----

----

| x                                       | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|-----------------------------------------|----------------------------------------------------------------------------------------------------|
|                                    |                                                                                               |
| For the period ended September 30, 2010 |
|                                    |                                                                                               |
| - or -                                  |
|                                    |                                                                                               |
| o                                       | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| Delaware                                      |   | 74-2705050                           |
|-----------------------------------------------|--------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation |   | (I.R.S. Employer Identification No.) |
| or Organization)                              |   |                                 |

| 3 Penns Trail, Newtown, Pennsylvania     |   | 18940      |
|------------------------------------------|--------|------------|
| (Address of Principal Executive Offices) |   | (Zip Code) |

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

| Class                       | Outstanding      |
|-----------------------------|------------------|
| $.10 par value common stock | 2,686,485 shares |

----

Table of Contents

| PART I-CONSOLIDATED FINANCIAL INFORMATION |                                                                                        |
|------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                           |                                                                                        |   |
| Item 1.                                        | Consolidated Financial Statements                                                           | 3 |
|                                           |                                                                                        |   |
| Item 2.                                        | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
|                                           |                                                                                        |   |
| Item 3.                                        | Quantitative and Qualitative Disclosures about Market Risk                                  | 31 |
|                                           |                                                                                        |   |
| Item 4.                                        | Controls and Procedures                                                                     | 32 |
|                                           |                                                                                        |   |
| PART II-OTHER INFORMATION                 |                                                                                        |
|                                           |                                                                                        |   |
| Item 1.                                        | Legal Proceedings                                                                           | 33 |
|                                           |                                                                                        |   |
| Item 1A.                                       | Risk Factors                                                                                | 33 |
|                                           |                                                                                        |   |
| Item 2.                                        | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 33 |
|                                           |                                                                                        |   |
| Item 3.                                        | Defaults Upon Senior Securities                                                             | 33 |
|                                           |                                                                                        |   |
| Item 4.                                        | [Removed and Reserved]                                                                      | 33 |
|                                           |                                                                                        |   |
| Item 5.                                        | Other Information                                                                           | 33 |
|                                           |                                                                                        |   |
| Item 6.                                        | Exhibits                                                                                    | 33 |
|                                           |                                                                                        |   |
| Signatures                                     | 34                                                                                          |
|                                           |                                                                                        |   |
| Exhibits                                       |                                                                                        |   |
|                                           |                                                                                        |   |
| 31.1                                           | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002         |   |
|                                           |                                                                                        |   |
| 31.2                                           | Certification of CFO pursuant of Section 302 of the Sarbanes-Oxley Act of 2002         |   |
|                                           |                                                                                        |   |
| 32.                                            | Certification pursuant of Section 906 of the Sarbanes-Oxley Act of 2002                |   |

----

Table of Contents

ITEM 1

|                                                                                                                                                                                                                                                                                         |   | September 30,2010   |    |   | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                         |   | (in thousands) |    |
| ASSETS                                                                                                                                                                                                                                                                                       |   |                |    |   |                  |   |
| Cash and cash equivalents                                                                                                                                                                                                                                                                    |   | $                   | 6,916   |   |                  | $      | 12,801 |   |
| Investment securities available for sale—at fair value                                                                                                                                                                                                                                 |   |                | 50,528  |   |                  |   | 40,853 |   |
| Mortgage-backed securities available for sale—at fair value                                                                                                                                                                                                                            |   |                | 71,500  |   |                  |   | 78,198 |   |
| Mortgage-backed securities held to maturity (fair value of $3,605 and $4,033, respectively)                                                                                                                                                                                             |   |                | 3,268   |   |                  |   | 3,733 |   |
| Loans receivable, net                                                                                                                                                                                                                                                                        |   |                | 519,374 |   |                  |   | 529,652 |   |
| Loans receivable held for sale                                                                                                                                                                                                                                                               |   |                | 1,078   |   |                  |   | 1,082 |   |
| Federal Home Loan Bank stock—at cost                                                                                                                                                                                                                                                   |   |                | 9,896   |   |                  |   | 9,896 |   |
| Accrued interest receivable                                                                                                                                                                                                                                                                  |   |                | 2,659   |   |                  |   | 2,777 |   |
| Premises and equipment, net                                                                                                                                                                                                                                                                  |   |                | 6,788   |   |                  |   | 5,523 |   |
| Goodwill                                                                                                                                                                                                                                                                                     |   |                | 4,324   |   |                  |   | 4,324 |   |
| Bank-owned life insurance                                                                                                                                                                                                                                                                    |   |                | 17,699  |   |                  |   | 17,190 |   |
| Other assets                                                                                                                                                                                                                                                                                 |   |                | 8,553   |   |                  |   | 8,061 |   |
| TOTAL ASSETS                                                                                                                                                                                                                                                                                 |   | $                   | 702,583 |   |                  | $      | 714,090 |   |
|                                                                                                                                                                                                                                                                                         |   |                |    |   |                  |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                   |   |                |    |   |                  |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                  |   |                |    |   |                  |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                     |   | $                   | 552,562 |   |                  | $      | 552,716 |   |
| Borrowings from the Federal Home Loan Bank                                                                                                                                                                                                                                                   |   |                | 68,671  |   |                  |   | 80,241 |   |
| Advances from borrowers for taxes and insurance                                                                                                                                                                                                                                              |   |                | 1,485   |   |                  |   | 2,231 |   |
| Accrued interest payable                                                                                                                                                                                                                                                                     |   |                | 1,797   |   |                  |   | 2,818 |   |
| Other liabilities                                                                                                                                                                                                                                                                            |   |                | 3,395   |   |                  |   | 4,210 |   |
| Total liabilities                                                                                                                                                                                                                                                                            |   |                | 627,910 |   |                  |   | 642,216 |   |
|                                                                                                                                                                                                                                                                                         |   |                |    |   |                  |   |   |   |
| Stockholders’ equity                                                                                                                                                                                                                                                                   |   |                |    |   |                  |   |   |   |
| Preferred stock, no par value; 2,000,000 shares authorized at September 30, 2010 and December 31, 2009, none issued                                                                                                                                                                |   |                | — |   |                  |   | — |   |
| Common stock, $0.10 par value; 10,000,000 shares authorized, 5,290,000 shares issued and, 2,685,448 and 2,672,603 shares outstanding at September 30, 2010 and December 31, 2009, respectively, net of shares in treasury of 2,604,552 and 2,617,397,  respectively |   |                | 529     |   |                  |   | 529 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                   |   |                | 54,078  |   |                  |   | 54,009 |   |
| Unearned ESOP shares                                                                                                                                                                                                                                                                         |   |                | (1,245  | )      |                  |   | (1,334 | ) |
| Treasury stock-at cost                                                                                                                                                                                                                                                                       |   |                | (54,064 | )      |                  |   | (54,331 | ) |
| Retained earnings                                                                                                                                                                                                                                                                            |   |                | 73,543  |   |                  |   | 72,376 |   |
| Accumulated other comprehensive income                                                                                                                                                                                                                                                       |   |                | 1,832   |   |                  |   | 625 |   |
| Total stockholders’ equity                                                                                                                                                                                                                                                             |   |                | 74,673  |   |                  |   | 71,874 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                             |   | $                   | 702,583 |   |                  | $      | 714,090 |   |

----

Table of Contents

|                                                |   | For the three monthsendedSeptember 30,                    |    |   | For the nine monthsendedSeptember 30, |   |
|-----------------------------------------------------|--------|----------------------------------------------------------------|---------|--------|------------------------------------------------------|--------|
|                                                |   | 2010                                                           |    |   | 2009                                                 |   |   | 2010 |   |   | 2009 |   |
|                                                |   | (in thousands, except per share data) |    |
| Interest income                                     |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |
| Loans, including fees                               |   | $                                                              | 7,020   |   |                                                 | $      | 7,638 |   |   | $ | 21,472 |   |   | $ | 22,951 |   |
| Mortgage-backed securities                          |   |                                                           | 886     |   |                                                 |   | 1,170 |   |   |   | 2,782 |   |   |   | 3,849 |   |
| Investment securities                               |   |                                                           | 444     |   |                                                 |   | 311 |   |   |   | 1,291 |   |   |   | 864 |   |
| Interest-bearing deposits and other                 |   |                                                           | — |   |                                                 |   | 1 |   |   |   | 2 |   |   |   | 1 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST INCOME                               |   |                                                           | 8,350   |   |                                                 |   | 9,120 |   |   |   | 25,547 |   |   |   | 27,665 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                    |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                            |   |                                                           | 1,757   |   |                                                 |   | 2,393 |   |   |   | 5,593 |   |   |   | 7,347 |   |
| Borrowings                                          |   |                                                           | 731     |   |                                                 |   | 988 |   |   |   | 2,372 |   |   |   | 3,481 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST EXPENSE                              |   |                                                           | 2,488   |   |                                                 |   | 3,381 |   |   |   | 7,965 |   |   |   | 10,828 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME                                 |   |                                                           | 5,862   |   |                                                 |   | 5,739 |   |   |   | 17,582 |   |   |   | 16,837 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                           |   |                                                           | 1,180   |   |                                                 |   | 650 |   |   |   | 2,741 |   |   |   | 1,905 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |   |                                                           | 4,682   |   |                                                 |   | 5,089 |   |   |   | 14,841 |   |   |   | 14,932 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest income                                 |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Service fees, charges and other operating income    |   |                                                           | 404     |   |                                                 |   | 464 |   |   |   | 1,296 |   |   |   | 1,498 |   |
| Bank-owned life insurance                           |   |                                                           | 170     |   |                                                 |   | 171 |   |   |   | 509 |   |   |   | 501 |   |
| Gain on sale of investments                         |   |                                                           | — |   |                                                 |   | — |   |   |   | 7 |   |   |   | 306 |   |
| Gain on sale of loans                               |   |                                                           | 353     |   |                                                 |   | 127 |   |   |   | 465 |   |   |   | 528 |   |
| Gain (loss) on sale of foreclosed real estate       |   |                                                           | — |   |                                                 |   | 34 |   |   |   | (137 | ) |   |   | 337 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL NON-INTEREST INCOME                           |   |                                                           | 927     |   |                                                 |   | 796 |   |   |   | 2,140 |   |   |   | 3,170 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest expense                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Compensation and benefits                           |   |                                                           | 2,269   |   |                                                 |   | 2,601 |   |   |   | 7,636 |   |   |   | 7,917 |   |
| Occupancy and equipment                             |   |                                                           | 774     |   |                                                 |   | 756 |   |   |   | 2,256 |   |   |   | 2,174 |   |
| Professional fees                                   |   |                                                           | 196     |   |                                                 |   | 195 |   |   |   | 680 |   |   |   | 651 |   |
| Marketing and advertising                           |   |                                                           | 152     |   |                                                 |   | 118 |   |   |   | 392 |   |   |   | 382 |   |
| FDIC insurance premiums                             |   |                                                           | 233     |   |                                                 |   | 182 |   |   |   | 686 |   |   |   | 714 |   |
| Other operating                                     |   |                                                           | 603     |   |                                                 |   | 568 |   |   |   | 1,760 |   |   |   | 1,782 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL NON-INTEREST EXPENSE                          |   |                                                           | 4,227   |   |                                                 |   | 4,420 |   |   |   | 13,410 |   |   |   | 13,620 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAXES                          |   |                                                           | 1,382   |   |                                                 |   | 1,465 |   |   |   | 3,571 |   |   |   | 4,482 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income taxes                                        |   |                                                           | 373     |   |                                                 |   | 353 |   |   |   | 878 |   |   |   | 1,128 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                          |   | $                                                              | 1,009   |   |                                                 | $      | 1,112 |   |   | $ | 2,693 |   |   | $ | 3,354 |   |
|                                                |   |                                                           |    |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per share—basic                      |   | $                                                              | 0.39    |   |                                                 | $      | 0.44 |   |   | $ | 1.06 |   |   | $ | 1.33 |   |
| Earnings per share—diluted                    |   | $                                                              | 0.39    |   |                                                 | $      | 0.44 |   |   | $ | 1.06 |   |   | $ | 1.33 |   |
| Dividends paid per share                            |   | $                                                              | 0.20    |   |                                                 | $      | 0.20 |   |   | $ | 0.60 |   |   | $ | 0.60 |   |

----

Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | For the nine monthsendedSeptember 30, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2010                                                 |    |   | 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (in thousands)                                  |    |
| OPERATING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                 |    |   |   |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                                    | 2,693   |   |   | $ | 3,354 |   |
| Adjustments to reconcile net income to net cash provided by operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                 |    |   |   |   |   |   |
| Amortization of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                 |    |   |   |   |   |   |
| Mortgage loan servicing rights                                                                                                                                 |   |                                                 | 290     |   |   |   | 136 |   |
| Deferred loan origination fees                                                                                                                                 |   |                                                 | 114     |   |   |   | 76 |   |
| Premiums and discounts on investment securities, net                                                                                                           |   |                                                 | 59      |   |   |   | 61 |   |
| Premiums and discounts on mortgage-backed securities, net                                                                                                      |   |                                                 | 63      |   |   |   | (172 | ) |
| Premiums and discounts on loans, net                                                                                                                           |   |                                                 | 128     |   |   |   | 134 |   |
| Provision for loan losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                 | 2,741   |   |   |   | 1,905 |   |
| Depreciation of premises and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                 | 645     |   |   |   | 670 |   |
| Increase in value of bank-owned life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                 | (509    | ) |   |   | (501 | ) |
| Stock grant expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                 | 12      |   |   |   | 12 |   |
| Stock option expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                 | 39      |   |   |   | 42 |   |
| Stock-based benefit programs: ESOP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                 | 180     |   |   |   | 161 |   |
| Proceeds from sale of loans originated for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                 | 27,326  |   |   |   | 35,088 |   |
| Origination of loans held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                 | (27,087 | ) |   |   | (34,797 | ) |
| (Gain) loss on sale of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 |    |   |   |   |   |   |
| Investments                                                                                                                                                    |   |                                                 | (7      | ) |   |   | (306 | ) |
| Loans held for sale                                                                                                                                            |   |                                                 | (465    | ) |   |   | (528 | ) |
| Foreclosed real estate                                                                                                                                         |   |                                                 | 137     |   |   |   | (337 | ) |
| Decrease in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                 |    |   |   |   |   |   |
| Accrued interest receivable                                                                                                                                    |   |                                                 | 118     |   |   |   | 169 |   |
| Other assets                                                                                                                                                   |   |                                                 | 411     |   |   |   | 467 |   |
| (Decrease) increase in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 |    |   |   |   |   |   |
| Accrued interest payable                                                                                                                                       |   |                                                 | (1,021  | ) |   |   | 198 |   |
| Other liabilities                                                                                                                                              |   |                                                 | (1,426  | ) |   |   | 208 |   |
| NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                                                                                     |   |                                                 | 4,441   |   |   |   | 6,040 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                 |    |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                 |    |   |   |   |   |   |
| Loan originations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                 | (59,604 | ) |   |   | (67,343 | ) |
| Loan principal payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 | 65,106  |   |   |   | 75,442 |   |
| Principal repayments on mortgage-backed securities held to maturity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                 | 462     |   |   |   | 843 |   |
| Principal repayments on mortgage-backed securities available for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                 | 20,649  |   |   |   | 25,311 |   |
| Purchase of investment securities available for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                 | (8,681  | ) |   |   | (7,856 | ) |
| Purchase of mortgage-backed securities available for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                 | (13,995 | ) |   |   | (10,608 | ) |
| Proceeds from sale of investment securities available for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                 | 60      |   |   |   | 5,514 |   |
| Proceeds from redemption/maturities of investment securities available for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                 | 590     |   |   |   | 755 |   |
| Proceeds from the sale of foreclosed real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                 | 799     |   |   |   | 2,497 |   |
| Purchase of premises and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                 | (1,910  | ) |   |   | (392 | ) |
| NET CASH PROVIDED BY INVESTING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                 | 3,476   |   |   |   | 24,163 |   |

----

Table of Contents

|                                                                                       |   | For the nine months endedSeptember 30, |    |
|--------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                                                       |   | 2010                                                       |    |   | 2009 |   |
|                                                                                       |   | (in thousands)                                        |    |
| FINANCING ACTIVITIES                                                                       |   |                                                       |    |   |   |   |
| Net (decrease) increase in customer deposits                                               |   |                                                       | (154    | ) |   |   | 42,099 |   |
| Net decrease in short-term borrowings from the Federal Home Loan Bank and other borrowings |   |                                                       | — |   |   |   | (32,416 | ) |
| Proceeds of long-term Federal Home Loan Bank borrowings                                    |   |                                                       | 12,884  |   |   |   | — |   |
| Repayment of long-term Federal Home Loan Bank borrowings                                   |   |                                                       | (24,454 | ) |   |   | (35,988 | ) |
| Net decrease in advances from borrowers for taxes and insurance                            |   |                                                       | (746    | ) |   |   | (727 | ) |
| Treasury stock acquired                                                                    |   |                                                       | — |   |   |   | (101 | ) |
| Exercise of stock options                                                                  |   |                                                       | 177     |   |   |   | 115 |   |
| Tax benefit arising from stock compensation                                                |   |                                                       | 17      |   |   |   | 6 |   |
| Common stock dividends paid                                                                |   |                                                       | (1,526  | ) |   |   | (1,509 | ) |
| NET CASH USED IN FINANCING ACTIVITIES                                                      |   |                                                       | (13,802 | ) |   |   | (28,521 | ) |
|                                                                                       |   |                                                       |    |   |   |   |   |   |
| NET(DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS                                       |   |                                                       | (5,885  | ) |   |   | 1,682 |   |
|                                                                                       |   |                                                       |    |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                           |   |                                                       | 12,801  |   |   |   | 2,719 |   |
|                                                                                       |   |                                                       |    |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                 |   | $                                                          | 6,916   |   |   | $ | 4,401 |   |
|                                                                                       |   |                                                       |    |   |   |   |   |   |
| Supplemental disclosure of cash flow information                                           |   |                                                       |    |   |   |   |   |   |
| Cash paid for:                                                                             |   |                                                       |    |   |   |   |   |   |
| Interest on deposits and borrowings                                                        |   | $                                                          | 8,986   |   |   | $ | 10,630 |   |
| Income taxes                                                                               |   | $                                                          | 1,462   |   |   | $ | 825 |   |
| Non-cash transactions:                                                                     |   |                                                       |    |   |   |   |   |   |
| Capitalization of mortgage servicing rights                                                |   | $                                                          | 231     |   |   | $ | 426 |   |
| Transfers from loans to foreclosed real estate                                             |   | $                                                          | 1,793   |   |   | $ | 3,163 |   |
| Securities available for sale purchased not settled                                        |   | $                                                          | 175     |   |   | $ | — |   |

----

Table of Contents

|                                                        |   | September 30, 2010    |   |
|-------------------------------------------------------------|--------|-----------------------|--------|
|                                                        |   | Before taxamount |   |   | Tax(expense)benefit |   |   | Net of taxamount |   |
|                                                        |   | (in thousands)   |   |
| Unrealized gains on securities                              |   |                  |   |   |   |   |   |   |   |
| Unrealized holding gains arising during period              |   | $                     | 1,126  |   |   | $ | (381 | ) |   | $ | 745 |   |
| Pension plan benefit adjustment related to actuarial losses |   |                  | 42     |   |   |   | (14 | ) |   |   | 28 |   |
|                                                        |   |                  |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net                             |   | $                     | 1,168  |   |   | $ | (395 | ) |   | $ | 773 |   |

|                                                        |   | September 30, 2009    |   |
|-------------------------------------------------------------|--------|-----------------------|--------|
|                                                        |   | Before taxamount |   |   | Tax(expense)benefit |   |   | Net of taxamount |   |
|                                                        |   | (in thousands)   |   |
| Unrealized gains on securities                              |   |                  |   |   |   |   |   |   |   |
| Unrealized holding gains arising during period              |   | $                     | 1,749  |   |   | $ | (590 | ) |   | $ | 1,159 |   |
| Pension plan benefit adjustment related to actuarial losses |   |                  | 46     |   |   |   | (15 | ) |   |   | 31 |   |
|                                                        |   |                  |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net                             |   | $                     | 1,795  |   |   | $ | (605 | ) |   | $ | 1,190 |   |

----

Table of Contents

|                                                                                     |   | September 30, 2010    |   |
|------------------------------------------------------------------------------------------|--------|-----------------------|--------|
|                                                                                     |   | Before taxamount |   |   | Tax(expense)benefit |   |   | Net of taxamount |   |
|                                                                                     |   | (in thousands)   |   |
| Unrealized gains on securities                                                           |   |                  |   |   |   |   |   |   |   |
| Unrealized holding gains arising during period                                           |   | $                     | 1,720  |   |   | $ | (586 | ) |   | $ | 1,134 |   |
| Reclassification adjustment for gains realized in net income                             |   |                  | (7     | ) |   |   | 2 |   |   |   | (5 | ) |
| Pension plan benefit adjustment related to prior service costs and actuarial losses |   |                  | 117    |   |   |   | (39 | ) |   |   | 78 |   |
|                                                                                     |   |                  |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net                                                          |   | $                     | 1,830  |   |   | $ | (623 | ) |   | $ | 1,207 |   |

|                                                         |   | September 30, 2009    |   |
|--------------------------------------------------------------|--------|-----------------------|--------|
|                                                         |   | Before taxamount |   |   | Tax(expense)benefit |   |   | Net of taxamount |   |
|                                                         |   | (in thousands)   |   |
| Unrealized gains on securities                               |   |                  |   |   |   |   |   |   |   |
| Unrealized holding gains arising during period               |   | $                     | 2,878  |   |   | $ | (979 | ) |   | $ | 1,899 |   |
| Reclassification adjustment for gains realized in net income |   |                  | (306   | ) |   |   | 104 |   |   |   | (202 | ) |
| Pension plan benefit adjustment related to actuarial losses  |   |                  | 137    |   |   |   | (50 | ) |   |   | 87 |   |
|                                                         |   |                  |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net                              |   | $                     | 2,709  |   |   | $ | (925 | ) |   | $ | 1,784 |   |

|                                                                            |   | Three months ended September 30, 2010 |   |
|---------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                                            |   | Income(numerator)                                    |   | Weightedaverageshares(denominator) |   | Per shareAmount |   |
| Basic earnings per share                                         |   |                                                 |   |   |   |   |   |
| Income available to common stockholders                                         |   | $                                                    | 1,009  |   | 2,559,466 |   | $ | 0.39 |   |
| Effect of dilutive securities                                                   |   |                                                 |   |   |   |   |   |
| Stock options and grants                                                        |   | —                                              |   | — |   | — |   |
|                                                                            |   |                                                 |   |   |   |   |   |
| Diluted earnings per share                                                      |   |                                                 |   |   |   |   |   |
| Income available to common stockholders plus effect of dilutive securities |   | $                                                    | 1,009  |   | 2,559,466 |   | $ | 0.39 |   |

----

Table of Contents

|                                                                       |   | Nine months ended September 30, 2010 |   |
|---------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                            |   | Income(numerator)                              |   | Weightedaverageshares(denominator) |   | Per shareAmount |   |
| Basic earnings per share                                         |   |                                           |   |   |   |   |   |
| Income available to common stockholders                                         |   | $                                              | 2,693  |   | 2,551,353 |   | $ | 1.06 |   |
| Effect of dilutive securities                                                   |   |                                           |   |   |   |   |   |
| Stock options and grants                                                        |   | —                                        |   | — |   | — |   |
|                                                                            |   |                                           |   |   |   |   |   |
| Diluted earnings per share                                                      |   |                                           |   |   |   |   |   |
| Income available to common stockholders plus effect of dilutive securities |   | $                                              | 2,693  |   | 2,551,353 |   | $ | 1.06 |   |

|                                                                            |   | Three months ended September 30, 2009 |   |
|---------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                                            |   | Income(numerator)                                    |   | Weightedaverageshares(denominator) |   | Per shareAmount |   |
| Basic earnings per share                                         |   |                                                 |   |   |   |   |   |
| Income available to common stockholders                                         |   | $                                                    | 1,112  |   | 2,523,429 |   | $ | 0.44 |   |
| Effect of dilutive securities                                                   |   |                                                 |   |   |   |   |   |
| Stock options and grants                                                        |   | —                                              |   | — |   | — |   |
|                                                                            |   |                                                 |   |   |   |   |   |
| Diluted earnings per share                                                      |   |                                                 |   |   |   |   |   |
| Income available to common stockholders plus effect of dilutive securities |   | $                                                    | 1,112  |   | 2,523,429 |   | $ | 0.44 |   |

|                                                                            |   | Nine months ended September 30, 2009 |   |
|---------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                            |   | Income(numerator)                              |   | Weightedaverageshares(denominator) |   | Per shareAmount |   |
| Basic earnings per share                                         |   |                                           |   |   |   |   |   |
| Income available to common stockholders                                         |   | $                                              | 3,354  |   | 2,520,228 |   | $ | 1.33 |   |
| Effect of dilutive securities                                                   |   |                                           |   |   |   |   |   |
| Stock options and grants                                                        |   | —                                        |   | — |   | — |   |
|                                                                            |   |                                           |   |   |   |   |   |
| Diluted earnings per share                                                      |   |                                           |   |   |   |   |   |
| Income available to common stockholders plus effect of dilutive securities |   | $                                              | 3,354  |   | 2,520,228 |   | $ | 1.33 |   |

----

Table of Contents

|                                                                                             |   | September 30, 2010 |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                             |   | Amortizedcost      |   |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                                                                                             |   | (in thousands)     |   |
| Investment securities available for sale                                                         |   |               |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and federal agencies                                                             |   | $                  | 6,000  |   |   | $ | 98 |   |   | $ | — |   |   | $ | 6,098 |   |
| Corporate debt securities                                                                        |   |               | 3,340  |   |   |   | 241 |   |   |   | — |   |   |   | 3,581 |   |
| State and political subdivisions                                                                 |   |               | 38,212 |   |   |   | 2,623 |   |   |   | (84 | ) |   |   | 40,751 |   |
| Equity securities                                                                                |   |               | 97     |   |   |   | 1 |   |   |   | — |   |   |   | 98 |   |
|                                                                                             |   | $                  | 47,649 |   |   | $ | 2,963 |   |   | $ | (84 | ) |   | $ | 50,528 |   |
|                                                                                             |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed securities issued by quasi-governmental agencies |   | $                  | 54,766 |   |   | $ | 2,135 |   |   | $ | — |   |   | $ | 56,901 |   |
| Residential mortgage-backed securities privately issued                                          |   |               | 14,496 |   |   |   | 147 |   |   |   | (44 | ) |   |   | 14,599 |   |
| Residential mortgage-backed securities available for sale                                        |   | $                  | 69,262 |   |   | $ | 2,282 |   |   | $ | (44 | ) |   | $ | 71,500 |   |
|                                                                                             |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed securities held to maturity                                          |   | $                  | 3,268  |   |   | $ | 337 |   |   | $ | — |   |   | $ | 3,605 |   |
|                                                                                             |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                             |   | December 31, 2009 |   |
|--------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                             |   | Amortizedcost          |   |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                                                                                             |   | (in thousands)         |   |
| Investment securities available for sale                                                         |   |                   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and federal agencies                                                             |   | $                      | 3,000  |   |   | $ | — |   |   | $ | (55 | ) |   | $ | 2,945 |   |
| Corporate debt securities                                                                        |   |                   | 3,340  |   |   |   | 177 |   |   |   | — |   |   |   | 3,517 |   |
| State and political subdivisions                                                                 |   |                   | 33,180 |   |   |   | 1,170 |   |   |   | (109 | ) |   |   | 34,241 |   |
| Equity securities                                                                                |   |                   | 150    |   |   |   | — |   |   |   | — |   |   |   | 150 |   |
|                                                                                             |   | $                      | 39,670 |   |   | $ | 1,347 |   |   | $ | (164 | ) |   | $ | 40,853 |   |
|                                                                                             |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed securities issued by quasi-governmental agencies |   | $                      | 68,707 |   |   | $ | 2,483 |   |   | $ | (39 | ) |   | $ | 71,151 |   |
| Residential mortgage-backed securities privately issued                                          |   |                   | 7,270  |   |   |   | — |   |   |   | (223 | ) |   |   | 7,047 |   |
| Residential mortgage-backed securities available for sale                                        |   | $                      | 75,977 |   |   | $ | 2,483 |   |   | $ | (262 | ) |   | $ | 78,198 |   |
|                                                                                             |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed securities held to maturity                                          |   | $                      | 3,733  |   |   | $ | 300 |   |   | $ | — |   |   | $ | 4,033 |   |
|                                                                                             |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                                  |   | Number         |   |   | Less than12 months |   |   | 12 monthsor longer |   |   | Total     |   |
|-------------------------------------------------------|--------|----------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-----------|--------|
| Description of Securities                             |   | ofSecurities   |   |   | FairValue               |   |   | UnrealizedLoss          |   |   | FairValue |   |   | UnrealizedLoss |   |   | Fairvalue |   |   | UnrealizedLoss |   |
|                                                  |   | (in thousands) |   |
| State and political subdivisions                      |   |           | 2      |   |                    | $      | 1,096  |                    |   | $      | (84       | )      |   | $ | — |   |   | $ | — |   |   | $ | 1,096 |   |   | $ | (84 | ) |
| Residential mortgage-backedsecurities privatelyissued |   |           | 2      |   |                    |   | 5,136  |                    |   |   | (44       | )      |   |   | — |   |   |   | — |   |   |   | 5,136 |   |   |   | (44 | ) |
|                                                  |   |           |   |   |                    |   |   |                    |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total temporarily impaired securities                 |   |           | 4      |   |                    | $      | 6,232  |                    |   | $      | (128      | )      |   | $ | — |   |   | $ | — |   |   | $ | 6,232 |   |   | $ | (128 | ) |

|                                                                         |   | Number         |   |   | Less than12 months |   |   | 12 monthsor longer |   |   | Total     |   |
|------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-----------|--------|
| Description of Securities                                                    |   | ofSecurities   |   |   | FairValue               |   |   | UnrealizedLoss          |   |   | FairValue |   |   | UnrealizedLoss |   |   | Fairvalue |   |   | UnrealizedLoss |   |
|                                                                         |   | (in thousands) |   |
| U.S. Government  and federal agencies                              |   |           | 1      |   |                    | $      | 2,945  |                    |   | $      | (55       | )      |   | $ | — |   |   | $ | — |   |   | $ | 2,945 |   |   | $ | (55 | ) |
| State and political subdivisions                                             |   |           | 6      |   |                    |   | 4,086  |                    |   |   | (109      | )      |   |   | — |   |   |   | — |   |   |   | 4,086 |   |   |   | (109 | ) |
| Residential mortgage-backed securities issued by quasi-governmental agencies |   |           | 2      |   |                    |   | 4,352  |                    |   |   | (39       | )      |   |   | — |   |   |   | — |   |   |   | 4,352 |   |   |   | (39 | ) |
| Residential mortgage-backed securities privately issued                      |   |           | 4      |   |                    |   | 5,536  |                    |   |   | (160      | )      |   |   | 1,511 |   |   |   | (63 | ) |   |   | 7,047 |   |   |   | (223 | ) |
| Total temporarily impaired securities                                        |   |           | 13     |   |                    | $      | 16,919 |                    |   | $      | (363      | )      |   | $ | 1,511 |   |   | $ | (63 | ) |   | $ | 18,430 |   |   | $ | (426 | ) |

----

Table of Contents

|                                                                                         |   | September 30, 2010 |    |   | December 31, 2009 |   |
|----------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-----------------------------|--------|
|                                                                                         |   | (in thousands)     |    |
| Held for investment:                                                                         |   |               |    |   |                        |   |
| First mortgage loans                                                                         |   |               |    |   |                        |   |
| Secured by one-to-four family residences                                                     |   | $                  | 270,603 |   |                        | $      | 271,651 |   |
| Secured by non-residential properties and/or non—owner occupied residential properties |   |               | 137,919 |   |                        |   | 134,584 |   |
| Construction loans                                                                           |   |               | 23,308  |   |                        |   | 29,671 |   |
| Total first mortgage loans                                                                   |   |               | 431,830 |   |                        |   | 435,906 |   |
| Other loans                                                                                  |   |               |    |   |                        |   |   |   |
| Commercial-business, real estate secured                                                     |   |               | 33,007  |   |                        |   | 33,514 |   |
| Commercial-business, non-real estate secured                                                 |   |               | 5,541   |   |                        |   | 7,462 |   |
| Home equity and second mortgage                                                              |   |               | 53,407  |   |                        |   | 54,811 |   |
| Other consumer                                                                               |   |               | 2,532   |   |                        |   | 2,565 |   |
| Total other loans                                                                            |   |               | 94,487  |   |                        |   | 98,352 |   |
| Total loans                                                                                  |   |               | 526,317 |   |                        |   | 534,258 |   |
| Net deferred loan origination costs and unamortized premiums                                 |   |               | 663     |   |                        |   | 609 |   |
| Less allowance for loan losses                                                               |   |               | (7,606  | )      |                        |   | (5,215 | ) |
| Total loans receivable                                                                       |   | $                  | 519,374 |   |                        | $      | 529,652 |   |
| Held for sale:                                                                               |   |               |    |   |                        |   |   |   |
| First mortgage loans                                                                         |   |               |    |   |                        |   |   |   |
| Secured by one-to-four family residences                                                     |   | $                  | 1,078   |   |                        | $      | 1,082 |   |

----

Table of Contents

|                                                                                         |   | For the nine months endedSeptember 30, |    |
|----------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                                                         |   | 2010                                                       |    |   | 2009 |   |
|                                                                                         |   |                                                       |    |   |   |   |
| Balance at January 1,                                                                   |   | $                                                          | 5,215   |   |   | $ | 3,855 |   |
| Provision charged to income                                                                  |   |                                                       | 2,741   |   |   |   | 1,905 |   |
| Charge-offs:                                                                                 |   |                                                       |    |   |   |   |   |   |
| Secured by one-to-four family residences                                                     |   |                                                       | (10     | ) |   |   | (97 | ) |
| Secured by non-residential properties and/or non—owner occupied residential properties |   |                                                       | (174    | ) |   |   | (278 | ) |
| Construction loans                                                                           |   |                                                       | — |   |   |   | (1,092 | ) |
| Commercial-business, non-real estate secured                                                 |   |                                                       | (146    | ) |   |   | — |   |
| Home equity and second mortgage                                                              |   |                                                       | — |   |   |   | (6 | ) |
| Other consumer                                                                               |   |                                                       | (28     | ) |   |   | (27 | ) |
| Recoveries:                                                                                  |   |                                                       |    |   |   |   |   |   |
| Commercial-business, non-real estate secured                                                 |   |                                                       | — |   |   |   | 22 |   |
| Other consumer                                                                               |   |                                                       | 8       |   |   |   | 10 |   |
| Balance at September 30,                                                                     |   | $                                                          | 7,606   |   |   | $ | 4,292 |   |

|   | · | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | Level 2 inputs are inputs that are observable for the asset or liability, either directly or indirectly. |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | Level 3 inputs are unobservable and contain assumptions of the party fair valuing the asset or liability. |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

----

Table of Contents

| At September 30, 2010                                                                            |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |    |   | SignificantOtherObservableInputs(Level 2) |   |    | SignificantUnobservableInputs(Level 3) |   |   | Balance as ofSeptember 30,2010 |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|--------|------------------------------------------------|--------|---------|---------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                             |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |
| Assets                                                                                           |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |
| Investment securities available for sale                                                    |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |
| U.S. Government and federal agencies                                                             |   | $                                                                 | — |   |                                           | $      | 6,098   |                                        |   | $      | —                                  |   |   | $ | 6,098 |   |
| Corporate debt securities                                                                        |   |                                                              | — |   |                                           |   | 3,581   |                                        |   |   | —                                  |   |   |   | 3,581 |   |
| State and political subdivisions                                                                 |   |                                                              | — |   |                                           |   | 40,751  |                                        |   |   | —                                  |   |   |   | 40,751 |   |
| Equity securities                                                                                |   |                                                              | 98      |   |                                           |   | — |                                        |   |   | —                                  |   |   |   | 98 |   |
| Total investment securities available for sale                                         |   | $                                                                 | 98      |   |                                           | $      | 50,430  |                                        |   | $      | —                                  |   |   | $ | 50,528 |   |
|                                                                                             |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |   |   |   |   |
| Residential mortgage-backed securities issued by quasi-governmental agencies |   | $                                                                 | — |   |                                           | $      | 56,901  |                                        |   | $      | —                                  |   |   | $ | 56,901 |   |
| Residential real estate mortgage - backed securities privately issued                            |   |                                                              | — |   |                                           |   | 14,599  |                                        |   |   | —                                  |   |   |   | 14,599 |   |
| Total mortgage-backed securities available for sale                                    |   | $                                                                 | — |   |                                           | $      | 71,500  |                                        |   | $      | —                                  |   |   | $ | 71,500 |   |
|                                                                                             |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |   |   |   |   |

| At December 31, 2009                                                                             |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |    |   | SignificantOtherObservableInputs(Level 2) |   |    | SignificantUnobservableInputs(Level 3) |   |   | Balance as ofDecember 31,2009 |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|--------|------------------------------------------------|--------|---------|---------------------------------------------|--------|--------|-----------------------------------------|--------|
|                                                                                             |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                    |   |
| Assets                                                                                           |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                    |   |
| Investment securities available for sale                                                    |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                    |   |
| U.S. Government and federal agencies                                                             |   | $                                                                 | — |   |                                           | $      | 2,945   |                                        |   | $      | —                                 |   |   | $ | 2,945 |   |
| Corporate debt securities                                                                        |   |                                                              | — |   |                                           |   | 3,517   |                                        |   |   | —                                 |   |   |   | 3,517 |   |
| State and political subdivisions                                                                 |   |                                                              | — |   |                                           |   | 34,241  |                                        |   |   | —                                 |   |   |   | 34,241 |   |
| Equity securities                                                                                |   |                                                              | 150     |   |                                           |   | — |                                        |   |   | —                                 |   |   |   | 150 |   |
| Total investment securities available for sale                                         |   | $                                                                 | 150     |   |                                           | $      | 40,703  |                                        |   | $      | —                                 |   |   | $ | 40,853 |   |
|                                                                                             |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                    |   |   |   |   |   |
| Residential mortgage-backed securities issued by quasi-governmental agencies |   | $                                                                 | — |   |                                           | $      | 71,151  |                                        |   | $      | —                                 |   |   | $ | 71,151 |   |
| Residential real estate mortgage - backed securities privately issued                            |   |                                                              | — |   |                                           |   | 7,047   |                                        |   |   | —                                 |   |   |   | 7,047 |   |
| Total mortgage-backed securities available for sale                                    |   | $                                                                 | — |   |                                           | $      | 78,198  |                                        |   | $      | —                                 |   |   | $ | 78,198 |   |
|                                                                                             |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                    |   |   |   |   |   |
| Forward loan sales                                                                               |   | $                                                                 | — |   |                                           | $      | — |                                        |   | $      | 21                                      |   |   | $ | 21 |   |

----

Table of Contents

|                                              |   | Forwardloan sales |    |
|---------------------------------------------------|--------|-------------------|---------|
|                                              |   |              |    |
| Beginning balance, January 1, 2010           |   | $                 | 21      |   |
| Total gains (losses) — realized/unrealized: |   |              |    |
| Included in earnings                              |   | (21               | )       |
| Included in other comprehensive income       |   | —           |    |
| Purchases, issuances, and settlements             |   | —           |    |
| Ending balance, September 30, 2010                |   | $                 | — |   |

| At September 30, 2010                         |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |    |   | SignificantOtherObservableInputs(Level 2) |   |    | SignificantUnobservableInputs(Level 3) |   |   | Balance as ofSeptember 30,2010 |   |
|-----------------------------------------------|--------|-------------------------------------------------------------------|---------|--------|------------------------------------------------|--------|---------|---------------------------------------------|--------|--------|------------------------------------------|--------|
|                                          |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |
| Assets                                        |   |                                                              |    |   |                                           |   |    |                                        |   |   |                                     |   |
| Impaired loans                                |   | $                                                                 | — |   |                                           | $      | — |                                        |   | $      | 19,608                                   |   |   | $ | 19,608 |   |
| Real estate acquired through foreclosure |   | $                                                                 | — |   |                                           | $      | — |                                        |   | $      | 2,153                                    |   |   | $ | 2,153 |   |
| Mortgage servicing rights                     |   | $                                                                 | — |   |                                           | $      | 637     |                                        |   | $      | —                                  |   |   | $ | 637 |   |

| At December 31, 2009                |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |    |   | SignificantOtherObservableInputs(Level 2) |   |    | SignificantUnobservableInputs(Level 3) |   |   | Balance as ofDecember 31, 2009 |   |
|------------------------------------------|--------|--------------------------------------------------------------|---------|--------|------------------------------------------------|--------|---------|---------------------------------------------|--------|--------|-------------------------------------|--------|
|                                     |   |                                                         |    |   |                                           |   |    |                                        |   |   |                                |   |
| Assets                                   |   |                                                         |    |   |                                           |   |    |                                        |   |   |                                |   |
| Impaired loans                           |   | $                                                            | — |   |                                           | $      | — |                                        |   | $      | 7,744                               |   |   | $ | 7,744 |   |
| Real estate acquired through foreclosure |   | $                                                            | — |   |                                           | $      | — |                                        |   | $      | 1,279                               |   |   | $ | 1,279 |   |
| Mortgage servicing rights                |   | $                                                            | — |   |                                           | $      | 696     |                                        |   | $      | —                             |   |   | $ | 696 |   |

----

Table of Contents

|                       |   | September 30, 2010 |   |   | December 31, 2009 |   |
|----------------------------|--------|--------------------|--------|--------|------------------------|--------|
|                       |   | Fairvalue          |   |   | Carryingvalue          |   |   | Fairvalue |   |   | Carryingvalue |   |
|                       |   | (in thousands)     |   |
| Cash and cash equivalents  |   | $                  | 6,916  |   |                   | $      | 6,916 |   |   | $ | 12,801 |   |   | $ | 12,801 |   |
| Investment securities      |   |               | 50,528 |   |                   |   | 50,528 |   |   |   | 40,853 |   |   |   | 40,853 |   |
| Mortgage-backed securities |   |               | 75,105 |   |                   |   | 74,768 |   |   |   | 82,231 |   |   |   | 81,931 |   |

|                  |   | September 30, 2010 |    |   | December 31, 2009 |   |
|-----------------------|--------|--------------------|---------|--------|------------------------|--------|
|                  |   | Fairvalue          |    |   | Carryingvalue          |   |   | Fairvalue |   |   | Carryingvalue |   |
|                  |   | (in thousands)     |    |
| Loans receivable, net |   | $                  | 550,932 |   |                   | $      | 520,452 |   |   | $ | 539,670 |   |   | $ | 530,734 |   |

|                              |   | September 30, 2010 |    |   | December 31, 2009 |   |
|-----------------------------------|--------|--------------------|---------|--------|------------------------|--------|
|                              |   | Fairvalue          |    |   | Carryingvalue          |   |   | Fairvalue |   |   | Carryingvalue |   |
|                              |   | (in thousands)     |    |
| Liabilities                       |   |               |    |   |                   |   |   |   |   |   |   |   |
| Deposits with stated maturities   |   | $                  | 215,747 |   |                   | $      | 212,087 |   |   | $ | 228,676 |   |   | $ | 225,093 |   |
| Borrowings with stated maturities |   | $                  | 71,266  |   |                   | $      | 68,671 |   |   | $ | 82,947 |   |   | $ | 80,241 |   |

----

Table of Contents

|                               |   | September 30, 2010 |    |   | December 31, 2009 |   |
|------------------------------------|--------|--------------------|---------|--------|------------------------|--------|
|                               |   | Fairvalue          |    |   | Carryingvalue          |   |   | Fairvalue |   |   | Carryingvalue |   |
|                               |   | (in thousands)     |    |
| Deposits with no stated maturities |   | $                  | 340,475 |   |                   | $      | 340,475 |   |   | $ | 327,623 |   |   | $ | 327,623 |   |

|                                      | 2010                 |   |
|-------------------------------------------|----------------------|--------|
|                                      | Numberof shares |   | Weightedaverageexerciseprice pershare | Weightedaverageremainingcontractualterm (inyears) |   | Aggregateintrinsicvalue ($ 000) |   |
| Outstanding at January 1, 2010       | 271,646              |   | $ | 26.23 |   |   |   |   |
| Options granted                           | —              |   | — |   |   |   |   |
| Options exercised                         | (12,845              | )      | 13.76 |   |   |   |   |
| Options forfeited                         | (6,865               | )      | 27.83 |   |   |   |   |
| Options expired                           | (3,383               | )      | 28.25 |   |   |   |   |
| Outstanding at September 30, 2010         | 248,553              |   | $ | 26.80 | 1.83 |   | $ | 16 |   |
| Options exercisable at September 30, 2010 | 210,859              |   | $ | 27.76 | 1.30 |   | $ | 16 |   |

----

Table of Contents

|                                    |   | Three months endedSeptember 30, |   |
|-----------------------------------------|--------|-------------------------------------------|--------|
|                                    |   | 2010                                      |   |   | 2009 |   |
|                                    |   |                                      |   |   |   |   |
| Components of net periodic benefit cost |   |                                      |   |   |   |   |
| Service cost                            |   | $                                         | 138    |   |   | $ | 118 |   |
| Interest cost                           |   |                                      | 74     |   |   |   | 62 |   |
| Expected return on plan assets          |   |                                      | (141   | ) |   |   | (93 | ) |
| Amortization of prior service cost      |   |                                      | 1      |   |   |   | — |   |
| Recognized net actuarial loss           |   |                                      | 41     |   |   |   | 46 |   |
|                                    |   |                                      |   |   |   |   |   |   |
| Net periodic benefit cost               |   | $                                         | 113    |   |   | $ | 133 |   |

|                                    |   | Nine months endedSeptember 30, |   |
|-----------------------------------------|--------|------------------------------------------|--------|
|                                    |   | 2010                                     |   |   | 2009 |   |
|                                    |   |                                     |   |   |   |   |
| Components of net periodic benefit cost |   |                                     |   |   |   |   |
| Service cost                            |   | $                                        | 415    |   |   | $ | 354 |   |
| Interest cost                           |   |                                     | 222    |   |   |   | 186 |   |
| Expected return on plan assets          |   |                                     | (414   | ) |   |   | (278 | ) |
| Amortization of prior service cost      |   |                                     | 2      |   |   |   | — |   |
| Recognized net actuarial loss           |   |                                     | 115    |   |   |   | 137 |   |
|                                    |   |                                     |   |   |   |   |   |   |
| Net periodic benefit cost               |   | $                                        | 340    |   |   | $ | 399 |   |

----

Table of Contents

----

Table of Contents

ITEM 2

----

Table of Contents

|                                                                                             |   | September 30,2010 |    |   | December 31,2009 |   |    | September 30,2009 |   |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|---------|-------------------|--------|--------|
|                                                                                             |   | (in thousands)    |    |   |
|                                                                                             |   |              |    |   |                  |   |    |              |   |   |
| Non-performing loans with a related allowance                                                    |   |              |    |   |                  |   |    |              |   |   |
| Secured by non-residential properties and/or non—owner occupied residential properties     |   | $                 | 940     |   |                  | $      | — |              |   | $      | — |   |   |
| Construction loans                                                                               |   |              | 3,887   |   |                  |   | 2,389   |              |   |   | — |   |   |
| Commercial-business, real estate secured                                                         |   |              | 2,605   |   |                  |   | — |              |   |   | — |   |   |
| Commercial-business, non-real estate secured                                                     |   |              | 44      |   |                  |   | — |              |   |   | — |   |   |
| Non-performing loans without a related allowance                                                 |   |              |    |   |                  |   |    |              |   |   |   |   |   |
| Secured by one-to-four family residences(1)                                                      |   |              | 1,470   |   |                  |   | 1,120   |              |   |   | 651 |   |   |
| Secured by non-residential properties and/or non—owner occupied residential properties (2) |   |              | 3,299   |   |                  |   | 2,506   |              |   |   | 823 |   |   |
| Construction loans                                                                               |   |              | 354     |   |                  |   | 2,167   |              |   |   | 1,497 |   |   |
| Commercial-business, real estate secured                                                         |   |              | 7,862   |   |                  |   | — |              |   |   | — |   |   |
| Home equity and second mortgage                                                                  |   |              | 1,084   |   |                  |   | 99      |              |   |   | 127 |   |   |
| Other consumer                                                                                   |   |              | — |   |                  |   | 4       |              |   |   | — |   |   |
| Total non-performing loans                                                                       |   | $                 | 21,545  |   |                  | $      | 8,285   |              |   | $      | 3,098 |   |   |
| Total loans past due 90 days as to interest or principal and accruing interest              |   | $                 | — |   |                  | $      | — |              |   | $      | — |   |   |
| Ratio of non-performing loans to gross loans                                                     |   |              | 4.08    | %      |                  |   | 1.55    | %                 |   |   | 0.58 |   | % |
| Ratio of non-performing loans to total assets                                                    |   |              | 3.07    | %      |                  |   | 1.16    | %                 |   |   | 0.44 |   | % |
| Real estate owned                                                                                |   | $                 | 2,153   |   |                  | $      | 1,279   |              |   | $      | 999 |   |   |
| Ratio of total non-performing assets to total assets                                             |   |              | 3.37    | %      |                  |   | 1.34    | %                 |   |   | 0.58 |   | % |
| Ratio of allowance for loan losses to total loans                                                |   |              | 1.44    | %      |                  |   | 0.97    | %                 |   |   | 0..80 |   | % |
| Ratio of allowance for loan losses to non-performing loans                                       |   |              | 35.30   | %      |                  |   | 62.95   | %                 |   |   | 138.54 |   | % |
|                                                                                             |   |              |    |   |                  |   |    |              |   |   |   |   |   |
| Loans delinquent 30-89 days(3)                                                                   |   | $                 | 2,701   |   |                  | $      | 934     |              |   | $      | 87 |   |   |

----

Table of Contents

----

Table of Contents

|                                                                                        |   | September 30,2010 |   |   | December 31,2009 |   |    | September 30,2009 |   |
|---------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-----------------------|--------|---------|-------------------|--------|
|                                                                                        |   | (in thousands)    |   |
| Impaired loans:                                                                             |   |              |   |   |                  |   |    |              |   |
| Secured by non-residential properties and /or non—owner occupied residential property |   | $                 | 120    |   |                  | $      | — |              |   | $ | — |   |
| Construction loans                                                                          |   |              | 1,374  |   |                  |   | 540     |              |   |   | — |   |
| Commercial-business, real estate secured                                                    |   |              | 398    |   |                  |   | — |              |   |   | — |   |
| Commercial-business, non-real estate secured                                                |   |              | 44     |   |                  |   | — |              |   |   | — |   |
| Total                                                                                       |   |              | 1,936  |   |                  |   | 540     |              |   |   | — |   |
| Unimpaired loans:                                                                           |   |              |   |   |                  |   |    |              |   |   |   |   |
| Secured by one-to-four family residences                                                    |   |              | 1,149  |   |                  |   | 962     |              |   |   | 1,443 |   |
| Secured by non-residential properties and or non—owner occupied residential property  |   |              | 1,819  |   |                  |   | 1,275   |              |   |   | 1,048 |   |
| Construction loans                                                                          |   |              | 1,173  |   |                  |   | 1,126   |              |   |   | 584 |   |
| Commercial-business, real estate secured                                                    |   |              | 484    |   |                  |   | 757     |              |   |   | 297 |   |
| Commercial-business, non-real estate secured                                                |   |              | 33     |   |                  |   | 168     |              |   |   | 48 |   |
| Home equity and second mortgage                                                             |   |              | 545    |   |                  |   | 303     |              |   |   | 307 |   |
| Other consumer                                                                              |   |              | 13     |   |                  |   | 14      |              |   |   | 17 |   |
| Total                                                                                       |   |              | 5,216  |   |                  |   | 4,605   |              |   |   | 3,744 |   |
|                                                                                        |   |              |   |   |                  |   |    |              |   |   |   |   |
| Unallocated                                                                                 |   |              | 454    |   |                  |   | 70      |              |   |   | 548 |   |
|                                                                                        |   |              |   |   |                  |   |    |              |   |   |   |   |
| Allowance for loan loss                                                                     |   | $                 | 7,606  |   |                  | $      | 5,215   |              |   | $ | 4,292 |   |

----

Table of Contents

|                                                                                  |   | Three Months Ended September 30, |    |
|---------------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                                  |   | 2010                             |    |   | 2009 |   |
|                                                                                  |   | Averagebalance                   |    |   | Interest |   |   | Averageyld/cost |   |   | Averagebalance |   |   | Interest |   |   | Averageyld/cost |   |
| ASSETS                                                                                |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                              |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable(1)                                                                   |   | $                                | 522,181 |   |   | $ | 7,020 |   |   |   | 5.33 | % |   | $ | 535,358 |   |   | $ | 7,638 |   |   |   | 5.66 | % |
| Mortgage-backed securities                                                            |   |                             | 79,070  |   |   |   | 886 |   |   |   | 4.45 | % |   |   | 100,482 |   |   |   | 1,170 |   |   |   | 4.62 | % |
| Investment securities(2)                                                              |   |                             | 59,077  |   |   |   | 586 |   |   |   | 3.94 | % |   |   | 41,849 |   |   |   | 430 |   |   |   | 4.08 | % |
| Other interest-earning assets(3)                                                      |   |                             | 10,122  |   |   |   | — | * |   |   | — | % |   |   | 2,027 |   |   |   | 1 |   |   |   | 0.20 | % |
| Total interest-earning assets                                                         |   |                             | 670,450 |   |   |   | 8,492 |   |   |   | 5.03 | % |   |   | 679,716 |   |   |   | 9,239 |   |   |   | 5.39 | % |
| Non interest-earning assets                                                           |   |                             | 42,716  |   |   |   |   |   |   |   |   |   |   |   | 37,463 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                          |   | $                                | 713,166 |   |   |   |   |   |   |   |   |   |   | $ | 717,179 |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                       |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                         |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                              |   | $                                | 556,314 |   |   |   | 1,757 |   |   |   | 1.25 | % |   | $ | 530,064 |   |   |   | 2,393 |   |   |   | 1.79 | % |
| Borrowings from the FHLB and other borrowings                                         |   |                             | 75,130  |   |   |   | 731 |   |   |   | 3.86 | % |   |   | 107,746 |   |   |   | 988 |   |   |   | 3.64 | % |
| Total interest-bearing liabilities                                                    |   |                             | 631,444 |   |   |   | 2,488 |   |   |   | 1.56 | % |   |   | 637,810 |   |   |   | 3,381 |   |   |   | 2.10 | % |
| Non interest-bearing liabilities                                                      |   |                             | 7,744   |   |   |   |   |   |   |   |   |   |   |   | 9,065 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                     |   |                             | 639,188 |   |   |   |   |   |   |   |   |   |   |   | 646,875 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                                                            |   |                             | 73,978  |   |   |   |   |   |   |   |   |   |   |   | 70,304 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’equity                                       |   | $                                | 713,166 |   |   |   |   |   |   |   |   |   |   | $ | 717,179 |   |   |   |   |   |   |   |   |   |
| Net interest income—tax equivalent basis                                        |   |                             |    |   |   |   | 6,004 |   |   |   |   |   |   |   |   |   |   |   | 5,858 |   |   |   |   |   |
| Interest rate spread(4)-tax equivalent basis                                          |   |                             |    |   |   |   |   |   |   |   | 3.47 | % |   |   |   |   |   |   |   |   |   |   | 3.29 | % |
| Net yield on interest-earning assets(5)—tax equivalent basis                    |   |                             |    |   |   |   |   |   |   |   | 3.55 | % |   |   |   |   |   |   |   |   |   |   | 3.42 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities |   |                             |    |   |   |   |   |   |   |   | 106.18 | % |   |   |   |   |   |   |   |   |   |   | 106.57 | % |
| Less: tax—equivalent interestadjustment                                         |   |                             |    |   |   |   | (142 | ) |   |   |   |   |   |   |   |   |   |   | (119 | ) |   |   |   |   |
| Net interest income                                                                   |   |                             |    |   |   | $ | 5,862 |   |   |   |   |   |   |   |   |   |   | $ | 5,739 |   |   |   |   |   |
| Interest rate spread(4)                                                               |   |                             |    |   |   |   |   |   |   |   | 3.38 | % |   |   |   |   |   |   |   |   |   |   | 3.22 | % |
| Net yield on interest-earningassets(5)                                                |   |                             |    |   |   |   |   |   |   |   | 3.47 | % |   |   |   |   |   |   |   |   |   |   | 3.35 | % |

----

Table of Contents

|   | (1 | )      | Nonaccrual loans have been included in the appropriate average loan balance category, but interest on nonaccrual loans has not been included for purposes of determining interest income.                                                      |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2 | )      | Tax equivalent adjustments to interest on investment securities were $142,000 and $119,000 for the quarter ended September 30, 2010 and 2009, respectively. Tax equivalent interest income is based upon a marginal effective tax rate of 34%. |
|   | (3 | )      | Includes interest-bearing deposits in other banks.                                                                                                                                                                                             |
|   | (4 | )      | Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.                                                                                      |
|   | (5 | )      | Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.                                                                                                                        |
|   | *  |   | Is less than $500 for period indicated                                                                                                                                                                                                         |

|                                          |   | Three months ended September 30                  |   |
|-----------------------------------------------|--------|-----------------------------------------------------------------|--------|
|                                          |   | 2010 vs 2009Increase (decrease) due to |   |
|                                          |   | Volume                                                          |   |   | Rate |   |   | Net |   |
| Interest income:                              |   |                                                            |   |   |   |   |   |   |   |
| Loans receivable, net                         |   | $                                                               | (185   | ) |   | $ | (433 | ) |   | $ | (618 | ) |
| Mortgage-backed securities                    |   |                                                            | (241   | ) |   |   | (43 | ) |   |   | (284 | ) |
| Investment securities (1)                     |   |                                                            | 253    |   |   |   | (97 | ) |   |   | 156 |   |
| Other interest-earning assets                 |   |                                                            | 6      |   |   |   | (7 | ) |   |   | (1 | ) |
| Total interest-earning assets                 |   |                                                            | (167   | ) |   |   | (580 | ) |   |   | (747 | ) |
| Interest expense:                             |   |                                                            |   |   |   |   |   |   |   |   |   |   |
| Deposits                                      |   |                                                            | 717    |   |   |   | (1,353 | ) |   |   | (636 | ) |
| Borrowings from the FHLB and other borrowings |   |                                                            | (612   | ) |   |   | 355 |   |   |   | (257 | ) |
|                                          |   |                                                            |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities            |   |                                                            | 105    |   |   |   | (998 | ) |   |   | (893 | ) |
| Net change in net interest income             |   | $                                                               | (272   | ) |   | $ | 418 |   |   | $ | 146 |   |

|   | (1 | ) |   | Tax equivalent adjustments to interest on investment securities were $142,000 and $119,000 for the quarters ended September 30, 2010 and 2009, respectively. Tax equivalent interest income is based upon a marginal effective tax rate of 34%. |
|--------|----|---|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

|                                                                                  |   | Nine Months Ended September 30, |    |
|---------------------------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                                  |   | 2010                            |    |   | 2009 |   |
|                                                                                  |   | Averagebalance                  |    |   | Interest |   |   | Averageyld/cost |   |   | Averagebalance |   |   | Interest |   |   | Averageyld/cost |   |
| ASSETS                                                                                |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                              |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable(1)                                                                   |   | $                               | 524,734 |   |   | $ | 21,472 |   |   |   | 5.49 | % |   | $ | 540,972 |   |   | $ | 22,951 |   |   |   | 5.69 | % |
| Mortgage-backed securities                                                            |   |                            | 80,538  |   |   |   | 2,782 |   |   |   | 4.63 | % |   |   | 104,752 |   |   |   | 3,849 |   |   |   | 4.93 | % |
| Investment securities(2)                                                              |   |                            | 56,956  |   |   |   | 1,709 |   |   |   | 4.02 | % |   |   | 39,798 |   |   |   | 1,189 |   |   |   | 4.01 | % |
| Other interest-earning assets(3)                                                      |   |                            | 10,112  |   |   |   | 2 |   |   |   | 0.03 | % |   |   | 1,519 |   |   |   | 1 |   |   |   | 0.09 | % |
| Total interest-earning assets                                                         |   |                            | 672,340 |   |   |   | 25,965 |   |   |   | 5.18 | % |   |   | 687,041 |   |   |   | 27,990 |   |   |   | 5.46 | % |
| Non interest-earning assets                                                           |   |                            | 42,050  |   |   |   |   |   |   |   |   |   |   |   | 37,092 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                          |   | $                               | 714,390 |   |   |   |   |   |   |   |   |   |   | $ | 724,133 |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                       |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                         |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                              |   | $                               | 554,259 |   |   |   | 5,593 |   |   |   | 1.35 | % |   | $ | 514,614 |   |   |   | 7,347 |   |   |   | 1.91 | % |
| Borrowings from the FHLB and other borrowings                                    |   |                            | 78,684  |   |   |   | 2,372 |   |   |   | 4.04 | % |   |   | 131,248 |   |   |   | 3,481 |   |   |   | 3.56 | % |
| Total interest-bearing liabilities                                                    |   |                            | 632,943 |   |   |   | 7,965 |   |   |   | 1.69 | % |   |   | 645,862 |   |   |   | 10,828 |   |   |   | 2.25 | % |
| Non interest-bearing liabilities                                                      |   |                            | 8,240   |   |   |   |   |   |   |   |   |   |   |   | 9,033 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                     |   |                            | 641,183 |   |   |   |   |   |   |   |   |   |   |   | 654,895 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                                                            |   |                            | 73,207  |   |   |   |   |   |   |   |   |   |   |   | 69,238 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’equity                                       |   | $                               | 714,390 |   |   |   |   |   |   |   |   |   |   | $ | 724,133 |   |   |   |   |   |   |   |   |   |
| Net interest income—tax equivalent basis                                        |   |                            |    |   |   |   | 18,000 |   |   |   |   |   |   |   |   |   |   |   | 17,162 |   |   |   |   |   |
| Interest rate spread(4)-tax equivalent basis                                     |   |                            |    |   |   |   |   |   |   |   | 3.49 | % |   |   |   |   |   |   |   |   |   |   | 3.21 | % |
| Net yield on interest-earningassets(5)—tax equivalent basis                |   |                            |    |   |   |   |   |   |   |   | 3.59 | % |   |   |   |   |   |   |   |   |   |   | 3.35 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities |   |                            |    |   |   |   |   |   |   |   | 106.22 | % |   |   |   |   |   |   |   |   |   |   | 106.38 | % |
| Less: tax—equivalent interest adjustment                                        |   |                            |    |   |   |   | (418 | ) |   |   |   |   |   |   |   |   |   |   | (325 | ) |   |   |   |   |
| Net interest income                                                                   |   |                            |    |   |   | $ | 17,582 |   |   |   |   |   |   |   |   |   |   | $ | 16,837 |   |   |   |   |   |
| Interest rate spread(4)                                                               |   |                            |    |   |   |   |   |   |   |   | 3.41 | % |   |   |   |   |   |   |   |   |   |   | 3.15 | % |
| Net yield on interest-earningassets(5)                                                |   |                            |    |   |   |   |   |   |   |   | 3.51 | % |   |   |   |   |   |   |   |   |   |   | 3.29 | % |

----

Table of Contents

|   | (1 | ) | Nonaccrual loans have been included in the appropriate average loan balance category, but interest on nonaccrual loans has not been included for purposes of determining interest income.                                                          |
|--------|----|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2 | ) | Tax equivalent adjustments to interest on investment securities were $418,000 and $325,000 for the nine months ended September 30, 2010 and 2009, respectively. Tax equivalent interest income is based upon a marginal effective tax rate of 34%. |
|   | (3 | ) | Includes interest-bearing deposits in other banks.                                                                                                                                                                                                 |
|   | (4 | ) | Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.                                                                                          |
|   | (5 | ) | Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.                                                                                                                            |

|                                          |   | Nine months ended September 30                   |   |
|-----------------------------------------------|--------|-----------------------------------------------------------------|--------|
|                                          |   | 2010 vs 2009Increase (decrease) due to |   |
|                                          |   | Volume                                                          |   |   | Rate |   |   | Net |   |
| Interest income:                              |   |                                                            |   |   |   |   |   |   |   |
| Loans receivable, net                         |   | $                                                               | (678   | ) |   | $ | (801 | ) |   | $ | (1,479 | ) |
| Mortgage-backed securities                    |   |                                                            | (847   | ) |   |   | (220 | ) |   |   | (1,067 | ) |
| Investment securities (1)                     |   |                                                            | 515    |   |   |   | 5 |   |   |   | 520 |   |
| Other interest-earning assets                 |   |                                                            | 3      |   |   |   | (2 | ) |   |   | 1 |   |
| Total interest-earning assets                 |   |                                                            | (1,007 | ) |   |   | (1,018 | ) |   |   | (2,025 | ) |
| Interest expense:                             |   |                                                            |   |   |   |   |   |   |   |   |   |   |
| Deposits                                      |   |                                                            | 837    |   |   |   | (2,591 | ) |   |   | (1,754 | ) |
| Borrowings from the FHLB and other borrowings |   |                                                            | (1,778 | ) |   |   | 669 |   |   |   | (1,109 | ) |
|                                          |   |                                                            |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities            |   |                                                            | (941   | ) |   |   | (1,922 | ) |   |   | (2,863 | ) |
| Net change in net interest income             |   | $                                                               | (66    | ) |   | $ | 904 |   |   | $ | 838 |   |

|   | (1 | ) |   | Tax equivalent adjustments to interest on investment securities were $418,000 and $325,000 for the nine months ended September 30, 2010 and 2009, respectively. Tax equivalent interest income is based upon a marginal effective tax rate of 34%. |
|--------|----|---|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

----

Table of Contents

ITEM 3

----

Table of Contents

ITEM 4

----

Table of Contents

| ITEM 1.  |   | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                              |
|----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                                                                                                                                                                           |
|     |   | Neither the Company nor its subsidiaries are involved in any pending legal proceedings, other than routine legal matters occurring in the ordinary course of business that in the aggregate involve amounts which are believed by management to be immaterial to the consolidated financial condition or results of operations of the Company. |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
| ITEM 1A. |   | RISKFACTORS                                                                                                                                                                                                                                                                                                                                    |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
|     |   | As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this item.                                                                                                                                                                            |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
| ITEM 2.  |   | UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS                                                                                                                                                                                                                                                                                     |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
|     |   | None.                                                                                                                                                                                                                                                                                                                                          |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
| ITEM 3.  |   | DEFAULTS UPON SENIOR SECURITIES                                                                                                                                                                                                                                                                                                                |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
|     |   | Not applicable.                                                                                                                                                                                                                                                                                                                                |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
| ITEM 4.  |   | [REMOVED AND RESERVED]                                                                                                                                                                                                                                                                                                                         |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
| ITEM 5.  |   | OTHER INFORMATION                                                                                                                                                                                                                                                                                                                              |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
|     |   | None.                                                                                                                                                                                                                                                                                                                                          |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
| ITEM 6.  |   | EXHIBITS                                                                                                                                                                                                                                                                                                                                       |
|     |   |                                                                                                                                                                                                                                                                                                                                           |
|     |   | (a)                                                                                                                                                                                                                                                                                                                                  | Exhibits |
|     |   |                                                                                                                                                                                                                                                                                                                                           | 31.1  | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|     |   |                                                                                                                                                                                                                                                                                                                                           | 31.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|     |   |                                                                                                                                                                                                                                                                                                                                           | 32. | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

----

Table of Contents

| Date:  | November 12, 2010 |   | /s/ Kent C. Lufkin                                   |
|--------|-------------------|--------|------------------------------------------------------|
|   |              |   | Kent C. Lufkin                                       |
|   |              |   | President and CEO                                    |
|   |              |   | (Principal Executive Officer)                        |
|   |              |   |                                                 |
|   |              |   |                                                 |
| Date:  | November 12, 2010 |   | /s/ Dennis R. Stewart                                |
|   |              |   | Dennis R. Stewart                                    |
|   |              |   | Executive Vice President and Chief Financial Officer |
|   |              |   | (Principal Financial & Accounting Officer)  |

----

----

----