------------------------------------------------------------------



| |  |  | the severity of the impairment;
| | - |  | -------------------------------



| |  |  | the cause of the impairment and the financial condition and near-term prospects of the issuer;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | activity in the market of the issuer which may indicate adverse credit conditions;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | if the Company intends to sell the investment;
| | - |  | ----------------------------------------------



| |  |  | if its more-likely-than-not the Company will be required to sell the investment before recovering its amortized cost basis; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | if the Company does not expect to recover the investments entire amortized cost basis (even if the Company does not intend to sell the security).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



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Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



The Companys review for impairment generally entails:



| |  |  | identification and evaluation of investments that have indications of possible impairment;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has
been in an unrealized loss position and the expected recovery period;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having
other-than-temporary impairment and those that would not support other-than-temporary impairment; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | documentation of the results of these analyses, as required under business policies.
| | - |  | ------------------------------------------------------------------------------------

For debt securities that are not deemed to be credit impaired, management performs additional analysis to assess whether it intends to sell or would
more-likely-than-not be required to sell the investment before the expected recovery of the amortized cost basis. Management has asserted that it has no intent to sell and that it believes it is more-likely-than-not that it will not be required to
sell the investment before recovery of its amortized cost basis.

Similarly, for equity securities, management considers the various factors
described above, including its intent and ability to hold the equity security for a period of time sufficient for recovery to amortized cost. Where management lacks that intent or ability, the securitys decline in fair value is deemed to be
other-than-temporary and is recorded in earnings.

For debt securities, a critical component of the evaluation for other-than-temporary
impairment is the identification of credit impaired securities, where management does not receive cash flows sufficient to recover the entire amortized cost basis of the security. The extent of the Companys analysis regarding credit quality
and the stress on assumptions used in the analysis had been refined for securities where the current fair value or other characteristics of the security warrant. The paragraphs below describe the Companys process for identifying credit
impairment in security types with the most significant unrealized losses as of March 31, 2010.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



Trust Preferred Debt Securities

Included in debt securities in an unrealized loss position at March 31, 2010 were fifteen different trust preferred offerings with an aggregate fair
value of $10,927,000, of which $10,917,000 had floating rates based on LIBOR. The unrealized losses on these debt securities amounted to $6,160,000 at March 31, 2010. Due to dislocations in the credit markets broadly, and the lack of trading
and new issuances in pooled trust preferred securities, market price indications generally reflect the lack of liquidity in the market. Prices on trust preferred securities were calculated by a third party valuation company. The valuation
methodology is based on the premise that the fair value of the securitys collateral should approximate the fair value of its liabilities. In general, the spreads for trust preferred collateral have widened by over 500 basis points since 2007.
To determine the decline in the collaterals value associated with this increase in credit spreads, the third party projected collateral cash flows for each pool using Intex, the industry standard modeling software for securities of this type.
Once generated, the cash flows for each pool were discounted at the applicable rate to arrive at the fair value of the collateral. Any declines in the resulting fair value of the collateral below the par value represents the component of loss
attributed to credit risk. The credit quality of each collateral pool was then analyzed for the purpose of projecting defaults and recoveries. Prepayment assumptions were also estimated. With these additional assumptions, cash flow projections for
both the collateral and the debt obligation were modeled and valued. The fair value of each bond was then determined by discounting the projected cash flows by an adjusted discount rate (adjusted to capture the default risk). During the three months
ended March 31, 2010, the Company recognized in earnings impairment charges of $296,000 on two investments in pooled trust preferred securities resulting from several factors, including a downgrade on their credit ratings, failure to pass their
principal coverage tests, and the decline in the net present value of their projected cash flows. During the six months ended March 31, 2010, the Company recognized in earnings impairment charges of $1.5 million on six investments in pooled
trust preferred securities resulting from several factors, including a downgrade on their credit ratings, failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected
cash flows. Management of the Company has deemed the impairment on these six trust preferred securities to be other-than-temporary based upon these factors and the duration and extent to which the market value has been less than cost, the inability
to forecast a recovery in market value, and other factors concerning the issuers in the pooled security. During the three and six months ended March 31, 2009, the Company recognized an impairment charge of $412,000 on one investment in a pooled
trust preferred security resulting from several factors, including a downgrade in its credit rating, its failure to pass its principal coverage test, indications of a break in yield, and the decline in the net present value of its projected cash
flows. Based on cash flow forecasts for the remaining securities, management expects to recover the remaining amortized cost of these securities. Furthermore, the Company does not intend to sell these securities and it is not more-likely-than-not
that the Company will be required to sell these securities before recovery of their cost basis, which may be at maturity.

Equity Securities

At March 31, 2010 the Company had $733,000 of unrealized losses on equity securities. These securities represent investments in common equity
offerings of seven financial institutions with an aggregate fair value of $2.2 million, one investment in preferred stock of an insurance company with a fair value of $952,000, and an investment in a mutual fund with an aggregate fair value of $1.3
million. In addition to the general factors mentioned above for determining whether the decline in market value is other than temporary, the analysis of each of these securities includes a review of the profitability of each issuer and its capital
adequacy, and all data available to determine the credit quality of each issuer. There were no impairment charges taken on these securities during the three and six months ended March 31, 2010. During the three months ended March 31, 2009
the Company recognized impairment charges of $1.2 million on the AMF Ultra Short Mortgage Fund. During the six months ended March 31, 2009 the Company recognized impairment charges of $1.2 million on the AMF Ultra Short Mortgage Fund and
$75,000 on the Companys holdings of Freddie Mac preferred stock. Based on the Companys detailed analysis, and because the Company has the ability and intent to hold the investments until a recovery of its amortized cost basis, except for
the investments mentioned above, the Company does not consider these remaining assets to be other-than-temporarily impaired at March 31, 2010. However, continued price declines could result in a write down of one or more of these equity
investments.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



Corporate Obligations

Included in corporate obligations in an unrealized loss position at March 31, 2010 were two different securities with an aggregate fair value of $1.2
million. The unrealized loss on these securities amounted to $772,000 at March 31, 2010. These two securities represent investments in corporate obligations issued by financial institutions and have floating rates which reset monthly based on
LIBOR. In addition to the general factors mentioned above for determining whether the decline in market value is other-than-temporary, the analysis of each of these securities included a review of the profitability of each issuer and its capital
adequacy, and all data available to determine the credit quality of each issuer. Both issuers are well-capitalized as of March 31, 2010 and the securities have an investment grade rating as rated by at least one nationally recognized credit
rating agency. Both institutions had participated in the Treasurys TARP Capital Purchase Program and have subsequently repaid the TARP proceeds. Based on the Companys detailed analysis and because the Company has the ability and intent
to hold these investments until a recovery of its amortized cost basis, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2010. There were no impairment charges on corporate obligations for the
three and six months ended March 31, 2010 and 2009.

The following is a rollforward for the six months ended March 31, 2010 of the
amounts recognized in earnings related to credit losses on securities which the Company has recorded other-than-temporary impairment charges through earnings and other comprehensive income:



|                                                                              |  |                |      
|----------------------------------------------------------------------------- |  | -------------- | -----
|                                                                              |  | (In Thousands)
|Credit component of OTTI as of 10/1/09                                        |  | $              |     
|Additions for credit-related OTTI charges on previously unimpaired securities |  |                | 1,530
|                                                                              |  |                |      
|Credit component of OTTI as of 3/31/10                                        |  | $              | 1,530
|                                                                              |  |                |      



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(7) Loans Receivable

Loans receivable are comprised of the following (dollar amounts in thousands):



|                                      |  |           |         |   |               |   |         |  
|------------------------------------- |  | --------- | ------- | - | ------------- | - | ------- | -
|                                      |  | March 31, |         |   | September 30, |  
|                                      |  | 2010      |         |   | 2009          |  
|First mortgage loans:                 |  |           |         |   |               |   |         |  
|Conventional:                         |  |           |         |   |               |   |         |  
|1-4 family dwellings                  |  | $         | 142,537 |   |               | $ | 164,718 |  
|Multi-family dwellings                |  |           | 42      |   |               |   | 82      |  
|Commercial                            |  |           | 98,170  |   |               |   | 97,086  |  
|Construction:                         |  |           |         |   |               |   |         |  
|Residential                           |  |           | 877     |   |               |   | 1,707   |  
|Commercial                            |  |           | 29,457  |   |               |   | 26,879  |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |           | 271,083 |   |               |   | 290,472 |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |          
|Less: Loans in process                |  |           | (12,555 | ) |               |   | (13,778 | )
|                                      |  |           |         |   |               |   |         |  
|                                      |  |           | 258,528 |   |               |   | 276,694 |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |          
|Consumer loans:                       |  |           |         |   |               |   |         |  
|Home equity                           |  |           | 75,926  |   |               |   | 80,453  |  
|Consumer loans                        |  |           | 1,506   |   |               |   | 1,538   |  
|Other                                 |  |           | 2,352   |   |               |   | 2,390   |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |           | 79,784  |   |               |   | 84,381  |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |          
|Commercial business loans and leases: |  |           |         |   |               |   |         |  
|Commercial business loans             |  |           | 56,944  |   |               |   | 54,329  |  
|Commercial leases                     |  |           | 215     |   |               |   | 205     |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |           | 57,159  |   |               |   | 54,534  |  
|                                      |  |           |         |   |               |   |         |  
|                                      |  |          
|Less: Allowance for loan losses       |  |           | (5,487  | ) |               |   | (5,702  | )
|                                      |  |          
|Unearned discounts and fees           |  |           | (155    | ) |               |   | (120    | )
|                                      |  |           |         |   |               |   |         |  
|Loans receivable, net                 |  | $         | 389,829 |   |               | $ | 409,787 |  
|                                      |  |           |         |   |               |   |         |  



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(8) Allowance for Loan Losses

Changes in the allowance for loan losses for the six months ended March 31, 2010, fiscal year ended September 30, 2009, and for the six months
ended March 31, 2009 are as follows (dollar amounts in thousands):



|                               |  |                  |       |   |               |   |        |                  |  |   |       |  
|------------------------------ |  | ---------------- | ----- | - | ------------- | - | ------ | ---------------- |  | - | ----- | -
|                               |  | Six Months Ended |       |   | Year Ended    |   |        | Six Months Ended | 
|                               |  | March 31,        |       |   | September 30, |   |        | March 31,        | 
|                               |  | 2010             |       |   | 2009          |   |        | 2009             | 
|Balance at beginning of period |  | $                | 5,702 |   |               | $ | 3,424  |                  |  | $ | 3,424 |  
|Provision for loan losses      |  |                  | 600   |   |               |   | 5,870  |                  |  |   | 875   |  
|Charge-offs                    |  |                  | (860  | ) |               |   | (3,713 | )                |  |   | (578  | )
|Recoveries                     |  |                  | 45    |   |               |   | 121    |                  |  |   | 36    |  
|                               |  |                  |       |   |               |   |        |                  |  |   |       |  
|Net charge-offs                |  |                  | (815  | ) |               |   | (3,592 | )                |  |   | (542  | )
|                               |  |                  |       |   |               |   |        |                  |  |   |       |  
|Balance at end of period       |  | $                | 5,487 |   |               | $ | 5,702  |                  |  | $ | 3,757 |  
|                               |  |                  |       |   |               |   |        |                  |  |   |       |  

The provision for loan losses charged to expense is based upon past loan loss experience and an evaluation of probable
losses in the current loan portfolio, including the evaluation of impaired loans in accordance with U.S. generally accepted accounting principles. A loan is considered to be impaired when, based upon current information and events, it is probable
that the Bank will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant shortfall in payments does not necessarily result in a loan being identified as impaired. For this purpose, delays less than 90
days are considered to be insignificant.

Impairment losses are included in the provision for loan losses. U.S. generally accepted accounting
principles do not apply to large groups of smaller balance, homogeneous loans that are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring. Loans collectively evaluated for impairment
include consumer loans and residential real estate loans, and are not included in the following data.

Included in the current amount of
impaired loans are $9.5 million of impaired loans for which the related allowance for loan losses is $1.4 million. Impaired loans of $8.6 million, of which $6.0 million are collateral dependent, do not have a related allowance for loan losses as a
result of applying impairment tests prescribed under U.S. generally accepted accounting principles. The net value of the collateral securing these loans is $8.9 million. The average recorded investment in impaired loans during the six months ended
March 31, 2010 was $17.5 million compared to $6.9 million for the same period in the prior year. For the six months ended March 31, 2010, the Company recognized $364,000 of interest income on impaired loans using the cash basis of
income recognition. The Company recognized $127,000 of interest income on impaired loans during the six-month period ended March 31, 2009.

At March 31, 2010, the recorded investment in loans that are considered to be impaired under U.S. generally accepted accounting principles was $18.1
million compared to $15.6 million at September 30, 2009. The increase is primarily related to a $2.0 million commercial real estate loan secured by a six-floor office/retail property in the City of Pittsburgh. One floor of the building is
currently vacant. The loan is past its contractual maturity date, however the customer is making monthly interest payments. The borrower has a commitment to secure financing elsewhere upon 100% occupancy of the property, The Company had the property
appraised in October 2009 and the appraised value exceeds the principal balance owed; no specific reserves have been allocated for this loan facility.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(9) Derivative Instruments

The Company accounts for its derivative instruments as either assets or liabilities on the balance sheet at fair value through adjustments to either the
hedged items, accumulated other comprehensive income (loss), or current earnings, as appropriate. As part of its overall interest rate risk management activities, the Company utilizes derivative instruments to manage its exposure to various types of
interest rate risk. These derivative instruments consist of interest rate swaps. There were two interest rate swap contracts outstanding as of March 31, 2010.

Entering into interest rate derivatives potentially exposes the Company to the risk of counterparties failure to fulfill their legal obligations
including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much
smaller.

During the second quarter of fiscal 2008, the Company entered into an interest rate swap contract involving the exchange of the
Companys floating rate interest rate payment on its $7.5 million in floating rate preferred securities for a fixed rate interest payment without the exchange of the underlying principal amount. This hedge relationship fails to qualify for the
assumption of no ineffectiveness (short cut method) as defined by U.S. generally accepted accounting principles. Therefore, the Company accounts for this hedge relationship as a cash flow hedge. The cumulative change in fair value of the hedging
derivative, to the extent that it is expected to be offset by the cumulative change in anticipated interest cash flows from the hedged exposure, will be deferred and reported as a component of accumulated other comprehensive income (AOCI). Any hedge
ineffectiveness will be charged to current earnings. Consistent with the risk management objective and the hedge accounting designation, management measured the degree of hedge effectiveness by comparing the cumulative change in anticipated interest
cash flows from the hedged exposure over the hedging period to the cumulative change in anticipated cash flows from the hedging derivative. Management utilizes the Hypothetical Derivative Method to compute the cumulative change in
anticipated interest cash flows from the hedged exposure. To the extent that the cumulative change in anticipated cash flows from the hedging derivative offsets from 80% to 125% of the cumulative change in anticipated interest cash flows from the
hedged exposure, the hedge will be deemed effective. The Company will use the Hypothetical Derivative Method to measure ineffectiveness. Under this method, the calculation of ineffectiveness will be done by using the change in fair value of the
hypothetical derivative. That is, the swap will be recorded at fair value on the balance sheet and other comprehensive income will be adjusted to an amount that reflects the lesser of either the cumulative change in fair value of the swap or the
cumulative change in the fair value of the hypothetical derivative instrument. Management will determine the ineffectiveness of the hedging relationship by comparing the cumulative change in anticipated interest cash flows from the hedged exposure
over the hedging period to the cumulative change in anticipated cash flows from the hedging derivative. Any difference between these two measures will be deemed hedge ineffectiveness and recorded in current earnings. As of March 31, 2010 the
hedge instrument was deemed to be effective, therefore, no amounts were charged to current earnings. The Company does not expect to reclassify any hedge-related amounts from accumulated other comprehensive income (loss) to earnings over the next
twelve months.

The pay fixed interest rate swap contract outstanding at March 31, 2010 is being utilized to hedge $7.5 million in
floating rate-preferred securities. Below is a summary of the interest rate swap contract and the terms at March 31, 2010:



|                       |  |                |       |         |      |      |                |      |   |              |            |            |   |   |  |   |    
|---------------------- |  | -------------- | ----- | ------- | ---- | ---- | -------------- | ---- | - | ------------ | ---------- | ---------- | - | - |  | - | ---
|                       |  | NotionalAmount |       | PayRate |      |      | ReceiveRate(*) |      |   | MaturityDate |            | Unrealized
|(Dollars in thousands) |  |                |       |         |      | Gain |                | Loss
|Cash flow hedge        |  | $              | 7,500 |         | 5.32 | %    |                | 1.62 | % |              | 12/15/2012 |            | $ |  |  | $ | 490



|(*) | Variable receive rate based upon contract rates in effect at March 31, 2010.
|--- | ----------------------------------------------------------------------------



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



During the first quarter of fiscal 2009, the Bank originated a $1.0 million fixed rate loan for one of
its commercial mortgage loan customers and simultaneously entered into an offsetting fixed interest rate swap contract with PNC Bank, National Association (PNC). The Bank pays PNC interest at the same fixed rate on the same notional
amount as the customer pays to the Bank on the commercial mortgage loan, and receives interest from PNC at a floating rate on the same notional amount. This interest rate hedging program helps the Bank limit its interest rate risk while at the same
time helps the Bank meet the financing needs and interest rate risk management needs of its commercial customers. The Company accounts for this hedge relationship as a fair value hedge. This interest rate swap contract was recorded at fair value
with any resulting gain or loss recorded in current period earnings. For the three and six months ended March 31, 2010 the Company recorded a loss of $1,000 and a gain of $5,000, respectively relating to this contract. For the three and six
months ended March 31, 2009 the Company recorded a gain of $1,000 and a loss of $17,000, respectively relating to this contract. As of March 31, 2010, the notional amount of the customer-related interest rate derivative financial
instrument was $975,000, compared to $993,000 at March 31, 2009.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(10) Comprehensive Income

In complying with U.S. generally accepted accounting principles the Company has developed the following table, which includes the tax effects of the
components of other comprehensive income (loss). Other comprehensive income (loss) consists of net unrealized gains (losses) on securities available-for-sale and derivatives that qualify as cash flow hedges. Other comprehensive income (loss) and
related tax effects for the indicated periods, consists of:



|                                                                                                                                                          |  |                                 |        |   |                                 |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | -
|(Dollars in thousands)                                                                                                                                    |  | Three MonthsEndedMarch 31, 2010 |        |   | Three MonthsEndedMarch 31, 2009 |  
|Net income (loss)                                                                                                                                         |  | $                               | 479    |   |                                 | $ | (129   | )
|Comprehensive (loss) gain on cash flow hedges net of tax of ($17) in 2010 and $1 in 2009                                                                  |  |                                 | (33    | ) |                                 |   | 1      |  
|Comprehensive gain on investment securities, net of tax of $545 in 2010 and $934 in 2009                                                                  |  |                                 | 1,057  |   |                                 |   | 1,813  |  
|Reclassification adjustment on investment securities, net of tax of ($132) in 2010 and $0 in 2009                                                         |  |                                 | (255   | ) |                                 |   |       |  
|Comprehensive loss on securities for which other-than-temporary impairment has been recognized in earnings, net of tax of $54 in
2010 and $0 in 2009      |  |                                 | 106    |   |                                 |   |       |  
|Reclassification adjustment for other-than-temporary impairment losses on debt securities, net of tax of $101 in 2010 and $560 in
2009                    |  |                                 | 195    |   |                                 |   | 1,085  |  
|                                                                                                                                                          |  |                                 |        |   |                                 |   |        |  
|Total comprehensive income                                                                                                                                |  | $                               | 1,549  |   |                                 | $ | 2,770  |  
|                                                                                                                                                          |  |                                 |        |   |                                 |   |        |  
|                                                                                                                                                          |  |                                
|(Dollars in thousands)                                                                                                                                    |  | Six
MonthsEndedMarch 31, 2010   |        |   | Six MonthsEndedMarch 31,
2009   |  
|Net income                                                                                                                                                |  | $                               | 711    |   |                                 | $ | 1,558  |  
|Comprehensive gain (loss) on cash flow hedges net of tax of $1 in 2010 and ($184) in 2009                                                                 |  |                                 | 2      |   |                                 |   | (357   | )
|Comprehensive gain (loss) on investment securities, net of tax of $1,737 in 2010 and ($549) in 2009                                                       |  |                                 | 3,372  |   |                                 |   | (1,067 | )
|Reclassification adjustment on investment securities, net of tax of ($353) in 2010 and $0 in 2009                                                         |  |                                 | (684   | ) |                                 |   |       |  
|Comprehensive loss on securities for which other-than-temporary impairment has been recognized in earnings, net of tax of
($1,524) in 2010 and $0 in 2009 |  |                                 | (2,958 | ) |                                 |   |       |  
|Reclassification adjustment for other-than-temporary impairment losses on debt securities, net of tax of $520 in 2010 and $585 in
2009                    |  |                                 | 1,010  |   |                                 |   | 1,135  |  
|                                                                                                                                                          |  |                                 |        |   |                                 |   |        |  
|Total comprehensive income                                                                                                                                |  | $                               | 1,453  |   |                                 | $ | 1,269  |  
|                                                                                                                                                          |  |                                 |        |   |                                 |   |        |  



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(11) Disclosures About Fair Value Measurements

In accordance with U.S. generally accepted accounting principles the following disclosures show the hierarchal disclosure framework associated with the
level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels defined by U.S. generally accepted accounting principles are as follows:



|            |  |                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level I -   |  | Quoted prices are available in the active markets for identical assets or liabilities as of the reported date.                                                                                                                                                                                                                                                                           
|            | 
|Level II -  |  | Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and
liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
|            | 
|Level III - |  | Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.                                                                                                                                                                                                                                                      

This hierarchy requires the use of observable market data when available.

The following table presents the assets and liabilities reported on the consolidated statements of financial condition at their fair value as of
March 31, 2010 and September 30, 2009 by level within the fair value hierarchy. As required by U.S. generally accepted accounting principles, financial assets and liabilities are classified in their entirety based on the lowest level of
input that is significant to the fair value measurement.



|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|------------------------------------------------------------------ |  | -------------- | ------ | -------- | - | --------- |  | ----- | ------ |  | - | -------
|                                                                   |  | Level I        |        | Level II |   | Level III |  | Total
|                                                                   |  | (In Thousands)
|As of March 31, 2010                                               |  |                |       
|Assets:                                                            |  |                |        |          |   |           |  |       |        |  |   |        
|Available-for-sale securities:                                     |  |                |        |          |   |           |  |       |        |  |   |        
|U.S. government and agency obligations                             |  | $              |       |          | $ | 46,929    |  | $     |       |  | $ | 46,929 
|Municipal obligations                                              |  |                |       |          |   | 26,230    |  |       |       |  |   | 26,230 
|Corporate obligations                                              |  |                |       |          |   | 9,459     |  |       |       |  |   | 9,459  
|Equity securities                                                  |  |                | 3,383  |          |   |          |  |       |       |  |   | 3,383  
|Mutual funds                                                       |  |                | 9,453  |          |   |          |  |       |       |  |   | 9,453  
|Trust preferred securities                                         |  |                |       |          |   |          |  |       | 12,580 |  |   | 12,580 
|Federal Home Loan Mortgage Corp. preferred stock                   |  |                |       |          |   | 48        |  |       |       |  |   | 48     
|Mortgage-backed securities and collateralized mortgage obligations |  |                |       |          |   | 53,284    |  |       |       |  |   | 53,284 
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|                                                                   |  | $              | 12,836 |          | $ | 135,950   |  | $     | 12,580 |  | $ | 161,366
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|Residential loans held for sale                                    |  | $              |       |          | $ | 517       |  | $     |       |  | $ | 517    
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|Liabilities:                                                       |  |                |        |          |   |           |  |       |        |  |   |        
|Derivative instruments                                             |  | $              |       |          | $ | 539       |  | $     |       |  | $ | 539    
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|------------------------------------------------------------------ |  | -------------- | ------ | -------- | - | --------- |  | ----- | ------ |  | - | -------
|                                                                   |  | Level I        |        | Level II |   | Level III |  | Total
|As of September 30, 2009                                           |  | (In Thousands)
|Assets:                                                            |  |                |        |          |   |           |  |       |        |  |   |        
|Available-for-sale securities:                                     |  |                |        |          |   |           |  |       |        |  |   |        
|U.S. government and agency obligations                             |  | $              |       |          | $ | 51,999    |  | $     |       |  | $ | 51,999 
|Municipal obligations                                              |  |                |       |          |   | 23,464    |  |       |       |  |   | 23,464 
|Corporate obligations                                              |  |                |       |          |   | 14,174    |  |       |       |  |   | 14,174 
|Equity securities                                                  |  |                | 3,298  |          |   |          |  |       |       |  |   | 3,298  
|Mutual funds                                                       |  |                | 9,900  |          |   |          |  |       |       |  |   | 9,900  
|Trust preferred securities                                         |  |                |       |          |   |          |  |       | 13,527 |  |   | 13,527 
|Federal Home Loan Mortgage Corp. preferred stock                   |  |                |       |          |   | 91        |  |       |       |  |   | 91     
|Mortgage-backed securities and collateralized mortgage obligations |  |                |       |          |   | 49,662    |  |       |       |  |   | 49,662 
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|                                                                   |  | $              | 13,198 |          | $ | 139,390   |  | $     | 13,527 |  | $ | 166,115
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|Residential loans held for sale                                    |  | $              |       |          | $ | 694       |  | $     |       |  | $ | 694    
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        
|Liabilities:                                                       |  |                |        |          |   |           |  |       |        |  |   |        
|Derivative instruments                                             |  | $              |       |          | $ | 578       |  | $     |       |  | $ | 578    
|                                                                   |  |                |        |          |   |           |  |       |        |  |   |        

At March 31, 2010, pooled trust preferred securities represent
investments in 20 different trust preferred offerings with an aggregate fair value of $12,580,000 of which $12,569,000 had floating rates based on LIBOR at March 31, 2010. Due to dislocations in the credit markets broadly, and the lack of
trading and new issuance in pooled trust preferred securities, market price indications generally reflect the lack of liquidity in the market. Prices on trust preferred securities were calculated by a third party valuation company. The valuation
methodology is based on the premise that the fair value of the securitys collateral should approximate the fair value of its liabilities. In general, the spreads for trust preferred collateral have widened by over 500 basis points since 2007.
To determine the decline in the collaterals value associated with this increase in credit spreads, the third party projected collateral cash flows for each pool using Intex, the commonly used modeling software for securities of this type. Once
generated, the cash flows for each pool were discounted at the applicable rate to arrive at the fair value of the collateral. Any declines in the resulting fair value of the collateral below the par value represents the component of loss attributed
to credit risk. The credit quality of each collateral pool was then analyzed for the purpose of projecting defaults and recoveries. Prepayment assumptions were also estimated. With these additional assumptions, cash flow projections for both the
collateral and the debt obligation were modeled and valued. The fair value of each bond was then determined by discounting the projected cash flows by an adjusted discount rate (adjusted to capture the default risk). During the three months ended
March 31, 2010 the Company recognized in earnings $296,000 of impairment charges on two pooled trust preferred securities resulting from several factors, including a downgrade in their credit ratings, failure to pass their principal coverage
tests, and the decline in the net present value of their projected cash flows. During the six months ended March 31, 2010 the Company recognized in earnings $1.5 million of impairment charges on six pooled trust preferred securities resulting
from several factors, including a downgrade in their credit ratings, failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected cash flows. Management of the Company
has deemed the impairment on these six trust preferred securities to be other-than-temporary based upon these factors and the duration and extent to which their market values have been less than cost, the inability to forecast a recovery in market
value, and other factors concerning the issuers in the pooled security. There were $412,000 of impairment charges taken on these securities during the three and six months ending March 31, 2009. Based on cash flow forecasts for the remaining
securities, management expects to recover the remaining amortized cost of these securities. Furthermore, the Company does not intend to sell these securities and it is not more-likely-than-not that the Company will be required to sell these
securities before recovery of their cost basis, which may be at maturity.



27



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



The following table presents the changes in the Level III fair-value category for the six months ended
March 31, 2010. The Company classifies financial instruments in Level III of the fair-value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to the unobservable inputs, the
valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.

Securities Available-For-Sale (In Thousands)



|                                                               |  |   |        |  
|-------------------------------------------------------------- |  | - | ------ | -
|Beginning balance October 1, 2009                              |  | $ | 13,527 |  
|Impairment charge on securities                                |  |   | (1,530 | )
|Net change in unrealized loss on securities available-for-sale |  |   | 1,740  |  
|Purchases, issuances, calls, and settlements                   |  |   | (1,038 | )
|Other                                                          |  |   | (119   | )
|Transfers in and/or out of Level III                           |  |   |       |  
|                                                               |  |   |        |  
|Ending balance March 31, 2010                                  |  | $ | 12,580 |  
|                                                               |  |   |        |  

The following table presents the assets measured on a nonrecurring basis on the consolidated statements of financial
condition at their fair value as of March 31, 2010 by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value
the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where
valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.



|                                         |  |                |   |          |   |           |  |       |       |  |   |       
|---------------------------------------- |  | -------------- | - | -------- | - | --------- |  | ----- | ----- |  | - | ------
|                                         |  | Level I        |   | Level II |   | Level III |  | Total
|As of March 31, 2010                     |  | (In Thousands)
|Assets Measured on a Nonrecurring Basis: |  |                |   |          |   |           |  |       |       |  |   |       
|Impaired loans                           |  | $              |  |          | $ | 9,896     |  | $     | 6,769 |  | $ | 16,665
|                                         |  |                |   |         
|                                         |  | Level I        |   | Level II |   | Level III |  | Total
|As of September 30, 2009                 |  | (In Thousands)
|Assets Measured on a Nonrecurring Basis: |  |                |   |          |   |           |  |       |       |  |   |       
|Impaired loans                           |  | $              |  |          | $ | 5,446     |  | $     | 8,709 |  | $ | 14,155

(12) Disclosures About Fair Value
of Financial Instruments

Management uses its best judgment in estimating the fair value of the Companys financial instruments,
however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales
transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective periods, and have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates. As
such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only
provided for a limited portion of the Companys assets and liabilities.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates,
comparisons between the Companys disclosures and those of other companies may not be meaningful. The Company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions:

Cash and Due From Banks

The carrying amounts reported approximate those assets fair value.

Interest Bearing Demand Deposits with Other Institutions

The carrying amounts reported approximate those assets fair value.

Securities

Fair
values of securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable securities. Prices on trust preferred securities were calculated by a
third party using a discounted projected cash-flow technique. Cash flows were estimated based on credit quality and prepayment assumptions. The present value of the projected cash flows was calculated using an adjusted discount rate which reflects
higher credit spreads due to economic stresses in the marketplace and lower credit ratings.

Loans Receivable

The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these calculations is based upon
the treasury yield curve adjusted for non-interest operating costs, credit loss, current market prices and assumed prepayment risk.

Federal Home Loan Bank Stock

The carrying amounts reported approximate those assets fair value.

Accrued Interest Receivable and Payable

The carrying amounts of accrued interest receivable and payable approximate their fair value.

Deposits

Deposits with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar
assets and liabilities. Deposits with no stated maturities have an estimated fair value equal to both the amount payable on demand and the recorded book balance.

Short-Term Borrowings

The carrying amounts for short-term borrowings approximate the estimated fair value of such liabilities.

Securities Sold Under Agreements to Repurchase

The fair values for securities sold under agreement to repurchase were estimated using the interest rate currently available from the party that holds the
existing debt.

Subordinated Debt

Fair values for subordinated debt are estimated using a discounted cash flow calculation similar to that used in valuing fixed rate certificate of deposit
liabilities.



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



Interest Rate Swap Contracts

Estimated fair values of interest rate swap contracts are based on quoted market prices.

Advance Payments by Borrowers for Taxes and Insurance

The fair value of the advance payments by borrowers for taxes and insurance approximates the carrying value of those commitments at those dates.

Long-Term Debt

The fair values for long-term debt were estimated using the interest rate currently available from the party that holds the existing debt.



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



Off-Balance Sheet Instruments

Fair values for the Companys off-balance sheet instruments are based on fees currently charged to enter into similar agreements, taking into account
the remaining terms of the agreements and the counterparties credit standing.

The carrying amounts and fair values of the
Companys financial instruments are presented in the following table:



|                                                         |  |                |         |                    |   |                |  |           |         |  |   |        
|-------------------------------------------------------- |  | -------------- | ------- | ------------------ | - | -------------- |  | --------- | ------- |  | - | -------
|                                                         |  | March 31,2010  |         | September 
30,2009
|                                                         |  | CarryingAmount |         | FairValue          |   | CarryingAmount |  | FairValue
|                                                         |  | (In Thousands)
|                                                         |  |                |         |                   
|Financial assets:                                        |  |                |         |                    |   |                |  |           |         |  |   |        
|Cash and due from banks                                  |  | $              | 5,496   |                    | $ | 5,496          |  | $         | 20,601  |  | $ | 20,601 
|Interest bearing demand deposits with other institutions |  |                | 23,686  |                    |   | 23,686         |  |           | 21,879  |  |   | 21,879 
|Securities available-for-sale                            |  |                | 161,366 |                    |   | 161,366        |  |           | 166,115 |  |   | 166,115
|Securities held-to-maturity                              |  |                | 85,037  |                    |   | 85,287         |  |           | 72,448  |  |   | 72,737 
|Loans receivable, net (including loans held for sale)    |  |                | 390,346 |                    |   | 391,118        |  |           | 410,481 |  |   | 414,988
|Federal Home Loan Bank stock                             |  |                | 10,034  |                    |   | 10,034         |  |           | 10,034  |  |   | 10,034 
|Accrued interest receivable                              |  |                | 2,731   |                    |   | 2,731          |  |           | 2,900   |  |   | 2,900  
|                                                         |  |                |         |                   
|Financial liabilities:                                   |  |                |         |                    |   |                |  |           |         |  |   |        
|Deposits                                                 |  |                | 446,130 |                    |   | 431,805        |  |           | 443,880 |  |   | 447,529
|Short-term borrowings                                    |  |                | 131     |                    |   | 131            |  |           | 104     |  |   | 104    
|Securities sold under agreements to repurchase           |  |                | 105,080 |                    |   | 114,071        |  |           | 106,244 |  |   | 116,280
|Subordinated Debt                                        |  |                | 7,732   |                    |   | 7,732          |  |           | 7,732   |  |   | 7,732  
|Interest rate swap contracts                             |  |                | 539     |                    |   | 539            |  |           | 578     |  |   | 578    
|Advance payments by borrowers for taxes and insurance    |  |                | 2,482   |                    |   | 2,482          |  |           | 1,274   |  |   | 1,274  
|Accrued interest payable                                 |  |                | 1,087   |                    |   | 1,087          |  |           | 1,263   |  |   | 1,263  
|Long-term debt                                           |  |                | 93,443  |                    |   | 97,377         |  |           | 118,541 |  |   | 123,139
|                                                         |  |                |         |                   
|Off-balance sheet financial instruments:                 |  |                |         |                    |   |                |  |           |         |  |   |        
|Standby letters of credit                                |  |                |        |                    |   |               |  |           |        |  |   |       
|Commitments to extend credit                             |  |                |        |                    |   |               |  |           |        |  |   |       

(13) Federal Home
Loan Bank (FHLB) Stock Dividends

The FHLB of Pittsburgh historically paid quarterly cash dividends, which were last paid on
November 17, 2008 at an annualized rate of 2.35%. In December 2008, the FHLB announced that it was suspending dividend payments beginning with the dividend payment that would have been payable in the March 2009 quarter in an effort to retain
capital. In addition, the historical practice of repurchasing excess capital stock from members of the FHLB was also suspended. The Banks investment in the FHLB of Pittsburgh was $10.0 million at March 31, 2010 and is valued at the par
issue amount of $100 per share.



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements - (Unaudited)(Continued)

March 31, 2010



(14) TARP Capital Purchase Program

On December 12, 2008, the Company entered into a Letter Agreement and Securities Purchase Agreement (collectively, the Purchase
Agreement) with the United States Department of the Treasury (Treasury) under the TARP Capital Purchase Program, pursuant to which the Company sold (i) 7,000 shares of the Companys Fixed Rate Cumulative Perpetual
Preferred Stock, Series B (the Series B Preferred Stock) and (ii) a warrant (the Warrant) to purchase 121,387 shares of the Companys common stock, par value $0.01 per share (the Common Stock), for an
aggregate purchase price of $7.0 million in cash.

The Series B Preferred Stock will qualify as Tier 1 capital and will pay cumulative
dividends at a rate of 5% per annum for the first five years, and 9% per annum thereafter. Pursuant to the terms of the Purchase Agreement, the ability of the Company to declare or pay dividends or distributions on, or purchase, redeem or
otherwise acquire for consideration, shares of its Junior Stock (as defined below) and Parity Stock (as defined below) will be subject to restrictions, including a restriction against increasing dividends from the last quarterly cash dividend per
share ($0.14) declared on the Common Stock prior to December 12, 2008. The Company may redeem the Series B Preferred Stock at a price of $1,000 per share plus accrued and unpaid dividends, subject to the concurrence of the Treasury and its
federal banking regulators. Prior to December 12, 2011, unless the Company has redeemed the Series B Preferred Stock or the Treasury has transferred the Series B Preferred Stock to a third party, the consent of the Treasury will be required for
the Company to increase its Common Stock dividend or repurchase its Common Stock or other equity or capital securities, other than in certain circumstances specified in the Agreement.

The Warrant has a 10-year term and is immediately exercisable upon its issuance, with an exercise price, subject to anti-dilution adjustments, equal to
$8.65 per share of the Common Stock. Treasury has agreed not to exercise voting power with respect to any shares of Common Stock issued upon exercise of the Warrant.

The Series B Preferred Stock and the Warrant were issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended. Upon the request of Treasury at any time, the Company has agreed to promptly enter into a deposit arrangement pursuant to which the Series B Preferred Stock may be deposited and depositary shares (Depositary
Shares), representing fractional shares of Series B Preferred Stock, may be issued. The Company has agreed to register the Series B Preferred Stock, the Warrant, the shares of Common Stock underlying the Warrant (the Warrant
Shares) and Depositary Shares, if any, as soon as practicable after the date of the issuance of the Series B Preferred Stock and the Warrant. Neither the Series B Preferred Stock nor the Warrant will be subject to any contractual restrictions
on transfer, except that Treasury may only transfer or exercise an aggregate of one-half of the Warrant Shares prior to the earlier of the redemption of 100% of the shares of Series B Preferred Stock or December 31, 2009.

The fair value of the preferred stock and the common stock warrants was determined based on their relative fair values calculated as of their issuance
date, December 12, 2008. Based on their relative fair values, the TARP proceeds (net of issuance costs) were allocated between preferred stock and additional paid in capital (for the warrant component). The market/discount rate used when
deriving the fair value of the preferred stock was 10.00%. This rate was determined by calculating the average dividend rate of the five most recent preferred equity offerings completed by banks and thrifts. A Black-Scholes model was used to
calculate the fair value of the common stock warrants. Key assumptions input into the model included: amount of common stock, $1,050,000 (based on 15% of the gross TARP proceeds); market price of the common stock on the warrant grant date, $6.75;
exercise price of the warrant, $8.65 (20 day trailing average of the common stock as of the Treasurys approval date); number of common stock warrants issued, 121,387; expected life of the warrants, 5 years; the risk free interest rate, 1.55%;
the continuous annualized volatility of the change in the underlying common stocks price, 32.00%; and the simple annual expected cash dividend yield on common stock, 8.30%. Based on the calculations, the fair value of the preferred stock
represented 95.65% of the total fair value of the preferred stock and common stock warrants, while the fair value of the common stock warrants represented 4.35% of the total. The discount on the preferred stock is being amortized on a straight-line
basis over five years.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

FIDELITY BANCORP, INC. AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion,
the words believes, anticipates, contemplates, expects, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those projected. Those risks and uncertainties include changes in interest rates, risks associated with the effect of integrating newly acquired businesses, the ability to control costs and
expenses, and general economic conditions. The Company does not undertake to, and specifically disclaims any obligation to, update any such forward-looking statements.

Fidelity Bancorp, Inc.s (Fidelity or the Company) business is conducted principally through its wholly-owned subsidiary,
Fidelity Bank PaSB, (the Bank). All references to the Company refer collectively to the Company and the Bank, unless the context indicates otherwise.

Critical Accounting Policies

Note 1 on
pages 57 through 65 of the Companys 2009 Annual Report to Shareholders lists significant accounting policies used in the development and presentation of its financial statements. This discussion and analysis, the significant accounting
policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of the Company and its results of operations.

The most significant estimates in the preparation of the Companys financial statements are for the allowance for loan losses, evaluation of
investments for other-than-temporary impairment, income taxes, and accounting for stock options. Please refer to the discussion of the allowance for loan losses in Note 8, Allowance for Loan Losses, on page 22 above. In addition, further
discussion of the estimates used in determining the allowance for loan losses is contained in the discussion on Provision for Loan Losses on pages 44 and 45 of the Companys 2009 Annual Report to Shareholders. Please refer to the
discussion of other-than-temporary impairment in Note 6, Securities, on pages 13 through 20 above and in Note 2, Securities, on pages 66 through 73 of the Companys 2009 Annual Report to Shareholders. Please refer to the
discussion of income taxes on page 44 below and in Note 11, Income Taxes, on pages 83 through 85 of the Companys 2009 Annual Report to Shareholders. Stock based compensation expense is reported in net income utilizing the
fair-value-based method in accordance with U.S. generally accepted accounting principles. The fair value of each option award is estimated at the date of grant using the Black-Scholes option-pricing model. Please refer to the discussion of stock
based compensation in Note 4, Stock Based Compensation, on pages 11 and 12 above. In addition, further discussion of the assumptions used in determining stock based compensation is contained in Note 14, Stock Option Plans, on
pages 87 through 89 of the Companys 2009 Annual Report to Shareholders.

Comparison of Financial Condition

Total assets of the Company decreased $22.0 million, or 3.0%, to $708.0 million at March 31, 2010 from $730.0 million at September 30, 2009.
Significant changes in individual categories include decreases in cash and cash equivalents of $13.3 million, securities available-for-sale of $4.7 million, and net loans of $20.0 million, partially offset by increases in securities held-to-maturity
of $12.6 million and other assets of $2.8 million. The decrease in cash and cash equivalents is a result of the Company repaying $25.0 million in Federal Home Loan Bank advances that matured during the current quarter. The decrease in net loans
reflects $54.3 million of prepayments, partially offset by $32.9 million in loan originations. The increase in other assets is primarily due to the FDIC requiring all insured depository institutions to prepay their federal deposit insurance
assessment through 2012. The prepayment was due on December 30, 2009 and was based on the institutions assessment base and assessment rate as of September 30, 2009 assuming a 5% annual growth in deposits and a three basis point
increase in the assessment rate during years 2011 and 2012.



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##### Table of Contents

Total liabilities of the Company decreased $23.2 million, or 3.4%, to $659.7 million at March 31, 2010
from $682.9 million at September 30, 2009. Significant changes include a decrease in long-term debt of $25.1 million, partially offset by an increase in deposits of $2.3 million. As mentioned above, the decrease in long-term debt was a result
of the Company repaying $25.0 million in Federal Home Loan Bank advances that matured during the current quarter. The increase in deposits is primarily attributed to an increase in checking accounts of $3.3 million, an increase in savings accounts
of $5.2 million, partially offset by a decrease in time deposits of $4.9 million and a decrease in money market accounts of $1.3 million.

Stockholders equity increased to $48.3 million at March 31, 2010, compared to $47.1 million at September 30, 2009. This result reflects
net income for the six-month period ended March 31, 2010 of $711,000; stock issued under the Dividend Reinvestment Plan of $8,000; stock-based compensation expense of $35,000; and a decrease in the accumulated other comprehensive loss of
$742,000, which is a result of changes in the net unrealized losses on the available-for-sale securities and by the unrealized loss recognized on the cash flow hedge as discussed in Note 9, Derivative Instruments, on pages 23 and 24
above. Offsetting these increases were common and preferred stock cash dividends paid of $298,000. On December 12, 2008, the Company sold $7.0 million in preferred stock to the U.S. Department of Treasury as a participant in the federal
governments TARP Capital Purchase Program. In connection with the investment, the Company also issued a ten-year warrant to the Treasury which permits the Treasury to purchase up to 121,387 shares of its common stock at an exercise price of
$8.65 per share. The Series B Preferred Stock will pay dividends at the rate of 5% per annum until the fifth anniversary of issuance and, unless redeemed earlier, at the rate of 9% thereafter. Until the third anniversary of the issuance of the
Series B Preferred Stock or its earlier redemption or transfer by the Treasury Department to an unaffiliated holder, the Company may not increase the dividend on the common stock or repurchase any shares of common stock. Approximately $3.4 million
of the balances in retained earnings as of March 31, 2010 and September 30, 2009 represent base year bad debt deductions for tax purposes only, as they are considered restricted accumulated earnings.

Non-Performing Assets

The following
table sets forth information regarding non-accrual loans and foreclosed real estate held by the Company at the dates indicated. The table does not include $1.4 million and $2.4 million in loans at March 31, 2010 and September 30, 2009,
respectively, that were more than 90 days past maturity but were otherwise performing in accordance with their terms. The Company did not have any loans which were classified as troubled debt restructurings at the dates presented (dollar amounts in
thousands).



|                                                                                    |  |               |        |   |                   |   |        |  
|----------------------------------------------------------------------------------- |  | ------------- | ------ | - | ----------------- | - | ------ | -
|                                                                                    |  | March 31,2010 |        |   | September 30,2009 |  
|Non-accrual residential real estate loans (one-to-four family)                      |  | $             | 3,082  |   |                   | $ | 1,397  |  
|Non-accrual construction, multi-family residential and commercial real estate loans |  |               | 12,805 |   |                   |   | 11,772 |  
|Non-accrual installment loans                                                       |  |               | 723    |   |                   |   | 350    |  
|Non-accrual commercial business loans                                               |  |               | 261    |   |                   |   | 1,386  |  
|                                                                                    |  |               |        |   |                   |   |        |  
|Total non-performing loans                                                          |  | $             | 16,871 |   |                   | $ | 14,905 |  
|                                                                                    |  |               |        |   |                   |   |        |  
|Total non-performing loans as a percent of net loans receivable                     |  |               | 4.33   | % |                   |   | 3.64   | %
|                                                                                    |  |               |        |   |                   |   |        |  
|Total foreclosed real estate                                                        |  | $             | 269    |   |                   | $ | 103    |  
|                                                                                    |  |               |        |   |                   |   |        |  
|Total non-performing loans and foreclosed real estate as a percent of total assets  |  |               | 2.42   | % |                   |   | 2.05   | %
|                                                                                    |  |               |        |   |                   |   |        |  

Included in non-performing loans at March 31, 2010 are twenty-four single-family residential real estate loans totaling
$3.1 million, twelve commercial real estate loans totaling $12.8 million, twenty-three installment loans totaling $723,000, and six commercial business loans totaling $261,000. Non-performing loans increased $2.0 million to $16.9 million at
March 31, 2010 from $14.9 million at September 30, 2009. Significant changes include thirteen residential real estate loans with an aggregate balance of $1.7 million and six commercial real estate loans with an aggregate balance of $1.7
million that were placed on non-accrual during the current period.



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At March 31, 2010, the Company had an allowance for loan losses of $5.5 million or 1.4% of gross loans
receivable, as compared to an allowance of $5.7 million or 1.4% of gross loans receivable at September 30, 2009. The allowance for loan losses equals 32.5% of non-performing loans at March 31, 2010 compared to 38.3% at September 30,
2009. The level of the allowance for loan losses as a percentage of non-performing loans reflects the concentration of non-performing loans in the commercial real estate category, most of which have collateral values exceeding their principal
balances owed and do not have a related allowance for loan losses as a result of applying impairment tests prescribed under U.S. generally accepted accounting principles (see Footnote 8). Management believes the balance in the allowance for loan
losses is adequate based on its analysis of quantitative and qualitative factors as of March 31, 2010. Management has evaluated its entire loan portfolio, including these non-performing loans, and the overall allowance for loan losses and
believes that the allowance for losses on loans at March 31, 2010 is reasonable. See also Provision for Loan Losses on page 41. However, there can be no assurance that the allowance for loan losses is sufficient to cover possible
future loan losses.

The Company recognizes that it must maintain an Allowance for Loan and Lease Losses (ALLL) at a level that is
adequate to absorb estimated credit losses associated with the loan and lease portfolio. The Companys Board of Directors has adopted an ALLL policy designed to provide management with a systematic methodology for determining and documenting
the ALLL each reporting period. This methodology was developed to provide a consistent process and review procedure to ensure that the ALLL is in conformity with the Companys policies and procedures and other supervisory and regulatory
guidelines.

The Companys ALLL methodology incorporates managements current judgments about the credit quality of the loan
portfolio. The following factors are considered when analyzing the appropriateness of the allowance: historical loss experience; volume; type of lending conducted by the Bank; industry standards; the level and status of past due and non-performing
loans; the general economic conditions in the Banks lending area; and other factors affecting the collectibility of the loans in its portfolio. The primary elements of the Banks methodology include portfolio segmentation and impairment
measurement. Management acknowledges that this is a dynamic process and consists of factors, many of which are external and out of managements control, that can change often, rapidly and substantially. The adequacy of the ALLL is based upon
estimates considering all the aforementioned factors as well as current and known circumstances and events. There is no assurance that actual portfolio losses will not be substantially different than those that were estimated.



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##### Table of Contents

Comparison of Results of Operations

for the Three and Six Months Ended March 31, 2010 and 2009

Net Income

The Company recorded net
income for the three months ended March 31, 2010 of $479,000 and net income available to common stockholders of $376,000 or $0.12 per diluted common share compared to a net loss of $129,000 and a net loss available to common stockholders of
$250,000 or ($0.08) per diluted common share for the same period in 2009. The increase in net income primarily reflects a decrease in other-than-temporary impairment (OTTI) charges on certain investment securities of $1.3 million. Other
factors contributing to the increase include an increase in other income (excluding OTTI charges) of $358,000, or 38.0%, a decrease in the provision for loan losses of $20,000, and a decrease in the income tax provision of $280,000, partially offset
by a decrease in net interest income of $1.1 million, or 23.2%, and an increase in operating expenses of $338,000, or 9.9%.

The Company
recorded net income for the six months ended March 31, 2010 of $711,000 and net income available to common stockholders of $506,000 or $0.17 per diluted common share compared to net income of $1.6 million and net income available to common
stockholders of $1.4 million or $0.45 per diluted common share for the same period in 2009. Factors contributing to the decrease include a decrease in net interest income of $2.1 million, or 22.7%, and an increase in operating expenses of $807,000,
or 12.1%, partially offset by a decrease in the provision for loan losses of $275,000, a decrease in OTTI charges on certain investment securities of $190,000, an increase in other income (excluding OTTI charges) of $1.2 million, or 68.4%, and a
decrease in the income tax provision of $368,000.

The Companys net income available to common stockholders and diluted earnings per
common share for the three and six months ended March 31, 2010 reflects the impact of $103,000 and $205,000 of preferred stock dividends and discount accretion, respectively. The Companys net loss/income available to common stockholders
and diluted earnings per common share for the three and six months ended March 31, 2009 reflects the impact of $121,000 of preferred stock dividends and discount accretion. The higher level of preferred stock dividend and discount accretion for
the three months ended March 31, 2009 reflects the payment of dividends accrued from the date of issue, December 12, 2008.



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Interest Rate Spread

The Companys interest rate spread, the difference between average yields calculated on a tax-equivalent basis on interest-earning assets and the
average cost of funds, decreased to 1.94% (annualized) in the three months ended March 31, 2010 from 2.41% (annualized) in the same period in 2009. The Companys tax-equivalent interest rate spread decreased to 1.97% (annualized) in the
six months ended March 31, 2010 from 2.47% (annualized) in the same period in 2009. The decrease for the three and six month period ended March 31, 2010 is the result of the average rate paid on interest-bearing liabilities decreasing less
than the average yield on interest-earning assets. The following table shows the average yields earned on the Companys interest-earning assets and the average rates paid on its interest-bearing liabilities for the periods indicated, the
resulting interest rate spreads, and the net yields on interest-earning assets.



|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  
|-------------------------------------------------------------------------------------------- |  | --------------------------- | - |  | ------------------------- | - |  | ---- | - |  | ---- | -
|                                                                                             |  | Three Months EndedMarch 31, |   |  | Six Months EndedMarch 31, |  
|                                                                                             |  | 2010                        |   |  | 2009                      |   |  | 2010 |   |  | 2009 |  
|Average yield on:                                                                            |  |                             |   |  |                           |   |  |      |   |  |      |  
|Mortgage loans                                                                               |  | 5.55                        | % |  | 5.92                      | % |  | 5.62 | % |  | 5.96 | %
|Mortgage-backed securities                                                                   |  | 3.07                        |   |  | 4.33                      |   |  | 3.25 |   |  | 4.55 |  
|Installment loans                                                                            |  | 5.56                        |   |  | 5.89                      |   |  | 5.66 |   |  | 6.04 |  
|Commercial business loans and leases                                                         |  | 4.91                        |   |  | 5.08                      |   |  | 4.96 |   |  | 5.28 |  
|Interest-earning deposits with other institutions, investment securities, and FHLB stock (1) |  | 3.02                        |   |  | 4.80                      |   |  | 3.02 |   |  | 4.94 |  
|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  
|Total interest-earning assets                                                                |  | 4.46                        |   |  | 5.42                      |   |  | 4.54 |   |  | 5.53 |  
|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  
|Average rates paid on:                                                                       |  |                             |   |  |                           |   |  |      |   |  |      |  
|Deposits                                                                                     |  | 1.42                        |   |  | 2.31                      |   |  | 1.50 |   |  | 2.39 |  
|Securities sold under agreement to repurchase                                                |  | 4.83                        |   |  | 4.90                      |   |  | 4.81 |   |  | 4.91 |  
|Short-term borrowings                                                                        |  | 0.23                        |   |  | 0.52                      |   |  | 0.25 |   |  | 0.65 |  
|Long-term debt                                                                               |  | 4.15                        |   |  | 4.08                      |   |  | 4.14 |   |  | 4.19 |  
|Subordinated debt                                                                            |  | 5.28                        |   |  | 5.32                      |   |  | 5.28 |   |  | 5.33 |  
|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  
|Total interest-bearing liabilities                                                           |  | 2.52                        |   |  | 3.01                      |   |  | 2.57 |   |  | 3.06 |  
|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  
|Average interest rate spread                                                                 |  | 1.94                        | % |  | 2.41                      | % |  | 1.97 | % |  | 2.47 | %
|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  
|Net yield on interest-earning assets                                                         |  | 2.18                        | % |  | 2.71                      | % |  | 2.20 | % |  | 2.73 | %
|                                                                                             |  |                             |   |  |                           |   |  |      |   |  |      |  



|(1) | Interest income on tax-exempt investments has been adjusted for federal income tax purposes using a rate of 34%. Interest income on tax-exempt investment securities was
$442,000 and $438,000 and the yield was 4.19% and 4.49%, prior to adjusting for federal income tax for the three months ended March 31, 2010 and 2009, respectively. Interest income on tax-exempt investment securities was $888,000 and $871,000
and the yield was 4.22% and 4.52%, prior to adjusting for federal income tax for the six months ended March 31, 2010 and 2009, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Interest Income

Interest on loans decreased $1.4 million or 20.6% to $5.5 million for the three months ended March 31, 2010, compared to $6.9 million in the same
period in 2009. Interest on loans decreased $2.7 million or 19.3% to $11.3 million for the six months ended March 31, 2010, compared to $13.9 million in the same period in 2009. The decrease for both periods reflects both a decrease in the
average size of the loan portfolio and a decrease in the average yield earned on the loan portfolio. For the three-month period ended March 31, 2010, the average outstanding loan balances decreased $72.1 million or 15.3% and the average yield
decreased by 36 basis points from 5.82% in the prior period to 5.46% in the current period. For the six-month period ended March 31, 2010, the average outstanding loan balances decreased $65.6 million or 13.9% and the average yield decreased by
37 basis points from 5.91% in the prior period to 5.54% in the current period. The average loan balances continued to decrease primarily due to increases in principal repayments. Also, due to the current low interest rate environment, for
asset/liability purposes, the Bank continues to sell most of the fixed rate, single-family mortgage loans that it originates.

Interest on
mortgage-backed securities decreased $271,000 or 26.9% to $738,000 for the three-month period ended March 31, 2010, compared to $1.0 million in the same period in 2009. Interest on mortgage-backed securities decreased $627,000 or 29.2% to $1.5
million for the six-month period ended March 31, 2010, compared to $2.1 million in the same period in 2009. The decrease for the three months ended March 31, 2010 reflects a decrease in the average yield earned on the portfolio, partially
offset by an increase in the average balance of mortgage-backed securities owned. The decrease for the six months ended March 31, 2010 reflects both a decrease in the average balance of mortgage-backed securities owned and a decrease in the
average yield earned on the portfolio. For the three-month period ended March 31, 2010, the average balance of mortgage-backed securities increased $3.0 million or 3.2% and the average yield decreased by 126 basis points from 4.33% in the prior
period to 3.07% in the current period. For the six-month period ended March 31, 2010, the average balance of mortgage-backed securities decreased $1.4 million or 1.4% and the average yield decreased by 130 basis points from 4.55% in the prior
period to 3.25% in the current period. The yield earned on mortgage-backed securities is affected, to some degree, by the repayment rate of loans underlying the securities. Premiums or discounts on the securities, if any, are amortized to interest
income over the life of the securities using the level yield method. During periods of falling interest rates, repayments of the loans underlying the securities generally increase, which shortens the average life of the securities and accelerates
the amortization of the premium or discount. Falling rates, however, also tend to increase the market value of the securities. A rising rate environment generally causes a reduced level of loan repayments and a corresponding decrease in
premium/discount amortization rates. Rising rates generally decrease the market value of the securities.

Interest on interest-bearing demand
deposits with other institutions and investment securities (non-tax equivalent) decreased $268,000 or 18.2% to $1.2 million for the three months ended March 31, 2010, as compared to $1.5 million in the same period in 2009. Interest on
interest-bearing demand deposits with other institutions and investment securities (non-tax equivalent) decreased $599,000 or 19.7% to $2.4 million for the six months ended March 31, 2010, as compared to $3.0 million in the same period in 2009.
The decrease for both periods reflects a decrease in the yield earned on these investments, partially offset by an increase in the average balance of investment securities in the portfolio. For the three-month period ended March 31, 2010 the
average balance of interest-bearing demand deposits with other institutions and investment securities (tax-equivalent) increased $47.2 million or 33.9% and the average yield decreased by 178 basis points from 4.80% in the prior period to 3.02% in
the current period. For the six-month period ended March 31, 2010 the average balance of interest-bearing demand deposits with other institutions and investment securities (tax-equivalent) increased $50.0 million or 36.0% and the average yield
decreased by 192 basis points from 4.94% in the prior period to 3.02% in the current period. The higher average balance was primarily related to purchases of lower risk municipal, government, and agency securities. The decrease in the yields are a
result of the current lower interest rate environment. Also, the decrease was attributed to the FHLB announcing in December 2008 that it was suspending dividend payments beginning with the dividend payment that would have been payable in the March
2009 quarter in an effort to retain capital. The FHLB of Pittsburgh historically paid quarterly cash dividends, which were last paid on November 17, 2008 at an annualized rate of 2.35%.



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Interest Expense

Interest on deposits decreased $779,000 or 35.8% to $1.4 million for the three-month period ended March 31, 2010, as compared to $2.2 million during
the same period in 2009. Interest on deposits decreased $1.5 million or 34.2% to $3.0 million for the six-month period ended March 31, 2010, as compared to $4.5 million in the same period in 2009. The decrease for both periods reflects a
decrease in the average cost of the deposits, partially offset by an increase in the average balance of deposits. For the three-month period ended March 31, 2010 the average balance of deposits increased $17.0 million or 4.4% and the average
yield decreased by 89 basis points from 2.31% in the prior period to 1.42% in the current period. For the six-month period ended March 31, 2010 the average balance of deposits increased $19.3 million or 5.1% and the average yield decreased by
89 basis points from 2.39% in the prior period to 1.50% in the current period. Management continues to try to attract and retain deposit accounts. The Company manages its cost of interest bearing deposit accounts by diligently monitoring the
interest rates on its products as well as the rates being offered by its competition through bi-weekly interest rate committee meetings and utilizing rate surveys and hence subsequently adjusting rates accordingly.

Interest on securities sold under agreement to repurchase, including retail, term, and wholesale structured borrowings, decreased $11,000 or 0.9% to $1.2
million for the three-month period ended March 31, 2010, as compared to $1.3 million during the same period in 2009. Interest on securities sold under agreement to repurchase, including retail, term, and wholesale structured borrowings,
decreased $23,000 or 0.9% to $2.5 million for the six-month period ended March 31, 2010, as compared to the same period in 2009. The decrease for both periods reflects a decrease in the cost of these funds, partially offset by a higher level of
average securities sold under agreement to repurchase. For the three-month period ended March 31, 2010 the average balance of securities sold under agreement to repurchase increased $593,000 or 0.6% and the average yield decreased by 7 basis
points from 4.90% in the prior period to 4.83% in the current period. For the six-month period ended March 31, 2010 the average balance of securities sold under agreement to repurchase increased $1.3 million or 1.3% and the average yield
decreased by 10 basis points from 4.91% in the prior period to 4.81% in the current period. The Bank had $95.0 million of wholesale structured borrowings outstanding at March 31, 2010 and 2009.

Interest on short-term borrowings, including Federal Home Loan Bank (FHLB) RepoPlus advances, FHLB revolving line of credit,
federal funds purchased, and treasury, tax and loan notes, decreased $39,000 or 95.1% to $2,000 for the three-month period ended March 31, 2010, as compared to $41,000 in the same period in 2009. Interest on short-term borrowings, including
Federal Home Loan Bank (FHLB) RepoPlus advances, FHLB revolving line of credit, federal funds purchased, and treasury, tax and loan notes, decreased $117,000 or 97.5% to $3,000 for the six-month period ended March 31,
2010, as compared to $120,000 in the same period in 2009. The decrease for both periods reflects both a decrease in the average cost of these borrowings as well as a decrease in the average balance of these borrowings. For the three-month period
ended March 31, 2010 the average balance of short-term borrowings decreased $28.9 million or 91.6% and the average yield decreased by 29 basis points from 0.52% in the prior period to 0.23% in the current period. For the six-month period ended
March 31, 2010 the average balance of short-term borrowings decreased $34.5 million or 93.8% and the average yield decreased by 40 basis points from 0.65% in the prior period to 0.25% in the current period. The decreases in average balances of
short-term borrowings were a result of the increase in average deposit balances and decrease in net loan average balances. The decrease in rates paid reflects lower short-term market interest rates.



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Interest on long-term debt, including FHLB fixed rate advances and Convertible Select advances,
decreased $61,000 or 5.1% to $1.1 million for the three-month period ended March 31, 2010, as compared to $1.2 million in the same period in 2009. Interest on long-term debt, including FHLB fixed rate advances and Convertible Select
advances, decreased $122,000 or 4.9% to $2.4 million for the six-month period ended March 31, 2010, as compared to $2.5 million in the same period in 2009. The decrease for the three months ended March 31, 2010 reflects a decrease in the
average balance of the debt, partially offset by an increase in the average cost of the debt. The decrease for the six months ended March 31, 2010 reflects both a decrease in the average balance of the debt and a decrease in the average cost of
the debt. For the three-month period ended March 31, 2010 the average balance of long-term debt decreased $7.8 million or 6.6% and the average yield increased by 7 basis points from 4.08% in the prior period to 4.15% in the current period. For
the six-month period ended March 31, 2010 the average balance of long-term debt decreased $4.6 million or 3.9% and the average yield decreased by 5 basis points from 4.19% in the prior period to 4.14% in the current period. The decrease in
average balance was attributed to the Company using its excess cash to pay for $25.0 million in Federal Home Loan Bank advances that matured during the current quarter. As noted above, the excess liquidity resulted from the increase in average
deposit balances and a decrease in net loan average balances resulting from increased prepayments.

Interest on subordinated debt decreased
$2,000 or 2.0% to $100,000 for the three months ended March 31, 2010, as compared to $102,000 in the same period in 2009. Interest on subordinated debt decreased $2,000 or 1.0% to $204,000 for the six months ended March 31, 2010, as
compared to $206,000 in the same period in 2009. The decrease for both periods reflects a decrease in the average cost of these floating-rate debentures while the average balance remained unchanged. For the three-month period ended March 31,
2010 the average cost decreased by 4 basis points from 5.32% in the prior period to 5.28% in the current period. For the six-month period ended March 31, 2010 the average cost decreased by 5 basis points from 5.33% in the prior period to 5.28%
in the current period. The decrease in interest expense on subordinated debt for the three months ended March 31, 2010 and 2009 was net of $69,000 and $39,000, respectively, in interest expense on an interest rate swap contract to hedge its
interest rate exposure from the subordinated debt. The decrease in interest expense on subordinated debt for the six months ended March 31, 2010 and 2009 was net of $140,000 and $64,000, respectively, in interest expense on an interest rate
swap contract to hedge its interest rate exposure from the subordinated debt.

Net Interest Income

The Companys net interest income decreased $1.1 million or 23.2% to $3.5 million, for the three-month period ended March 31, 2010, as compared
to $4.6 million in the same period in 2009. The Companys net interest income decreased $2.1 million or 22.7% to $7.2 million, for the six-month period ended March 31, 2010, as compared to $9.3 million in the same period in 2009. The
decrease for the three-month period is attributable to a decrease in the interest rate spread and a decrease in net interest-earning assets. The decrease for the six-month period is attributable to a decrease in the interest rate spread, partially
offset by an increase in net interest-earning assets. The decreased yield on interest-earning assets is primarily attributable to lower rates on loans and investments and the decreased cost of funds primarily relates to lower deposit interest rates.
For the three months ended March 31, 2010 and 2009 the ratio of average interest-earning assets to average interest-bearing liabilities was 109.3% and 109.4%, respectively. For the six months ended March 31, 2010 and 2009 the ratio of
average interest-earning assets to average interest-bearing liabilities was 109.5% and 109.0%, respectively.



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Provision for Loan Losses

The provision for loan losses was $300,000 for the three-month period ended March 31, 2010, as compared to $320,000 for the same period in 2009. The
provision for loan losses was $600,000 for the six-month period ended March 31, 2010, as compared to $875,000 during the same period in 2009. At March 31, 2010, the allowance for loan losses decreased to $5.5 million from $5.7 million at
September 30, 2009. Net loan charge-offs were $776,000 for the three months ended March 31, 2010 as compared to net loan charge-offs of $148,000 for the three months ended March 31, 2009. Net loan charge-offs were $815,000 for the six
months ended March 31, 2010 as compared to net loan charge-offs of $542,000 for the six months ended March 31, 2009. Significant charge-offs during the current periods include one installment loan with a balance of $25,000, one commercial
real estate loan with a balance of $75,000, and fourteen commercial business loans with an aggregate balance of $643,000.

The provision for
loan losses is charged to operations to bring the total allowance for loan losses to a level that represents managements best estimates of the losses inherent in the portfolio based on a monthly review by management of factors such as
historical loss experience, volume, type of lending conducted by the Bank, industry standards, the level and status of past due and non-performing loans, the general economic conditions in the Banks lending area, and other factors affecting
the collectibility of the loans in its portfolio.

The allowance for loan losses is maintained at a level that represents managements
best estimates of losses in the loan portfolio at the balance sheet date. However, there can be no assurance that the allowance for loan losses will be adequate to cover losses which may be realized in the future and that additional provisions for
losses will not be required.

Non-interest Income

Excluding OTTI charges of $296,000 and $1.5 million for the three and six months ended March 31, 2010, respectively, and $1.6 million and $1.7
million for the three and six months ended March 31, 2009, respectively, total non-interest or other income increased $358,000 or 38.0% to $1.3 million and increased $1.2 million or 68.4% to $3.0 million for the three and six month periods
ended March 31, 2010, respectively, as compared to the same periods in 2009. The increase for the three-month period ended March 31, 2010 is primarily attributed to an increase in realized gains on sales of securities and an increase in
ATM fees, partially offset by a decrease in loan service charges and fees, and a decrease in gains on sales of loans. The increase for the six-month period ended March 31, 2010 is primarily attributed to an increase in loan service charges and
fees, an increase in realized gains on sales of securities, an increase in gains on sales of loans, an increase in gains on loan interest rate swaps, an increase in ATM fees, and an increase in non-insured investment products income, partially
offset by a decrease in deposit service charges and fees, and a decrease in earnings on cash surrender value of life insurance.

Loan service
charges and fees, which includes late charges on loans and other miscellaneous loan fees, decreased $15,000 or 10.7% to $125,000, and increased $12,000 or 4.5% to $278,000 for the three and six months ended March 31, 2010, respectively, as
compared to the same periods in 2009. The decrease for the three-month period ended March 31, 2010 is primarily attributed to a decrease in late charges on lines of credit, and a decrease in title insurance fees, partially offset by an increase
in late charges on mortgage loans. The increase for the six-month period ended March 31, 2010 is primarily attributed to an increase in late charges on mortgage loans, an increase in loan satisfaction fees, and an increase in title insurance
fees, partially offset by a decrease in late charges on lines of credit and a decrease in miscellaneous fees collected on residential mortgage loans.

Net realized gains on the sales of securities were $387,000 and $1.0 million for the three and six months ended March 31, 2010, respectively. There
were no gains on sales of securities for the three and six months ended March 31, 2009. The current period sales were made from the available-for-sale portfolio as part of managements asset/liability management strategies.



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Impairment charges on securities were $296,000 and $1.6 million for the three months ended March 31,
2010 and 2009, respectively. The impairment charges for the current period relate to the Companys investments in two pooled trust preferred securities. The impairment charges resulted from several factors, including a downgrade in their credit
ratings, their failure to pass their principal coverage tests, and the decline in the net present value of their projected cash flows. Management of the Company has deemed the impairment on the trust preferred securities to be other-than-temporary
based upon these factors and the duration and extent to which the market value has been less than cost, the inability to forecast a recovery in market value, and other factors concerning the issuers in the pooled securities. The impairment charges
for the prior period relate to the Companys holdings of the AMF Ultra Short Mortgage Fund and its investment in a pooled trust preferred security. Impairment charges on securities were $1.5 million and $1.7 million for the six months ended
March 31, 2010 and 2009, respectively. The impairment charges for the current six-month period relate to the Companys investments in six pooled trust preferred securities. The impairment charges resulted from several factors, including a
downgrade in their credit ratings, their failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected cash flows. Management of the Company has deemed the impairment on
the trust preferred securities to be other-than-temporary based upon these factors and the duration and extent to which the market value has been less than cost, the inability to forecast a recovery in market value, and other factors concerning the
issuers in the pooled securities. The impairment charges for the prior-year six-month period relate to the Companys holdings of the AMF Ultra Short Mortgage Fund, Freddie Mac preferred stock, and its investment in a pooled trust preferred
security.

Gains on the sales of loans were $86,000 and $221,000 for the three and six-month period ended March 31, 2010, respectively,
as compared to gains of $124,000 and $154,000 for the same periods in fiscal 2009. The three-month period ended March 31, 2010 results reflect the sale of approximately $5.8 million of fixed-rate, single-family mortgage loans, compared to $9.5
million of similar loan sales during the prior year period. The six-month period ended March 31, 2010 results reflect the sale of approximately $14.6 million of fixed-rate, single-family mortgage loans, compared to $11.6 million of similar loan
sales during the prior year period. Due to the low interest rate environment, the Bank continues to sell most of the fixed rate, single-family mortgage loans it originates.

The Company recognized a loss of $1,000 on its loan interest rate swap for the three months ended March 31, 2010 and a gain of $5,000 for the six
months ended March 31, 2010. The Company recognized a gain of $1,000 on its loan interest rate swap for the three months ended March 31, 2009 and a loss of $17,000 for the six months ended March 31, 2009. As discussed in Note
(9) above, during the first quarter of fiscal 2009 the Company entered into a $1.0 million fixed rate loan with one of its commercial mortgage loan customers and simultaneously entered into an offsetting fixed interest rate swap contract with
PNC. It remains the only loan-related swap outstanding as of March 31, 2010.

Deposit service charges and fees were $334,000 and $719,000
for the three and six months ended March 31, 2010 as compared to $342,000 and $730,000 during the same periods in 2009. The decrease for both periods is attributed to a decrease in net volume of fees collected for returned checks.

Automated teller machine (ATM) fees were $214,000 and $457,000 for the three and six months ended March 31, 2010 as compared to $171,000 and
$357,000 during the same periods in 2009. The increase for the three and six months ended March 31, 2010 is attributed to an increase in the interchange fees earned on debit card transactions. The increase during the six-month period is also
due to a $45,000 incentive payment the Bank received to switch its ATM network from the STAR network to the PULSE network.

Non-insured
investment product income was $34,000 and $83,000 for the three and six months ended March 31, 2010 as compared to $23,000 and $49,000 for the same periods in 2009. The increase for both periods is primarily attributed to an increase in the
commissions earned on the sales of these products due to higher volumes of sales.

Earnings on cash surrender value of life insurance were
$58,000 and $119,000 for the three and six months ended March 31, 2010 as compared to $66,000 and $138,000 in the same periods in 2009. The decrease for both periods is primarily attributed to a decrease in the amount of bank owned life
insurance outstanding as compared to March 31, 2009. The Companys former Chairman of the Board passed away during the third quarter of fiscal 2009, thus the bank owned life insurance outstanding decreased.



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Non-interest Expense

Total non-interest expense for the three-month period ended March 31, 2010 increased to $3.8 million, as compared to $3.4 million for the same period
in 2009. Total non-interest expense for the six-month period ended March 31, 2010 increased to $7.5 million, as compared to $6.7 million for the same period in 2009. The increase for the three months ended March 31, 2010 is primarily
attributed to an increase in depreciation and amortization expense, an increase in professional fees, an increase in service bureau expense, an increase in FDIC deposit insurance premiums, and an increase in other operating expenses, partially
offset by a decrease in compensation and benefits expense. The increase for the six months ended March 31, 2010 is primarily attributed to an increase in compensation and benefits expense, an increase in office occupancy and equipment expense,
an increase in depreciation and amortization expense, an increase in professional fees, an increase in service bureau expense, an increase in FDIC deposit insurance premiums, and an increase in other operating expenses.

Compensation and benefits expense was $2.0 million for the three-month period ended March 31, 2010, as compared to $2.1 million for the same period
in 2009. Compensation and benefits expense was $4.1 million for the six-month period ended March 31, 2010, as compared to $4.0 million for the same period in 2009. The decrease for the three months ended March 31, 2010 is attributed to a
decrease in retirement fund expense and a decrease in bonus expense. The increase for the six months ended March 31, 2010 is attributed to an increase in commissions expense due to an increase in residential mortgages that were sold. The
increase is also due to $198,000 of accrued bonus expense that was reversed during the six-month period ended March 31, 2009 compared to $30,000 of bonus expense accrued for the six-month period ended March 31, 2010. Discretionary bonuses
were reduced in fiscal 2009. The increases for the six months ended March 31, 2010 were partially offset by a decrease in retirement fund expense.

Office occupancy and equipment expense was $274,000 and $528,000 for the three and six months ended March 31, 2010 as compared to $276,000 and
$512,000 for the same period in 2009. The decrease for the three-month period is primarily attributed to a decrease in rent expense. The increase for the six-month period is primarily attributed to an increase in real estate taxes paid on office
buildings due to the Company opening its new Shadyside branch location in August 2009.

Depreciation and amortization expense was $133,000 and
$267,000 for the three and six months ended March 31, 2010 as compared to $120,000 and $242,000 for the same period in 2009. The increase for both periods is primarily attributed to the Company opening its new Shadyside branch location in
August 2009.

Professional fees were $130,000 and $270,000 for the three and six months ended March 31, 2010 as compared to $105,000 and
$257,000 for the same period in 2009. The increase for the three months ended March 31, 2010 is primarily attributed to an increase in legal fees. The increase for the six months ended March 31, 2010 is primarily attributed to an increase
in legal fees, partially offset by a decrease in audit fees. The increase in legal fees is primarily related to collection efforts on delinquent loans. The decrease in audit fees for the six-month period is primarily related to fees the Company paid
to its former audit firm to consent on the Companys Annual Report for the fiscal year ended September 30, 2008 and the related filings associated with the TARP Capital Purchase Program in December 2008. The Company paid these fees during
the six-month period ended March 31, 2009 and did not have similar fees for the six-month period ended March 31, 2010.

Service
bureau expense was $145,000 for the three-month period ended March 31, 2010, as compared to $113,000 for the same period in 2009. Service bureau expense was $307,000 and $219,000 for the six-month periods ended March 31, 2010 and 2009,
respectively. The increase for both periods is a result of the Bank continually adding technology and new products and services.

Federal
deposit insurance premiums were $322,000 and $631,000 for the three and six months ended March 31, 2010, respectively, as compared to $75,000 and $94,000 for the same periods in 2009. The increase for both periods is attributed to recent
increases in the base assessment rate and the assessment rate imposed on the Bank for its election to participate in the Transaction Account Guarantee Program under the FDICs Temporary Liquidity Guarantee Program which provides unlimited
insurance coverage for non-interest bearing transaction accounts.



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Other operating expenses were $651,000 for the three-month period ended March 31, 2010 compared to
$550,000 for the same period in 2009. Other operating expenses were $1.2 million for the six-month period ended March 31, 2010 compared to $1.1 million for the same period in 2009. The increase for both periods is primarily attributed to an
increase in postage expense, an increase in teller cash shortage expense, and an increase in debit card charge off expense.

Income Taxes

Total income tax benefit for the three-month period ended March 31, 2010 was $11,000, as compared to income tax expense of $269,000
for the three-month period ended March 31, 2009. Total income tax benefit for the six-month period ended March 31, 2010 was $124,000, as compared to income tax expense of $244,000 for the prior-year period. The tax benefits for the current
periods were significantly impacted by the OTTI charges during the respective periods. The OTTI charges recorded in the current periods caused pre-tax income to be lower than tax-exempt income, therefore a tax benefit was recorded. Tax-exempt income
includes: income earned on certain municipal investments that qualify for state and/or federal income tax exemption; income earned by the Banks Delaware subsidiary, which is not subject to state income tax; and earnings on Bank-owned life
insurance policies, which are exempt from federal taxation. State and federal tax-exempt income for the three-month period ended March 31, 2010 was $1.7 million and $445,000, respectively, compared to $1.8 million and $395,000, respectively,
for the three-month period ended March 31, 2009. State and federal tax-exempt income for the six-month period ended March 31, 2010 was $3.9 million and $852,000, respectively, compared to $3.6 million and $788,000, respectively, for the
six-month period ended March 31, 2009.

Capital Requirements

The Federal Reserve Board measures capital adequacy for bank holding companies on the basis of a risk-based capital framework and a leverage ratio. The
guidelines include the concept of Tier 1 capital and total capital. Tier 1 capital is essentially common equity, excluding net unrealized gains (losses) on securities available-for-sale, goodwill, and cash flow hedges, plus certain types of
preferred stock, including the Series B Preferred Stock, and the Preferred Securities issued by FB Statutory Trust III in 2007. The Preferred Securities may comprise up to 25% of the Companys Tier 1 capital. The Series B Preferred Stock
constitutes Tier 1 Capital for both the risk-weighted and leverage capital requirements. Total capital includes Tier 1 capital and other forms of capital such as the allowance for loan losses, subject to limitations, and subordinated debt. The
guidelines establish a minimum standard risk-based target ratio of 8%, of which at least 4% must be in the form of Tier 1 capital. At March 31, 2010, the Company had Tier 1 capital as a percentage of risk-weighted assets of 12.35% and total
risk-based capital as a percentage of risk-weighted assets of 13.55%.

In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines currently provide for a minimum ratio of Tier 1 capital as a percentage of average total assets (the Leverage Ratio) of 3% for bank holding companies that meet certain
criteria, including that they maintain the highest regulatory rating. All other bank holding companies are required to maintain a Leverage Ratio of at least 4% or be subject to prompt corrective action by the Federal Reserve. At March 31, 2010,
the Company had a leverage ratio of 7.80%.

The FDIC has issued regulations that require insured institutions, such as the Bank, to maintain
minimum levels of capital. In general, current regulations require a leverage ratio of Tier 1 capital to average total assets of not less than 3% for the most highly rated institutions and an additional 1% to 2% for all other institutions. At
March 31, 2010, the Bank complied with the minimum leverage ratio having Tier 1 capital of 7.08% of average total assets, as defined.

The Bank is also required to maintain a ratio of qualifying total capital to risk-weighted assets and off-balance sheet items of a minimum of 8%. At
March 31, 2010, the Banks total capital to risk-weighted assets ratio calculated under the FDIC capital requirement was 12.51%.



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Liquidity

The Companys primary sources of funds have historically consisted of deposits, repurchase agreements, amortization and prepayments of outstanding
loans, borrowings from the FHLB of Pittsburgh and other sources, including sales of securities and, to a limited extent, loans. At March 31, 2010, the total of approved loan commitments amounted to $5.2 million. In addition, the Company had
$12.6 million of undisbursed loan funds at that date. The amount of savings certificates which mature during the next twelve months totals approximately $88.3 million, a substantial portion of which management believes, on the basis of prior
experience as well as its competitive pricing strategy, will remain in the Company.

Off Balance Sheet Commitments

The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The Banks exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit
and letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

A summary of the contractual amount of the Companys financial instrument commitments is as follows:



|                                                    |  |                |        |                   |   |       
|--------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                                    |  | March 31,2010  |        | September 30,2009
|                                                    |  | (in thousands)
|Commitments to grant loans                          |  | $              | 5,233  |                   | $ | 12,491
|Unfunded commitments under lines of credit          |  |                | 73,738 |                   |   | 72,804
|Financial and performance standby letters of credit |  |                | 1,744  |                   |   | 1,293 

The Company does not issue any
guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third
party. Generally, all letters of credit, when issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Bank requires
collateral supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under
the corresponding guarantees. The current amount of liability as of March 31, 2010 for guarantees under standby letters of credit issued is not material.



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Not Applicable



|Item 4T. | Controls and Procedures
|-------- | -----------------------

The
Companys management evaluated, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, the effectiveness of the Companys disclosure controls and procedures, as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

There were no changes in the Companys internal control over financial reporting that occurred during the Companys last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

Part IIOther Information



|Item 1. | Legal Proceedings
|------- | -----------------

The Company is not
involved in any pending legal proceedings other than non-material legal proceedings undertaken in the ordinary course of business.



|Item 1A. | Risk Factors
|-------- | ------------

Not Applicable



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

Not Applicable



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not
Applicable



|Item 4. | [Removed and Reserved]
|------- | ----------------------



|Item 5. | Other Information
|------- | -----------------

(a) On
February 9, 2010, the Company held its annual meeting of stockholders and the following items were presented:

Election of Director
Donald J. Huber, Director Robert F. Kastelic, and Director Oliver D. Keefer as Directors of the Company. Director Huber received 1,774,474 votes in favor and 412,766 votes withheld; Director Kastelic received 1,777,062 votes in favor and 413,178
votes withheld; and Director Keefer received 1,777,782 votes in favor and 412,459 votes withheld. Director Huber, Director Kastelic, and Director Keefer were all elected for a three-year term that expires in February 2013. There were 575,671 broker
non-votes. There were no abstentions.

The approval of resolution on executive compensation received 2,297,604 votes in favor, 370,909 votes
against, 6,595 abstentions, and 90,802 broker non-votes.

(b) Not applicable



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------

The following exhibits are
filed as part of this Report.



|        |  |                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1     |  | Articles of Incorporation (1)                                                                                                                                                                                                                                  
|        | 
|3.2     |  | Amended Bylaws (14)                                                                                                                                                                                                                                            
|        | 
|3.3     |  | Statement with Respect to Shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B (15)                                                                                                                                                             
|        | 
|4.1     |  | Common Stock Certificate (1)                                                                                                                                                                                                                                   
|        | 
|4.2     |  | Rights Agreement dated as of March 31, 2003 by and between Fidelity Bancorp, Inc. and Registrar and Transfer Company (3)                                                                                                                                       
|        | 
|4.3     |  | Amendment No. 1 to Rights Agreement (4)                                                                                                                                                                                                                        
|        | 
|4.4*    |  | Indenture, dated as of September 20, 2007, between Fidelity Bancorp, Inc. and Wilmington Trust Company                                                                                                                                                         
|        | 
|4.5*    |  | Amended and Restated Declaration of Trust, dated as of September 20, 2007, by and among Wilmington Trust Company as Institutional Trustee, Fidelity Bancorp, Inc., as Sponsor and
Richard G. Spencer, Lisa L. Griffith, and Michael A. Mooney as Administrators
|        | 
|4.6*    |  | Guarantee Agreement, as dated as of September 20, 2007, by and between Fidelity Bancorp, Inc. and Wilmington Trust Company                                                                                                                                     
|        | 
|4.7     |  | Form of Certificate for the Series B Preferred Stock (15)                                                                                                                                                                                                      
|        | 
|4.8     |  | Warrant for Purchase of Shares of Common Stock (15)                                                                                                                                                                                                            
|        | 
|10.1**  |  | Employee Stock Ownership Plan, as amended (1)                                                                                                                                                                                                                  
|        | 
|10.4**  |  | 1997 Employee Stock Compensation Program (6)                                                                                                                                                                                                                   
|        | 
|10.6**  |  | 1998 Group Term Replacement Plan (7)                                                                                                                                                                                                                           
|        | 
|10.8**  |  | 1998 Salary Continuation Plan Agreement by and between R.G. Spencer, the Company and the Bank (7)                                                                                                                                                              
|        | 
|10.9**  |  | 1998 Salary Continuation Plan Agreement by and between M.A. Mooney, the Company and the Bank (7)                                                                                                                                                               
|        | 
|10.10** |  | Salary Continuation Plan Agreement with Lisa L. Griffith (2)                                                                                                                                                                                                   
|        | 
|10.11** |  | 1998 Stock Compensation Plan (8)                                                                                                                                                                                                                               
|        | 
|10.12** |  | 2000 Stock Compensation Plan (9)                                                                                                                                                                                                                               
|        | 
|10.13** |  | 2001 Stock Compensation Plan (10)                                                                                                                                                                                                                              
|        | 
|10.14** |  | 2002 Stock Compensation Plan (11)                                                                                                                                                                                                                              
|        | 
|10.15** |  | 2005 Stock-Based Incentive Plan (12)                                                                                                                                                                                                                           
|        | 
|10.16** |  | Form of Directors Indemnification Agreement (13)                                                                                                                                                                                                               
|        | 
|10.17** |  | Employment Agreement, dated January 1, 2002, between Fidelity Bancorp, Inc. and Fidelity Bank, PaSB and Richard G. Spencer (14)                                                                                                                                
|        | 
|10.18** |  | Employment Agreement, dated January 1, 2000, between Fidelity Bancorp, Inc. and Fidelity Bank, PaSB and Michael A. Mooney (14)                                                                                                                                 
|        | 
|10.19** |  | Severance Agreement, dated February 10, 2004, between Fidelity Bank, PaSB and Lisa L. Griffith (14)                                                                                                                                                            
|        | 
|10.20** |  | Severance Agreement, dated December 19, 1997, between Fidelity Bank, PaSB and Anthony F. Rocco (14)                                                                                                                                                            
|        | 
|10.21** |  | Severance Agreement, dated December 19, 1997, between Fidelity Bank, PaSB and Sandra L. Lee (14)                                                                                                                                                               
|        | 
|10.22   |  | Letter Agreement, dated December 12, 2008, between Fidelity Bancorp, Inc. and United States Department of the Treasury, with respect to the issuance and sale of the Series B
Preferred Stock and the Warrant (15)                                             
|        | 
|10.23** |  | Form of Waiver, executed by each of Messrs. Spencer, Rocco, and Mooney and Ms. Lee and Ms. Griffith (15)                                                                                                                                                       
|        | 
|10.24** |  | Form of Letter Agreement, executed by each of Messrs. Spencer, Rocco, and Mooney and Ms. Lee and Ms. Griffith (15)                                                                                                                                             
|        | 
|31.1    |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                                              
|        | 
|31.2    |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                                                                              
|        | 
|32      |  | Section 1350 Certification                                                                                                                                                                                                                                     



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|* | Not filed in accordance with the provisions of Item 601(b)(4)(iii) of Regulation S-K. The Company agrees to provide a copy of these documents to the Commission
upon request.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Management contract or compensatory plan or arrangement.
|-- | --------------------------------------------------------

|(1) | Incorporated by reference from the exhibits attached to the Prospectus and Proxy Statement of the Company included in its Registration Statement on Form S-4 (SEC File
No. 33-55384) filed with the SEC on December 3, 1992 (the Registration Statement).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference from the identically numbered exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2003.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference from Exhibit 1 to the Companys Registration Statement on Form 8-A filed March 31, 2003.
|--- | ------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to Exhibit 4.2 to Amendment No. 1 to the Companys Registration Statement on Form 8-A filed March 17, 2005.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference from an exhibit to the Registration Statement on Form S-8 (SEC File No. 333-26383) filed with the SEC on May 2, 1997.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference from an exhibit to the Registration Statement on Form S-8 for the year ended September 30, 1998 (SEC File No. 333-47841) filed with
the SEC on March 12, 1998.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to an identically numbered exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 1998 filed
with the SEC on December 29, 1998.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference from Exhibit 4.1 to the Registration Statement on Form S-8 (SEC File No. 333-71145) filed with the SEC on January 25, 1999.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (SEC File No. 333-53934) filed with the SEC on January 19, 2001.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference from Exhibit 4.1 to the Registration Statement on Form S-8 (SEC File No. 333-81572) filed with the SEC on January 29, 2002.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference from Exhibit 4.1 to Registration Statement on Form S-8 (SEC File No. 333-103448) filed with the SEC on February 26, 2003.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Incorporated by reference from Exhibit 4.1 to Registration Statement on Form S-8 (SEC File No. 333-123168) filed with the SEC on March 7, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Incorporated by reference to an identically numbered exhibit in Form 10-Q filed with the SEC on February 13, 2007.
|---- | ------------------------------------------------------------------------------------------------------------------

|(14) | Incorporated by reference to an identically numbered exhibit to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2007.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) | Incorporated by reference to an exhibit to the Registrants Current Report on Form 8-K filed December 12, 2008.
|---- | ---------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



|                   |  |                        |  |                                                                
|------------------ |  | ---------------------- |  | ---------------------------------------------------------------
|                   |  | FIDELITY BANCORP, INC.
|                   |  |                       
|Date: May 14, 2010 |  | By:                    |  | /S/    RICHARD G.
SPENCER                                      
|                   |  |                        |  | Richard G. Spencer
President and Chief Executive Officer       
|                   |  |                       
|Date: May 14, 2010 |  | By:                    |  | /S/    LISA L.
GRIFFITH                                        
|                   |  |                        |  | Lisa L. Griffith
Sr. Vice President and Chief Financial Officer



49