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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q/A

Amendment No. 1







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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011

COMMISSION FILE NO: 0-17411





PARKVALE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)







|                         |  |                                       
|------------------------ |  | --------------------------------------
|Pennsylvania             |  | 25-1556590                            
|(State of incorporation) |  | (I.R.S. EmployerIdentification Number)

4220 William Penn Highway, Monroeville, Pennsylvania 15146

(Address of principal executive offices; zip code)

Registrants telephone number, including area code: (412) 373-7200





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

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

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



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

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

The closing sales price of the Registrants Common Stock on May 16, 2011 was $10.30 per share.

Number of shares of Common Stock outstanding as of May 16, 2011 was 5,582,846.









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PARKVALE FINANCIAL CORPORATION

INDEX



|                                                                                                                      |  |      |       | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | 
|                                                                                                                      |  | Page |      
|                                                                                                                      | 
|Part I. Financial Information                                                                                         |  |      |       | 
|                                                                                                                      | 
|Item 1.                                                                                                               |  |      |       | 
|Consolidated Statements of Financial Condition as of March 31, 2011 (Unaudited) and June 30,
2010                     |  |      | 3     | 
|                                                                                                                      | 
|Consolidated Statements of Operations for the three months and nine months ended March 
31, 2011 and 2010 (Unaudited) |  |      | 5     | 
|                                                                                                                      | 
|Consolidated Statements of Cash Flows for the nine months ended March 31, 2011 and 2010
(Unaudited)                   |  |      | 6-7   | 
|                                                                                                                      | 
|Consolidated Statements of Shareholders Equity for the nine months ended March 
31, 2011 and 2010 (Unaudited)        |  |      | 7-8   | 
|                                                                                                                      | 
|Notes to Unaudited Interim Consolidated Financial Statements                                                          |  |      | 8-36  | 
|                                                                                                                      | 
|Item 2.                                                                                                               |  |      |       | 
|Managements Discussion and Analysis of Financial Condition and Results of Operations                                 |  |      | 36-46 | 
|                                                                                                                      | 
|Item 3.                                                                                                               |  |      |       | 
|Quantitative and Qualitative Disclosures about Market Risk                                                            |  |      | 46    | 
|                                                                                                                      | 
|Item 4.                                                                                                               |  |      |       | 
|Controls and Procedures                                                                                               |  |      | 46    | 
|                                                                                                                      | 
|Part II - Other Information                                                                                           |  |      | 47    | 
|                                                                                                                      | 
|Signatures                                                                                                            |  |      | 48    | 
|                                                                                                                      | 
|Exhibits                                                                                                              |  |      |       | 
|EX31.1                                                                                                               |  |      |       | 
|EX31.2                                                                                                               |  |      |       | 
|EX32.1                                                                                                               |  |      |       | 



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PART I.

Explanatory Note

This Amendment on Form 10-Q/A amends our Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2011, filed with the Securities and Exchange Commission (SEC) on May 20, 2011. We are filing this Amendment to correct the consolidated financial statements
of Parkvale Financial Corporation (the Company) as of March 31, 2011 and June 30, 2010 and for each of the periods ended March 31, 2011 and 2010.

The Companys management along with its independent registered public accounting firm, during the course of the Companys fiscal 2011 annual audit of financial results and application of
financial controls, identified a deficiency that represented a material weakness in internal control over financial reporting. While a remediation plan was implemented to correct the material weakness in internal control over financial reporting, in
finalizing its Form 10-K for the year ended June 30, 2011, management together with its independent registered public accounting firm identified the existence of an under-accrual of FDIC deposit insurance expense for the fiscal years ended
June 30, 2010 and 2009 resulting from a previous change in FDIC regulations regarding the manner in which deposit insurance assessments were collected. The cumulative effect during fiscal 2009 through fiscal 2010 is a $1.1 million increase to
the reported net loss to common shareholders. As a result of these adjustments, management with the concurrence of the Board of Directors has determined that the Companys financial statements for fiscal 2010 and 2009 should be restated. This
Form 10-Q amendment is being filed to reflect the restated numbers as of March 31, 2011 and June 30, 2010 and for the three and nine months ended March 31, 2010.

Item 1.

PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar amounts in thousands, except share data)



|                                                                                                           |  |               |           |  |               |   |           | 
|---------------------------------------------------------------------------------------------------------- |  | ------------- | --------- |  | ------------- | - | --------- | 
|                                                                                                           |  | March 31,2011 |           |  | June 30,2010  |  
|                                                                                                           |  | (As Restated) |           |  | (As Restated) |  
|                                                                                                           |  | (Unaudited)   |           |  |               |  
|ASSETS                                                                                                     |  |               |           |  |               |   |           | 
|Cash and noninterest-earning deposits                                                                      |  | $             | 15,492    |  |               | $ | 17,736    | 
|Federal funds sold                                                                                         |  |               | 156,218   |  |               |   | 135,773   | 
|                                                                                                           |  |               |           |  |               |   |           | 
|Cash and cash equivalents                                                                                  |  |               | 171,710   |  |               |   | 153,509   | 
|Interest-earning deposits in other banks                                                                   |  |               | 3,835     |  |               |   | 801       | 
|Investment securities available for sale at fair value (cost of $5,501 at March 31 and $65,778 at
June 30) |  |               | 5,243     |  |               |   | 65,770    | 
|Investment securities held to maturity (fair value of $481,082 at March 31 and $437,931 at June 30)        |  |               | 484,223   |  |               |   | 443,452   | 
|Federal Home Loan Bank Stock, at cost                                                                      |  |               | 12,958    |  |               |   | 14,357    | 
|Loans, net of allowance of $19,030 at March 31 and $19,209 at June 30                                      |  |               | 998,936   |  |               |   | 1,032,363 | 
|Foreclosed real estate, net                                                                                |  |               | 9,390     |  |               |   | 8,637     | 
|Office properties and equipment, net                                                                       |  |               | 17,144    |  |               |   | 17,374    | 
|Goodwill                                                                                                   |  |               | 25,634    |  |               |   | 25,634    | 
|Intangible assets                                                                                          |  |               | 2,195     |  |               |   | 2,877     | 
|Prepaid expenses and other assets                                                                          |  |               | 68,953    |  |               |   | 76,535    | 
|                                                                                                           |  |               |           |  |               |   |           | 
|Total assets                                                                                               |  | $             | 1,800,221 |  |               | $ | 1,841,309 | 
|                                                                                                           |  |               |           |  |               |   |           | 



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|                                                                                                                    |  |   |           |   |  |   |           |  
|------------------------------------------------------------------------------------------------------------------- |  | - | --------- | - |  | - | --------- | -
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                |  |   |           |   |  |   |           |  
|LIABILITIES                                                                                                         |  |   |           |   |  |   |           |  
|Deposits                                                                                                            |  | $ | 1,480,886 |   |  | $ | 1,488,073 |  
|Advances from Federal Home Loan Bank                                                                                |  |   | 150,862   |   |  |   | 185,973   |  
|Term debt                                                                                                           |  |   | 21,875    |   |  |   | 23,750    |  
|Other debt                                                                                                          |  |   | 12,925    |   |  |   | 13,865    |  
|Advance payments from borrowers for taxes and insurance                                                             |  |   | 6,775     |   |  |   | 7,526     |  
|Other liabilities                                                                                                   |  |   | 4,105     |   |  |   | 4,249     |  
|                                                                                                                    |  |   |           |   |  |   |           |  
|Total liabilities                                                                                                   |  |   | 1,677,428 |   |  |   | 1,723,436 |  
|                                                                                                                    |  |   |           |   |  |   |           |  
|SHAREHOLDERS EQUITY                                                                                                |  |   |           |   |  |   |           |  
|Preferred stock ($1.00 par value, liquidation preference $1,000; 5,000,000 shares authorized; 31,762 shares
issued) |  |   | 31,762    |   |  |   | 31,762    |  
|Common stock ($1.00 par value; 10,000,000 shares authorized; 6,734,894 shares issued)                               |  |   | 6,735     |   |  |   | 6,735     |  
|Additional paid-in capital                                                                                          |  |   | 2,151     |   |  |   | 2,734     |  
|Treasury stock at cost (1,152,048 shares at March 31 and 1,205,683 shares at June 30)                               |  |   | (24,072   | ) |  |   | (25,193   | )
|Accumulated other comprehensive loss                                                                                |  |   | (13,516   | ) |  |   | (13,413   | )
|Retained earnings                                                                                                   |  |   | 119,733   |   |  |   | 115,248   |  
|                                                                                                                    |  |   |           |   |  |   |           |  
|Total shareholders equity                                                                                          |  |   | 122,793   |   |  |   | 117,873   |  
|                                                                                                                    |  |   |           |   |  |   |           |  
|Total liabilities and shareholders equity                                                                          |  | $ | 1,800,221 |   |  | $ | 1,841,309 |  
|                                                                                                                    |  |   |           |   |  |   |           |  



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PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except per share data)

(Unaudited)



|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|------------------------------------------------------------------ |  | --------------------------- | ------ | - | -------------------------- | - | ------ | ---- |  | - | ------------- | - |  | - | ------- | -
|                                                                   |  | Three months endedMarch 31, |        |   | Nine months endedMarch 31, |  
|                                                                   |  | 2011                        |        |   | 2010                       |   |        | 2011 |  |   | 2010          |  
|                                                                   |  |                             |        |   | (As Restated)              |   |        |      |  |   | (As Restated) |  
|Interest income:                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Loans                                                              |  | $                           | 12,408 |   |                            | $ | 13,745 |      |  | $ | 38,269        |   |  | $ | 42,768  |  
|Investments                                                        |  |                             | 3,497  |   |                            |   | 4,799  |      |  |   | 10,631        |   |  |   | 14,895  |  
|Federal funds sold                                                 |  |                             | 77     |   |                            |   | 88     |      |  |   | 284           |   |  |   | 291     |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Total interest income                                              |  |                             | 15,982 |   |                            |   | 18,632 |      |  |   | 49,184        |   |  |   | 57,954  |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Interest expense:                                                  |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Deposits                                                           |  |                             | 4,543  |   |                            |   | 6,464  |      |  |   | 14,538        |   |  |   | 21,843  |  
|Borrowings                                                         |  |                             | 2,340  |   |                            |   | 2,754  |      |  |   | 7,476         |   |  |   | 8,289   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Total interest expense                                             |  |                             | 6,883  |   |                            |   | 9,218  |      |  |   | 22,014        |   |  |   | 30,132  |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Net interest income                                                |  |                             | 9,099  |   |                            |   | 9,414  |      |  |   | 27,170        |   |  |   | 27,822  |  
|Provision for loan losses                                          |  |                             | 691    |   |                            |   | 1,164  |      |  |   | 2,740         |   |  |   | 4,851   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Net interest income after provision for losses                     |  |                             | 8,408  |   |                            |   | 8,250  |      |  |   | 24,430        |   |  |   | 22,971  |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Noninterest Income:                                                |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Other-than-temporary impairment losses recognized in earnings      |  |                             | (255   | ) |                            |   | (6,536 | )    |  |   | (4,236        | ) |  |   | (12,537 | )
|Non-credit related losses recognized in other comprehensive income |  |                             |       |   |                            |   | 5,492  |      |  |   | 2,039         |   |  |   | 7,950   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Net impairment losses recognized in earnings                       |  |                             | (255   | ) |                            |   | (1,044 | )    |  |   | (2,197        | ) |  |   | (4,587  | )
|Service charges on deposit accounts                                |  |                             | 1,628  |   |                            |   | 1,487  |      |  |   | 5,052         |   |  |   | 4,754   |  
|Other fees and service charges                                     |  |                             | 339    |   |                            |   | 376    |      |  |   | 1,101         |   |  |   | 1,102   |  
|Net gain on sale of assets                                         |  |                             |       |   |                            |   | 167    |      |  |   | 1,366         |   |  |   | 2,372   |  
|Other                                                              |  |                             | 507    |   |                            |   | 521    |      |  |   | 1,799         |   |  |   | 1,575   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Total noninterest income                                           |  |                             | 2,219  |   |                            |   | 1,507  |      |  |   | 7,121         |   |  |   | 5,216   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Noninterest Expense:                                               |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Compensation and employee benefits                                 |  |                             | 3,649  |   |                            |   | 3,804  |      |  |   | 11,049        |   |  |   | 11,236  |  
|Office occupancy                                                   |  |                             | 1,158  |   |                            |   | 1,243  |      |  |   | 3,272         |   |  |   | 3,449   |  
|Marketing                                                          |  |                             | 78     |   |                            |   | 78     |      |  |   | 256           |   |  |   | 238     |  
|FDIC insurance                                                     |  |                             | 918    |   |                            |   | 868    |      |  |   | 2,716         |   |  |   | 2,509   |  
|Office supplies, telephone and postage                             |  |                             | 477    |   |                            |   | 479    |      |  |   | 1,487         |   |  |   | 1,412   |  
|Other                                                              |  |                             | 1,555  |   |                            |   | 1,494  |      |  |   | 4,757         |   |  |   | 4,456   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Total noninterest expense                                          |  |                             | 7,835  |   |                            |   | 7,966  |      |  |   | 23,537        |   |  |   | 23,300  |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Income before income taxes                                         |  |                             | 2,792  |   |                            |   | 1,791  |      |  |   | 8,014         |   |  |   | 4,887   |  
|Income tax expense                                                 |  |                             | 845    |   |                            |   | 437    |      |  |   | 2,003         |   |  |   | 531     |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Net income                                                         |  |                             | 1,947  |   |                            |   | 1,354  |      |  |   | 6,011         |   |  |   | 4,356   |  
|Less: Preferred stock dividend                                     |  |                             | 397    |   |                            |   | 397    |      |  |   | 1,191         |   |  |   | 1,191   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Income available to common shareholders                            |  | $                           | 1,550  |   |                            | $ | 957    |      |  | $ | 4,820         |   |  | $ | 3,165   |  
|                                                                   |  |                             |        |   |                            |   |        |      |  |   |               |   |  |   |         |  
|Net income per common basic share                                  |  | $                           | 0.28   |   |                            | $ | 0.17   |      |  | $ | 0.87          |   |  | $ | 0.58    |  
|Net income per common diluted share                                |  | $                           | 0.28   |   |                            | $ | 0.17   |      |  | $ | 0.87          |   |  | $ | 0.58    |  



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PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)



|                                                                   |  |                             |          |   |               |   |          |  
|------------------------------------------------------------------ |  | --------------------------- | -------- | - | ------------- | - | -------- | -
|                                                                   |  | Nine months ended
March 31, |         
|                                                                   |  | 2011                        |          |   | 2010          |  
|                                                                   |  |                             |          |   | (As Restated) |  
|Cash flows from operating activities:                              |  |                             |          |   |               |   |          |  
|Interest received                                                  |  | $                           | 50,262   |   |               | $ | 57,544   |  
|Loan fees received                                                 |  |                             | 444      |   |               |   | 242      |  
|Other fees and commissions received                                |  |                             | 7,148    |   |               |   | 6,604    |  
|Interest paid                                                      |  |                             | (22,182  | ) |               |   | (30,260  | )
|Cash paid to suppliers and others                                  |  |                             | (17,302  | ) |               |   | (39,447  | )
|Income taxes refund (paid)                                         |  |                             | 3,748    |   |               |   | (1,718   | )
|                                                                   |  |                             |          |   |               |   |          |  
|Net cash provided by (used in) operating activities                |  |                             | 22,118   |   |               |   | (7,035   | )
|Cash flows from investing activities:                              |  |                             |          |   |               |   |          |  
|Proceeds from sale of investment securities available for sale     |  |                             | 51,308   |   |               |   | 2,331    |  
|Proceeds from maturities of investment securities held to maturity |  |                             | 207,469  |   |               |   | 280,366  |  
|Purchase of investment securities held to maturity                 |  |                             | (242,235 | ) |               |   | (332,140 | )
|(Purchase) maturity of deposits in other banks                     |  |                             | (3,034   | ) |               |   | 3,318    |  
|Principal collected on loans                                       |  |                             | 209,781  |   |               |   | 181,473  |  
|Loans made to customers, net of loans in process                   |  |                             | (169,186 | ) |               |   | (121,120 | )
|Purchase of loans                                                  |  |                             | (10,722  | ) |               |   |         |  
|Proceeds from loans sold                                           |  |                             |         |   |               |   | 7,527    |  
|Other                                                              |  |                             | (412     | ) |               |   | (178     | )
|                                                                   |  |                             |          |   |               |   |          |  
|Net cash provided by investing activities                          |  |                             | 42,969   |   |               |   | 21,577   |  
|Cash flows from financing activities:                              |  |                             |          |   |               |   |          |  
|Net increase in checking and savings accounts                      |  |                             | 34,679   |   |               |   | 58,945   |  
|Net (decrease) in certificates of deposit                          |  |                             | (41,867  | ) |               |   | (56,751  | )
|Repayment of FHLB advances                                         |  |                             | (35,014  | ) |               |   | (19      | )
|Repayment of term debt                                             |  |                             | (1,875   | ) |               |   | (625     | )
|Net (decrease) in other borrowings                                 |  |                             | (940     | ) |               |   | (6,683   | )
|Net (decrease) in borrowers advances for taxes and insurance      |  |                             | (751     | ) |               |   | (759     | )
|Dividends paid                                                     |  |                             | (1,690   | ) |               |   | (2,009   | )
|Contribution to benefit plans                                      |  |                             | 572      |   |               |   | 712      |  
|                                                                   |  |                             |          |   |               |   |          |  
|Net cash (used in) financing activities                            |  |                             | (46,886  | ) |               |   | (7,189   | )
|                                                                   |  |                             |          |   |               |   |          |  
|Net increase in cash and cash equivalents                          |  |                             | 18,201   |   |               |   | 7,353    |  
|Cash and cash equivalents at beginning of period                   |  |                             | 153,509  |   |               |   | 165,891  |  
|                                                                   |  |                             |          |   |               |   |          |  
|Cash and cash equivalents at end of period                         |  | $                           | 171,710  |   |               | $ | 173,244  |  
|                                                                   |  |                             |          |   |               |   |          |  



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|                                                                                  |  |                            |        |   |               |   |         |  
|--------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------- | - | ------- | -
|                                                                                  |  | Nine months endedMarch 31, |       
|                                                                                  |  | 2011                       |        |   | 2010          |  
|                                                                                  |  |                            |        |   | (As Restated) |  
|Reconciliation of net income to net cash provided by operating activities:        |  |                            |        |   |               |   |         |  
|Net income                                                                        |  | $                          | 6,011  |   |               | $ | 4,356   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                            |        |   |               |   |         |  
|Depreciation and amortization                                                     |  |                            | 1,324  |   |               |   | 1,439   |  
|(Accretion) and amortization of loan fees and discounts                           |  |                            | 488    |   |               |   | (1,296  | )
|Loan fees collected and deferred (premiums paid)                                  |  |                            | 60     |   |               |   | (45     | )
|Provision for loan losses                                                         |  |                            | 2,740  |   |               |   | 4,851   |  
|Loss on writedown of assets                                                       |  |                            | 2,197  |   |               |   | 4,587   |  
|Gain on sale of assets                                                            |  |                            | (1,366 | ) |               |   | (2,372  | )
|Decrease in accrued interest receivable                                           |  |                            | 460    |   |               |   | 797     |  
|Decrease (increase) in other assets                                               |  |                            | 7,124  |   |               |   | (15,985 | )
|(Decrease) increase in accrued interest payable                                   |  |                            | (52    | ) |               |   | 43      |  
|Increase (decrease) in other liabilities                                          |  |                            | 3,132  |   |               |   | (3,410  | )
|                                                                                  |  |                            |        |   |               |   |         |  
|Total adjustments                                                                 |  |                            | 16,107 |   |               |   | (11,391 | )
|                                                                                  |  |                            |        |   |               |   |         |  
|Net cash provided by (used in) operating activities                               |  | $                          | 22,118 |   |               | $ | (7,035  | )
|                                                                                  |  |                            |        |   |               |   |         |  

For purposes of reporting cash flows, cash and cash equivalents include cash and noninterest earning deposits, and federal funds sold.
Generally, federal funds are sold for one-day periods. Loans transferred to foreclosed assets aggregated $7.4 million for the nine months ended March 31, 2011 and $8.0 million for the nine months ended March 31, 2010, and is included in
the principal collected on loans component of the consolidated statements of cash flows. Loans were transferred to foreclosed assets at the lesser of their carrying value or indicated fair value, less costs to sell.

PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(Dollars in thousands, except share data)

(Unaudited)



|                                                                                    |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------- |  | -------------- | ------ |  | ----------- | - | ----- | ------------------------ |  | - | ------------- | - |  | ------------------------------------------ | -------- | - | ---------------- |  | -------- | ------------------------ |  | - | ------- | - |  | - | ------- | -
|                                                                                    |  | PreferredStock |        |  | CommonStock |   |       | AdditionalPaid-inCapital |  |   | TreasuryStock |   |  | AccumulatedOtherComprehensiveIncome (Loss) |          |   | RetainedEarnings |  |          | TotalShareholdersEquity | 
|Balance, June 30, 2010, As Restated                                                 |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,734         |   |  |                                            | ($25,193 | ) |                  |  | ($13,413 | )                        |  | $ | 115,248 |   |  | $ | 117,873 |  
|Net income, nine months ended March 31, 2011                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | 6,011   |   |  |   | 6,011   |  
|Accumulated other comprehensive income (loss):                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Change in swap liability, net of tax                                                |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (238     | )                        |  |   |         |   |  |   |         |  
|Change in unrealized gain (loss) on securities, net of deferred tax benefit of $236 |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | 675      |                          |  |   |         |   |  |   |         |  
|Reclassification adjustment, net of taxes of $(291)                                 |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (540     | )                        |  |   |         |   |  |   | (103    | )
|Comprehensive income                                                                |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   | 5,908   |  
|Dividends declared on common stock at $0.06 per share                               |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | (335    | ) |  |   | (335    | )
|Dividends on preferred stock                                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | (1,191  | ) |  |   | (1,191  | )
|Sale of treasury stock to ESOP & Benefit Plans                                      |  |                |        |  |             |   |       |                          |  |   | (633          | ) |  |                                            | 1,121    |   |                  |  |          |                          |  |   |         |   |  |   | 488     |  
|Recognition of stock option compensation expense                                    |  |                |        |  |             |   |       |                          |  |   | 50            |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   | 50      |  
|                                                                                    |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Balance, March 31, 2011, As Restated                                                |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,151         |   |  |                                            | ($24,072 | ) |                  |  | ($13,516 | )                        |  | $ | 119,733 |   |  | $ | 122,793 |  
|                                                                                    |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  



7



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##### Table of Contents

|                                                                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | -------------- | ------ |  | ----------- | - | ----- | ------------------------ |  | - | ------------- | - |  | ------------------------------------------ | -------- | - | ---------------- |  | ------- | ------------------------ |  | - | ------- | - |  | - | ------- | -
|                                                                                        |  | PreferredStock |        |  | CommonStock |   |       | AdditionalPaid-inCapital |  |   | TreasuryStock |   |  | AccumulatedOtherComprehensiveIncome (Loss) |          |   | RetainedEarnings |  |         | TotalShareholdersEquity | 
|Balance, June 30, 2009, As Restated                                                     |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 4,116         |   |  |                                            | ($27,314 | ) |                  |  | ($10    | )                        |  | $ | 134,735 |   |  | $ | 150,024 |  
|Net income, nine months ended                                                           |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  
|March 31, 2010, As Restated                                                             |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   | 4,356   |   |  |   | 4,356   |  
|Accumulated other comprehensive                                                         |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  
|Income (loss):                                                                          |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  
|Change in swap liability                                                                |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | 452     |                          |  |   |         |   |  |   |         |  
|Change in unrealized gain (loss) on securities, net of deferred tax benefit of $(2,713) |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (4,273  | )                        |  |   |         |   |  |   |         |  
|Reclassification adjustment, net of taxes of $(808)                                     |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (1,407  | )                        |  |   |         |   |  |   | (5,228  | )
|Comprehensive loss                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   | (872    | )
|Dividends declared on common stock at $0.15 per share                                   |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   | (823    | ) |  |   | (823    | )
|Dividends on preferred stock                                                            |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   | (1,191  | ) |  |   | (1,191  | )
|Sale of treasury stock to                                                               |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  
|ESOP & Benefit Plans                                                                    |  |                |        |  |             |   |       |                          |  |   | (1,409        | ) |  |                                            | 2,121    |   |                  |  |         |                          |  |   |         |   |  |   | 712     |  
|Recognition of stock option compensation expense                                        |  |                |        |  |             |   |       |                          |  |   | 27            |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   | 27      |  
|                                                                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  
|Balance, March 31, 2010, As Restated                                                    |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,734         |   |  |                                            | ($25,193 | ) |                  |  | ($5,238 | )                        |  | $ | 137,077 |   |  | $ | 147,877 |  
|                                                                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |         |                          |  |   |         |   |  |   |         |  

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share data)

NOTE 1. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

The Companys management along with its independent registered public accounting firm, during the course of the
Companys fiscal 2011 annual audit of financial results and application of financial controls, identified a deficiency that represented a material weakness in internal control over financial reporting. While a remediation plan was implemented
to correct the material weakness in internal control over financial reporting, in finalizing its Form 10-K for the year ended June 30, 2011, management together with its independent registered public accounting firm identified the existence of
an under-accrual of FDIC deposit insurance expense for the fiscal years ended June 30, 2010 and 2009 resulting from a previous change in FDIC regulations regarding the manner in which deposit insurance assessments were collected. The cumulative
effect during fiscal 2009 through fiscal 2010 is a $1.1 million increase to the reported net loss to common shareholders. As a result of these adjustments, management with the concurrence of the Board of Directors has determined that the
Companys financial statements for fiscal 2010 and 2009 should be restated. This Form 10-Q amendment is being filed to reflect the restated numbers as of March 31, 2011 and June 30, 2010 and for the three and nine months ended
March 31, 2010.

The following tables set forth the consolidated restated financial statements as of March 31, 2011
and June 30, 2010 and for the three and nine months ended March 31, 2010 previously filed in the Companys quarterly report on Form 10-Q for the period ended March 31, 2011.



8



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following is a summary of the adjustments to our previously issued consolidated
statements of financial condition as of March 31, 2011 and June 30, 2010:

CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION



|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|------------------------------------------------------------------------------------------------------------------- |  | --------------- | --------- | - | ---------- |  | ------- | --------------- |  | - | --------------- | - |  | ---------- | --------- | - | --------------- |  | ------- | - |  | - | --------- | -
|                                                                                                                    |  | March 31,       |           |   | June 30,   | 
|(Dollar amounts in thousands)                                                                                       |  | 2011As Reported |           |   | Adjustment |  |         | 2011As Restated |  |   | 2010 AsReported |   |  | Adjustment |           |   | 2010As Restated | 
|                                                                                                                    |  | (Unaudited)     |           |   |            |  |         | (Unaudited)     |  |   |                 |   |  |            |           |   |                 | 
|Assets                                                                                                              |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Cash and noninterest-earning deposits                                                                               |  | $               | 15,492    |   |            |  |         |                 |  | $ | 15,492          |   |  | $          | 17,736    |   |                 |  |         |   |  | $ | 17,736    |  
|Federal funds sold                                                                                                  |  |                 | 156,218   |   |            |  |         |                 |  |   | 156,218         |   |  |            | 135,773   |   |                 |  |         |   |  |   | 135,773   |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Cash and cash equivalents                                                                                           |  |                 | 171,710   |   |            |  |         |                 |  |   | 171,710         |   |  |            | 153,509   |   |                 |  |         |   |  |   | 153,509   |  
|Interest-earning deposits in other banks                                                                            |  |                 | 3,835     |   |            |  |         |                 |  |   | 3,835           |   |  |            | 801       |   |                 |  |         |   |  |   | 801       |  
|Investment securities available for sale, at fair value (cost of $5,501 at March 31 and $65,778 at
June 30)         |  |                 | 5,243     |   |            |  |         |                 |  |   | 5,243           |   |  |            | 65,770    |   |                 |  |         |   |  |   | 65,770    |  
|Investment securities held to maturity (fair value of $481,082 at March 31 and $437,931 at June 30)                 |  |                 | 484,223   |   |            |  |         |                 |  |   | 484,223         |   |  |            | 443,452   |   |                 |  |         |   |  |   | 443,452   |  
|Federal Home Loan Bank Stock, at cost                                                                               |  |                 | 12,958    |   |            |  |         |                 |  |   | 12,958          |   |  |            | 14,357    |   |                 |  |         |   |  |   | 14,357    |  
|Loans, net of allowance of $19,030 at March 31 and $19,209 at June 30                                               |  |                 | 998,936   |   |            |  |         |                 |  |   | 998,936         |   |  |            | 1,032,363 |   |                 |  |         |   |  |   | 1,032,363 |  
|Foreclosed real estate, net                                                                                         |  |                 | 9,390     |   |            |  |         |                 |  |   | 9,390           |   |  |            | 8,637     |   |                 |  |         |   |  |   | 8,637     |  
|Office properties and equipment, net                                                                                |  |                 | 17,144    |   |            |  |         |                 |  |   | 17,144          |   |  |            | 17,374    |   |                 |  |         |   |  |   | 17,374    |  
|Goodwill                                                                                                            |  |                 | 25,634    |   |            |  |         |                 |  |   | 25,634          |   |  |            | 25,634    |   |                 |  |         |   |  |   | 25,634    |  
|Intangible assets and deferred charges                                                                              |  |                 | 2,195     |   |            |  |         |                 |  |   | 2,195           |   |  |            | 2,877     |   |                 |  |         |   |  |   | 2,877     |  
|Prepaid expenses and other assets (a)                                                                               |  |                 | 70,024    |   |            |  | (1,071  | )               |  |   | 68,953          |   |  |            | 77,606    |   |                 |  | (1,071  | ) |  |   | 76,535    |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Total assets                                                                                                        |  | $               | 1,801,292 |   |            |  | ($1,071 | )               |  | $ | 1,800,221       |   |  | $          | 1,842,380 |   |                 |  | ($1,071 | ) |  | $ | 1,841,309 |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Liabilities and Shareholders Equity                                                                                |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Liabilities                                                                                                         |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Deposits                                                                                                            |  | $               | 1,480,886 |   |            |  |         |                 |  | $ | 1,480,886       |   |  | $          | 1,488,073 |   |                 |  |         |   |  | $ | 1,488,073 |  
|Advances from Federal Home Loan Bank                                                                                |  |                 | 150,862   |   |            |  |         |                 |  |   | 150,862         |   |  |            | 185,973   |   |                 |  |         |   |  |   | 185,973   |  
|Other debt                                                                                                          |  |                 | 12,925    |   |            |  |         |                 |  |   | 12,925          |   |  |            | 13,865    |   |                 |  |         |   |  |   | 13,865    |  
|Term Debt                                                                                                           |  |                 | 21,875    |   |            |  |         |                 |  |   | 21,875          |   |  |            | 23,750    |   |                 |  |         |   |  |   | 23,750    |  
|Advance payments from borrowers for taxes and insurance                                                             |  |                 | 6,775     |   |            |  |         |                 |  |   | 6,775           |   |  |            | 7,526     |   |                 |  |         |   |  |   | 7,526     |  
|Other liabilities                                                                                                   |  |                 | 4,105     |   |            |  |         |                 |  |   | 4,105           |   |  |            | 4,249     |   |                 |  |         |   |  |   | 4,249     |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Total liabilities                                                                                                   |  |                 | 1,677,428 |   |            |  |        |                 |  |   | 1,677,428       |   |  |            | 1,723,436 |   |                 |  |        |   |  |   | 1,723,436 |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Shareholders Equity                                                                                                |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Preferred stock ($1.00 par value; liquidation preference $1,000; 5,000,000 shares authorized; 31,762 shares
issued) |  |                 | 31,762    |   |            |  |         |                 |  |   | 31,762          |   |  |            | 31,762    |   |                 |  |         |   |  |   | 31,762    |  
|Common stock ($1.00 par value; 10,000,000 shares authorized; 6,734,894 shares issued)                               |  |                 | 6,735     |   |            |  |         |                 |  |   | 6,735           |   |  |            | 6,735     |   |                 |  |         |   |  |   | 6,735     |  
|Additional paid-in capital                                                                                          |  |                 | 2,151     |   |            |  |         |                 |  |   | 2,151           |   |  |            | 2,734     |   |                 |  |         |   |  |   | 2,734     |  
|Treasury stock at cost - 1,152,048 shares at March 31 and 1,205,683 shares at June 30                               |  |                 | (24,072   | ) |            |  |         |                 |  |   | (24,072         | ) |  |            | (25,193   | ) |                 |  |         |   |  |   | (25,193   | )
|Accumulated other comprehensive (loss)                                                                              |  |                 | (13,516   | ) |            |  |         |                 |  |   | (13,516         | ) |  |            | (13,413   | ) |                 |  |         |   |  |   | (13,413   | )
|Retained earnings (a)                                                                                               |  |                 | 120,804   |   |            |  | (1,071  | )               |  |   | 119,733         |   |  |            | 116,319   |   |                 |  | (1,071  | ) |  |   | 115,248   |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Total shareholders equity                                                                                          |  | $               | 123,864   |   |            |  | ($1,071 | )               |  | $ | 122,793         |   |  | $          | 118,944   |   |                 |  | ($1,071 | ) |  | $ | 117,873   |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  
|Total liabilities and shareholders equity                                                                          |  | $               | 1,801,292 |   |            |  | ($1,071 | )               |  | $ | 1,800,221       |   |  | $          | 1,842,380 |   |                 |  | ($1,071 | ) |  | $ | 1,841,309 |  
|                                                                                                                    |  |                 |           |   |            |  |         |                 |  |   |                 |   |  |            |           |   |                 |  |         |   |  |   |           |  



|(a) | Adjustment related to the accrual of FDIC deposit insurance expense.
|--- | --------------------------------------------------------------------



9



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##### Table of Contents

The following is a summary of the adjustments to our previously issued consolidated
statements of operations for the three and nine months ended March 31, 2010:

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except per share data)



|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|------------------------------------------------------------------ |  | ---------------------------- | ------ | - | --------------------------- |  | ------ | ---------- |  | - | ---------- | - |  | ---------- | ------- | - | ---------- |  | ------ | - |  | - | ------- | -
|                                                                   |  | Three months ended March 31, |        |   | Nine months ended March 31, | 
|                                                                   |  | 2010                         |        |   |                             |  |        | 2010       |  |   | 2010       |   |  |            |         |   | 2010       | 
|                                                                   |  | AsReported                   |        |   | Adjustment                  |  |        | AsRestated |  |   | AsReported |   |  | Adjustment |         |   | AsRestated | 
|Interest Income:                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Loans                                                              |  | $                            | 13,745 |   |                             |  |        |            |  | $ | 13,745     |   |  | $          | 42,768  |   |            |  |        |   |  | $ | 42,768  |  
|Investments                                                        |  |                              | 4,799  |   |                             |  |        |            |  |   | 4,799      |   |  |            | 14,895  |   |            |  |        |   |  |   | 14,895  |  
|Federal funds sold                                                 |  |                              | 88     |   |                             |  |        |            |  |   | 88         |   |  |            | 291     |   |            |  |        |   |  |   | 291     |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Total interest income                                              |  |                              | 18,632 |   |                             |  |       |            |  |   | 18,632     |   |  |            | 57,954  |   |            |  |       |   |  |   | 57,954  |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Interest Expense:                                                  |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Deposits                                                           |  |                              | 6,464  |   |                             |  |        |            |  |   | 6,464      |   |  |            | 21,843  |   |            |  |        |   |  |   | 21,843  |  
|Borrowings                                                         |  |                              | 2,754  |   |                             |  |        |            |  |   | 2,754      |   |  |            | 8,289   |   |            |  |        |   |  |   | 8,289   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Total interest expense                                             |  |                              | 9,218  |   |                             |  |       |            |  |   | 9,218      |   |  |            | 30,132  |   |            |  |       |   |  |   | 30,132  |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Net interest income                                                |  |                              | 9,414  |   |                             |  |       |            |  |   | 9,414      |   |  |            | 27,822  |   |            |  |       |   |  |   | 27,822  |  
|Provision for loan losses                                          |  |                              | 1,164  |   |                             |  |        |            |  |   | 1,164      |   |  |            | 4,851   |   |            |  |        |   |  |   | 4,851   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Net interest income after provision for
loan losses                |  |                              | 8,250  |   |                             |  |       |            |  |   | 8,250      |   |  |            | 22,971  |   |            |  |       |   |  |   | 22,971  |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Noninterest Income:                                                |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Other-than-temporary impairment
losses recognized in earnings      |  |                              | (6,536 | ) |                             |  |        |            |  |   | (6,536     | ) |  |            | (12,537 | ) |            |  |        |   |  |   | (12,537 | )
|Non-credit related losses recognized in
other comprehensive income |  |                              | 5,492  |   |                             |  |        |            |  |   | 5,492      |   |  |            | 7,950   |   |            |  |        |   |  |   | 7,950   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Net impairment losses recognized in
earnings                       |  |                              | (1,044 | ) |                             |  |        |            |  |   | (1,044     | ) |  |            | (4,587  | ) |            |  |       |   |  |   | (4,587  | )
|Service charges on deposit accounts                                |  |                              | 1,487  |   |                             |  |        |            |  |   | 1,487      |   |  |            | 4,754   |   |            |  |        |   |  |   | 4,754   |  
|Other service charges and fees                                     |  |                              | 376    |   |                             |  |        |            |  |   | 376        |   |  |            | 1,102   |   |            |  |        |   |  |   | 1,102   |  
|Net gain on sale of assets                                         |  |                              | 167    |   |                             |  |        |            |  |   | 167        |   |  |            | 2,372   |   |            |  |        |   |  |   | 2,372   |  
|Other                                                              |  |                              | 521    |   |                             |  |        |            |  |   | 521        |   |  |            | 1,575   |   |            |  |        |   |  |   | 1,575   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Total noninterest income                                           |  |                              | 1,507  |   |                             |  |       |            |  |   | 1,507      |   |  |            | 5,216   |   |            |  |       |   |  |   | 5,216   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Noninterest Expense:                                               |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Compensation and employee benefits                                 |  |                              | 3,804  |   |                             |  |        |            |  |   | 3,804      |   |  |            | 11,236  |   |            |  |        |   |  |   | 11,236  |  
|Office occupancy                                                   |  |                              | 1,243  |   |                             |  |        |            |  |   | 1,243      |   |  |            | 3,449   |   |            |  |        |   |  |   | 3,449   |  
|Marketing                                                          |  |                              | 78     |   |                             |  |        |            |  |   | 78         |   |  |            | 238     |   |            |  |        |   |  |   | 238     |  
|FDIC insurance (a)                                                 |  |                              | 769    |   |                             |  | 99     |            |  |   | 868        |   |  |            | 1,982   |   |            |  | 527    |   |  |   | 2,509   |  
|Office supplies, telephone and postage                             |  |                              | 479    |   |                             |  |        |            |  |   | 479        |   |  |            | 1,412   |   |            |  |        |   |  |   | 1,412   |  
|Other                                                              |  |                              | 1,494  |   |                             |  |        |            |  |   | 1,494      |   |  |            | 4,456   |   |            |  |        |   |  |   | 4,456   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Total noninterest expense                                          |  |                              | 7,867  |   |                             |  | 99     |            |  |   | 7,966      |   |  |            | 22,773  |   |            |  | 527    |   |  |   | 23,300  |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Income before income tax expense                                   |  |                              | 1,890  |   |                             |  | (99    | )          |  |   | 1,791      |   |  |            | 5,414   |   |            |  | (527   | ) |  |   | 4,887   |  
|Income tax expense (b)                                             |  |                              | 472    |   |                             |  | (35    | )          |  |   | 437        |   |  |            | 716     |   |            |  | (185   | ) |  |   | 531     |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Net income                                                         |  | $                            | 1,418  |   |                             |  | ($64   | )          |  | $ | 1,354      |   |  | $          | 4,698   |   |            |  | ($342  | ) |  | $ | 4,356   |  
|Preferred Stock Dividend                                           |  |                              | 397    |   |                             |  |        |            |  |   | 397        |   |  |            | 1,191   |   |            |  |        |   |  |   | 1,191   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Income to common stockholders                                      |  | $                            | 1,021  |   |                             |  | ($64   | )          |  | $ | 957        |   |  | $          | 3,507   |   |            |  | ($342  | ) |  | $ | 3,165   |  
|                                                                   |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Net income per common share:                                       |  |                              |        |   |                             |  |        |            |  |   |            |   |  |            |         |   |            |  |        |   |  |   |         |  
|Basic                                                              |  | $                            | 0.18   |   |                             |  | ($0.01 | )          |  | $ | 0.17       |   |  | $          | 0.64    |   |            |  | ($0.06 | ) |  | $ | 0.58    |  
|Diluted                                                            |  | $                            | 0.18   |   |                             |  | ($0.01 | )          |  | $ | 0.17       |   |  | $          | 0.64    |   |            |  | ($0.06 | ) |  | $ | 0.58    |  



|(a) | Adjustment related to the accrual of FDIC deposit insurance expense.
|--- | --------------------------------------------------------------------

|(b) | Adjustment related to the tax effect of the above adjustment
|--- | ------------------------------------------------------------



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The following is a summary of the adjustments to our previously issued consolidated
statements of cash flows for the nine months ended March 31, 2010:

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)



|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  
|------------------------------------------------------------------ |  | -------------------------------- | -------- | - | ------------ | - | - | ---------- |  | - | -------- | -
|                                                                   |  | Nine months ended
March 31, 2010 |         
|                                                                   |  | AsReported                       |          |   | Adjust-ments |   |   | AsRestated | 
|Cash flows from operating activities:                              |  |                                  |          |   |              |   |   |            |  |   |          |  
|Interest received                                                  |  | $                                | 57,544   |   |              |   |   |            |  | $ | 57,544   |  
|Loan fees received                                                 |  |                                  | 242      |   |              |   |   |            |  |   | 242      |  
|Other fees and commissions received                                |  |                                  | 6,604    |   |              |   |   |            |  |   | 6,604    |  
|Interest paid                                                      |  |                                  | (30,260  | ) |              |   |   |            |  |   | (30,260  | )
|Cash paid to suppliers and others                                  |  |                                  | (39,447  | ) |              |   |   |            |  |   | (39,447  | )
|Income taxes (paid)                                                |  |                                  | (1,718   | ) |              |   |   |            |  |   | (1,718   | )
|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  
|Net cash (used in) operating activities                            |  |                                  | (7,035   | ) |              |   |  |            |  |   | (7,035   | )
|Cash flows from investing activities:                              |  |                                  |          |   |              |   |   |            |  |   |          |  
|Proceeds from sales of investment securities available for sale    |  |                                  | 2,331    |   |              |   |   |            |  |   | 2,331    |  
|Proceeds from maturities of investment securities held to maturity |  |                                  | 280,366  |   |              |   |   |            |  |   | 280,366  |  
|Purchase of investment securities held to maturity                 |  |                                  | (332,140 | ) |              |   |   |            |  |   | (332,140 | )
|Maturity of deposits in other banks                                |  |                                  | 3,318    |   |              |   |   |            |  |   | 3,318    |  
|Principal collected on loans                                       |  |                                  | 181,473  |   |              |   |   |            |  |   | 181,473  |  
|Loans made to customers, net of loans in process                   |  |                                  | (121,120 | ) |              |   |   |            |  |   | (121,120 | )
|Loans sales                                                        |  |                                  | 7,527    |   |              |   |   |            |  |   | 7,527    |  
|Other                                                              |  |                                  | (178     | ) |              |   |   |            |  |   | (178     | )
|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  
|Net cash provided by investing activities                          |  |                                  | 21,577   |   |              |   |  |            |  |   | 21,577   |  
|Cash flows from financing activities:                              |  |                                  |          |   |              |   |   |            |  |   |          |  
|Net increase in checking and savings accounts                      |  |                                  | 58,945   |   |              |   |   |            |  |   | 58,945   |  
|Net (decrease) in certificates of deposit                          |  |                                  | (56,751  | ) |              |   |   |            |  |   | (56,751  | )
|Repayment of FHLB advances                                         |  |                                  | (19      | ) |              |   |   |            |  |   | (19      | )
|Repayment of term debt                                             |  |                                  | (625     | ) |              |   |   |            |  |   | (625     | )
|Net (decrease) in other borrowings                                 |  |                                  | (6,683   | ) |              |   |   |            |  |   | (6,683   | )
|Net (decrease) in borrowers advances for taxes and insurance      |  |                                  | (759     | ) |              |   |   |            |  |   | (759     | )
|Dividends paid                                                     |  |                                  | (2,009   | ) |              |   |   |            |  |   | (2,009   | )
|Contribution to benefit plans                                      |  |                                  | 712      |   |              |   |   |            |  |   | 712      |  
|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  
|Net cash provided by financing activities                          |  |                                  | (7,189   | ) |              |   |  |            |  |   | (7,189   | )
|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  
|Net increase in cash and cash equivalents                          |  |                                  | 7,353    |   |              |   |  |            |  |   | 7,353    |  
|Cash and cash equivalents at beginning of period                   |  |                                  | 165,891  |   |              |   |   |            |  |   | 165,891  |  
|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  
|Cash and cash equivalents at end of period                         |  | $                                | 173,244  |   |              | $ |  |            |  | $ | 173,244  |  
|                                                                   |  |                                  |          |   |              |   |   |            |  |   |          |  



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



|                                                                                  |  |   |         |   |  |    |     |   |  |   |         |  
|--------------------------------------------------------------------------------- |  | - | ------- | - |  | -- | --- | - |  | - | ------- | -
|Reconciliation of net income to net cash provided by operating activities:        |  |   |         |   |  |    |     |   |  |   |         |  
|Net income                                                                        |  | $ | 4,698   |   |  | ($ | 342 | ) |  | $ | 4,356   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |   |         |   |  |    |     |   |  |   |         |  
|Depreciation and amortization                                                     |  |   | 1,439   |   |  |    |     |   |  |   | 1,439   |  
|(Accretion) and amortization of loan fees and discounts                           |  |   | (1,296  | ) |  |    |     |   |  |   | (1,296  | )
|Loan fees collected and deferred and (premiums paid)                              |  |   | (45     | ) |  |    |     |   |  |   | (45     | )
|Provision for loan losses                                                         |  |   | 4,851   |   |  |    |     |   |  |   | 4,851   |  
|Loss on writedown of assets                                                       |  |   | 4,587   |   |  |    |     |   |  |   | 4,587   |  
|Gain on sale of assets                                                            |  |   | (2,372  | ) |  |    |     |   |  |   | (2,372  | )
|Decrease in accrued interest receivable                                           |  |   | 797     |   |  |    |     |   |  |   | 797     |  
|Decrease (increase) in other assets                                               |  |   | (16,327 | ) |  |    | 342 |   |  |   | (15,985 | )
|Increase in accrued interest payable                                              |  |   | 43      |   |  |    |     |   |  |   | 43      |  
|Increase (decrease) in other liabilities                                          |  |   | (3,410  | ) |  |    |     |   |  |   | (3,410  | )
|                                                                                  |  |   |         |   |  |    |     |   |  |   |         |  
|Total adjustments                                                                 |  |   | (11,733 | ) |  |    | 342 |   |  |   | (11,391 | )
|                                                                                  |  |   |         |   |  |    |     |   |  |   |         |  
|Net cash (used in) operating activities                                           |  |   | ($7,035 | ) |  | $  |    |   |  |   | ($7,035 | )
|                                                                                  |  |   |         |   |  |    |     |   |  |   |         |  

The following table presents a reconciliation of the effects of adjustments made to the Companys
previously reported consolidated statements of shareholders equity for 2011, 2010 and 2009:

CONSOLIDATED STATEMENTS
OF SHAREHOLDERS EQUITY

(Dollar amounts in thousands)



|                                       |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|-------------------------------------- |  | -------------- | ------ |  | ----------- | - | ----- | ------------------------ |  | - | ------------- |  |  | ------------------------------------------ | -------- | - | ---------------- |  | -------- | ------------------------ |  | - | ------- | - |  | - | ------- | -
|                                       |  | PreferredStock |        |  | CommonStock |   |       | AdditionalPaid-InCapital |  |   | TreasuryStock |  |  | AccumulatedOtherComprehensive(Loss) Income |          |   | RetainedEarnings |  |          | TotalShareholdersEquity | 
|Balance at June 30, 2009, As Reported  |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 4,116         |  |  |                                            | ($27,314 | ) |                  |  | ($10     | )                        |  | $ | 135,471 |   |  | $ | 150,760 |  
|Restatement Adjustments:               |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Net income                             |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   | (736    | ) |  |   | (736    | )
|Balance at June 30, 2009 As Restated   |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 4,116         |  |  |                                            | ($27,314 | ) |                  |  | ($10     | )                        |  | $ | 134,735 |   |  | $ | 150,024 |  
|Balance at March 31, 2010, As Reported |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,734         |  |  |                                            | ($25,193 | ) |                  |  | ($5,238  | )                        |  | $ | 138,155 |   |  | $ | 148,955 |  
|Restatement Adjustments:               |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Net income                             |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   | (342    | ) |  |   | (342    | )
|Cumulative effect of restatement       |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   | (736    | ) |  |   | (736    | )
|Balance at March 31, 2010, As Restated |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,734         |  |  |                                            | ($25,193 | ) |                  |  | ($5,238  | )                        |  | $ | 137,077 |   |  | $ | 147,877 |  
|Balance at June 30, 2010, As Reported  |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,734         |  |  |                                            | ($25,193 | ) |                  |  | ($13,413 | )                        |  | $ | 116,319 |   |  | $ | 118,944 |  
|Restatement Adjustments:               |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Net income                             |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   | (335    | ) |  |   | (335    | )
|Cumulative effect of restatement       |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   | (736    | ) |  |   | (736    | )
|Balance at June 30, 2010 As Restated   |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,734         |  |  |                                            | ($25,193 | ) |                  |  | ($13,413 | )                        |  | $ | 115,248 |   |  | $ | 117,873 |  
|Balance at March 31, 2011, As Reported |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,151         |  |  |                                            | ($24,072 | ) |                  |  | ($13,516 | )                        |  | $ | 120,804 |   |  | $ | 123,864 |  
|Restatement Adjustments:               |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Cumulative effect of restatement       |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |          |   |                  |  |          |                          |  |   | (1,071  | ) |  |   | (1,071  | )
|Balance at March 31, 2011, As Restated |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,151         |  |  |                                            | ($24,072 | ) |                  |  | ($13,516 | )                        |  | $ | 119,733 |   |  | $ | 122,793 |  



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NOTE 2. STATEMENTS OF OPERATIONS

The statements of operations for the nine months ended March 31, 2011 and 2010 are unaudited, but in the opinion of management
reflect all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the results of operations for those periods. The results of operations for the nine months ending March 31, 2011 are not necessarily
indicative of the results that may be expected for the fiscal year ended June 30, 2011. The Annual Report on Form 10-K/A for the year ended June 30, 2010 contains additional information and should be read in conjunction with this report.

NOTE 3. RECLASSIFICATION

Certain amounts in prior period financial statements have been reclassified to conform to the current period presentation. The
reclassifications had no significant effect on Parkvales financial condition or results of operations.

NOTE 4. SUBSEQUENT EVENTS

The Corporation evaluated and disclosed all material subsequent events that provide evidence about conditions that existed as of
March 31, 2011 through the date the consolidated financial statements were filed with the Securities and Exchange Commission.

NOTE 5. LOANS AND THE ALLOWANCE FOR LOAN LOSS

Loans are summarized as follows:



|                                            |  |                |           |   |               |   |           |  
|------------------------------------------- |  | -------------- | --------- | - | ------------- | - | --------- | -
|                                            |  | March 31, 2011 |           |   | June 30, 2010 |  
|Mortgage loans:                             |  |                |           |   |               |   |           |  
|1-4 Family                                  |  | $              | 633,105   |   |               | $ | 660,685   |  
|Commercial                                  |  |                | 159,435   |   |               |   | 159,991   |  
|                                            |  |                |           |   |               |   |           |  
|                                            |  |                | 792,540   |   |               |   | 820,676   |  
|Consumer loans:                             |  |                |           |   |               |   |           |  
|Home Equity                                 |  |                | 145,479   |   |               |   | 147,567   |  
|Automobile                                  |  |                | 28,047    |   |               |   | 34,817    |  
|Other Consumer                              |  |                | 9,571     |   |               |   | 7,250     |  
|                                            |  |                |           |   |               |   |           |  
|                                            |  |                | 183,097   |   |               |   | 189,634   |  
|Commercial business loans                   |  |                | 41,429    |   |               |   | 40,445    |  
|                                            |  |                |           |   |               |   |           |  
|Total gross loans                           |  |                | 1,017,066 |   |               |   | 1,050,755 |  
|Less: Loans in process                      |  |                | 3         |   |               |   | 135       |  
|Allowance for loan losses                   |  |                | 19,030    |   |               |   | 19,209    |  
|Unamortized premiums and deferred loan fees |  |                | (903      | ) |               |   | (952      | )
|                                            |  |                |           |   |               |   |           |  
|Loans, net                                  |  | $              | 998,936   |   |               | $ | 1,032,363 |  
|                                            |  |                |           |   |               |   |           |  

The loans receivable portfolio is segmented into mortgage loans, consumer loans and commercial business loans. The
mortgage loan segment has two classes, 1-4 family first lien residential mortgage loans and commercial mortgage loans, which are comprised of commercial real estate, multi-family and acquisition and development loans. The consumer loan segment
consists of three classes, home equity



13



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##### Table of Contents

loans, automobile loans and other loans. The commercial segment consists of one class, commercial and industrial loans.

Portfolio Risk Characteristics:

A loan is considered impaired when, based on current
information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as
impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the known circumstances surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrowers prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial business loans and commercial mortgage
loans by either the present value of expected future cash flows discounted at the loans effective interest rate or the fair value of the collateral if the loan is collateral dependent.

An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. The estimated fair values of substantially all of the Corporations impaired
loans are measured based on the estimated fair value of the loans collateral.

For commercial loans secured by real estate, estimated
fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on
various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the
collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For
commercial business loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrowers financial statements, inventory reports, accounts receivable
agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Corporation does not separately identify individual 1-4 family mortgage loans or consumer
loans for impairment disclosures, unless such loans are the subject of a troubled debt restructuring agreement.

Loans whose terms are
modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring
generally involve a temporary reduction in interest rate or an extension of a loans stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if a pattern of consistent principal and interest payments under
the modified terms is demonstrated after modification. Loans classified as troubled debt restructurings are designated as impaired.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



1-4 family loans include residential first mortgage loans originated by Parkvale Bank in the greater
Pittsburgh Metropolitan area, which comprises its primary market area, and loans purchased from other financial institutions in the secondary market, which are geographically diversified. We currently originate fixed-rate, fully amortizing mortgage
loans with maturities of 15 to 30 years. We also offer adjustable rate mortgage (ARM) loans where the interest rate either adjusts on an annual basis or is fixed for the initial one, three or five years and then adjusts annually. We
underwrite 1 to 4 family residential mortgage loans with loan-to-value ratios of up to 95%, generally provided that the borrower obtains private mortgage insurance on loans that exceed 80% of the appraised value or sales price, whichever is less, of
the secured property. We also require that title insurance, hazard insurance and, if appropriate, flood insurance be maintained on all properties securing real estate loans. We require that a licensed appraiser from our list of approved appraisers
perform and submit to us an appraisal on all properties secured by a first mortgage on 1 to 4 family first mortgage loans. In underwriting 1-4 family residential mortgage loans, the Corporation evaluates both the borrowers ability to make
monthly payments and the value of the property securing the loan. Real estate loans originated by the Corporation generally contain a due upon sale clause allowing the Corporation to declare the unpaid principal balance due and payable
upon the sale of the property. The Corporation has not engaged in sub-prime residential mortgage loan originations. Our single-family residential mortgage loans generally are underwritten on terms and documentation conforming to guidelines issued by
Freddie Mac. All of Parkvales lending activities, including loan purchases, are subject to written underwriting standards and loan origination procedures approved by the Board of Directors.

Commercial mortgage loans include commercial real estate, multi-family and other loans that are secured by non-farm nonresidential properties. Commercial
and multi-family real estate loans generally present a higher level of risk than loans secured by 1-4 family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and
borrowers, the effect of general economic conditions on income producing properties and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by commercial and multi-family real
estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, or a bankruptcy court modifies a lease term, or a major
tenant is unable to fulfill its lease obligations), the borrowers ability to repay the loan may be impaired.

Consumer loans include
home equity loans secured by first or second liens on residential property, automobile loans and other unsecured consumer loans. The Corporation currently originates most of its consumer loans in its primary market area and surrounding areas. The
Corporation originates consumer loans primarily on a direct basis. Consumer loans generally have higher interest rates and shorter terms than residential mortgage loans; however, they have additional credit risk due to the type of collateral
securing the loan.

Consumer loans may entail greater credit risk than do residential mortgage loans, particularly in the case of consumer
loans secured by rapidly depreciable assets, such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater
likelihood of damage, loss or depreciation. In addition, consumer loan collections are dependent on the borrowers continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the
application of



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##### Table of Contents

various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Commercial business loans are primarily short term facilities extended to small businesses and professionals located within the communities served by Parkvale, and are generally secured by business assets
of the borrower. The commercial business loans which we originated may be either a revolving line of credit or for a fixed term of generally 10 years or less. Interest rates are adjustable, indexed to a published prime rate of interest, or fixed.
Generally, equipment, machinery, real property or other corporate assets secure such loans. Personal guarantees from the business principals are generally obtained as additional collateral.

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Corporations
internal risk rating system as of March 31, 2011:



|                          |  |      |         |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|------------------------- |  | ---- | ------- |  | -------------- | - | ----- | ----------- |  | - | -------- |  |  | ----- | -- |  |  | - | --------- | 
|                          |  | Pass |         |  | SpecialMention |   |       | Substandard |  |   | Doubtful |  |  | Total |   
|Mortgage loans:           |  |      |         |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|1-4 family                |  | $    | 608,879 |  |                | $ | 3,958 |             |  | $ | 20,268   |  |  | $     |   |  |  | $ | 633,105   | 
|Commercial                |  |      | 155,647 |  |                |   | 1,101 |             |  |   | 2,687    |  |  |       |   |  |  |   | 159,435   | 
|Lease Financing           |  |      |        |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |          | 
|Home equity               |  |      |        |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |          | 
|Consumer - credit card    |  |      |        |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |          | 
|Consumer loans:           |  |      |         |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|Home Equity               |  |      | 144,671 |  |                |   |      |             |  |   | 780      |  |  |       | 28 |  |  |   | 145,479   | 
|Automobile                |  |      | 27,929  |  |                |   |      |             |  |   | 118      |  |  |       |   |  |  |   | 28,047    | 
|Other Consumer            |  |      | 9,567   |  |                |   |      |             |  |   |         |  |  |       | 4  |  |  |   | 9,571     | 
|Commercial business loans |  |      | 38,655  |  |                |   | 1,140 |             |  |   | 1,634    |  |  |       |   |  |  |   | 41,429    | 
|                          |  |      |         |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|Total                     |  | $    | 985,348 |  |                | $ | 6,199 |             |  | $ | 25,487   |  |  | $     | 32 |  |  | $ | 1,017,066 | 
|                          |  |      |         |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 

Pass-rated loans consist of facilities that do not currently expose the Bank to sufficient risk to warrant
classifications. Special mention loans have potential weaknesses requiring managements close attention that if uncorrected, may result in deterioration of the repayment prospects. Substandard loans have a well-defined weakness that jeopardizes
liquidation of the debt, and includes loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Doubtful loans have all the weaknesses inherent with substandard facilities
with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.

The
following table presents nonaccrual loans by class of the loan portfolio as of March 31, 2011:



|                                      |  |   |        | 
|------------------------------------- |  | - | ------ | 
|Mortgage loans:                       |  |   |        | 
|1-4 family                            |  | $ | 23,324 | 
|Commercial                            |  |   | 1,425  | 
|Consumer loans:                       |  |   |        | 
|Home Equity                           |  |   | 503    | 
|Automobile                            |  |   | 136    | 
|Commercial real estate - construction |  |   |        | 
|Lease Financing                       |  |   |        | 
|Other Consumer                        |  |   | 4      | 
|Commercial business loans             |  |   | 1,259  | 
|                                      |  |   |        | 
|Total                                 |  | $ | 26,651 | 
|                                      |  |   |        | 



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



A loan is considered impaired when, based on current information and events, it is probable that
Parkvale will not be able to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. The following table summarizes information regarding impaired loans by loan portfolio class as
of March 31, 2011:



|                                    |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|----------------------------------- |  | ---------------------- | ------ |  | ---------------------- | - | ------ | ---------------- |  | - | ------------------------- |  |  | ------------------------- | ------ |  |  | - | --- | 
|                                    |  | Net RecordedInvestment |        |  | UnpaidPrincipalBalance |   |        | RelatedAllowance |  |   | AverageRecordedInvestment |  |  | Interest IncomeRecognized |       
|With no related allowance recorded: |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Mortgage loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|1-4 family                          |  | $                      | 20,289 |  |                        | $ | 20,289 |                  |  | $ |                          |  |  | $                         | 19,871 |  |  | $ | 263 | 
|Commercial                          |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Consumer loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Home Equity                         |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Automobile                          |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Other Consumer                      |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Commercial business loans           |  |                        | 799    |  |                        |   | 799    |                  |  |   |                          |  |  |                           | 1,735  |  |  |   |    | 
|With an allowance recorded:         |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Mortgage loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|1-4 family                          |  | $                      | 8,550  |  |                        | $ | 13,802 |                  |  | $ | 5,252                     |  |  | $                         | 9,744  |  |  | $ |    | 
|Commercial                          |  |                        | 1,394  |  |                        |   | 2,013  |                  |  |   | 619                       |  |  |                           | 1,369  |  |  |   | 14  | 
|Consumer loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Home Equity                         |  |                        | 406    |  |                        |   | 564    |                  |  |   | 158                       |  |  |                           | 399    |  |  |   |    | 
|Automobile                          |  |                        | 113    |  |                        |   | 228    |                  |  |   | 115                       |  |  |                           | 134    |  |  |   |    | 
|Other Consumer                      |  |                        |       |  |                        |   | 27     |                  |  |   | 27                        |  |  |                           |       |  |  |   |    | 
|Commercial business loans           |  |                        |       |  |                        |   | 49     |                  |  |   | 49                        |  |  |                           |       |  |  |   |    | 
|Total:                              |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Mortgage loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|1-4 family                          |  | $                      | 28,839 |  |                        | $ | 34,091 |                  |  | $ | 5,252                     |  |  | $                         | 29,615 |  |  | $ | 263 | 
|Commercial                          |  |                        | 1,394  |  |                        |   | 2,013  |                  |  |   | 619                       |  |  |                           | 1,369  |  |  |   | 14  | 
|Consumer loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Home Equity                         |  |                        | 406    |  |                        |   | 564    |                  |  |   | 158                       |  |  |                           | 399    |  |  |   |    | 
|Automobile                          |  |                        | 113    |  |                        |   | 228    |                  |  |   | 115                       |  |  |                           | 134    |  |  |   |    | 
|Other Consumer                      |  |                        | -      |  |                        |   | 27     |                  |  |   | 27                        |  |  |                           | -      |  |  |   | -   | 
|Commercial business loans           |  |                        | 799    |  |                        |   | 848    |                  |  |   | 49                        |  |  |                           | 1,735  |  |  |   |    | 



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



At March 31, 2011, modifications have been performed at market terms on 126 loans totaling $20,289
primarily related to extension of maturity dates and extension of interest-only payment periods of thirty-six months or less. These modified loans, which are all performing at March 31, 2011, are included in the reported $20,289 of impaired
loans without a related allowance for loan losses amount above. The discounted cash flow analysis related to these modifications results in an insignificant impact over the life of the loan.

The performance and credit quality of the loan portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table
presents the classes of the loan portfolio summarized by the past due status as of March 31, 2011:



|                          |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|------------------------- |  | ------------------ | ----- |  | ----------------- | - | ----- | ------------------ |  | - | ------------ |  |  | ------- | ------ |  | ---------------------- | - | ------- | ------------------------------------ |  | - | --------- |  |  | - | - | 
|                          |  | 30-59 DaysPast Due |       |  | 60-89DaysPast Due |   |       | Greaterthan90 Days |  |   | TotalPastDue |  |  | Current |        |  | Total LoansReceivables |   |         | LoansReceivable> 90 Daysand Accruing | 
|Mortgage loans:           |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|1-4 family                |  | $                  | 5,774 |  |                   | $ | 4,655 |                    |  | $ | 23,324       |  |  | $       | 33,753 |  |                        | $ | 599,352 |                                      |  | $ | 633,105   |  |  | $ |  | 
|Commercial                |  |                    | 3,111 |  |                   |   | 419   |                    |  |   | 1,425        |  |  |         | 4,955  |  |                        |   | 154,480 |                                      |  |   | 159,435   |  |  |   |  | 
|Consumer loans:           |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Home Equity               |  |                    | 681   |  |                   |   | 256   |                    |  |   | 503          |  |  |         | 1,440  |  |                        |   | 144,039 |                                      |  |   | 145,479   |  |  |   |  | 
|Automobile                |  |                    | 205   |  |                   |   | 41    |                    |  |   | 136          |  |  |         | 382    |  |                        |   | 27,665  |                                      |  |   | 28,047    |  |  |   |  | 
|Other Consumer            |  |                    | 8     |  |                   |   | 10    |                    |  |   | 4            |  |  |         | 22     |  |                        |   | 9,549   |                                      |  |   | 9,571     |  |  |   |  | 
|Commercial business loans |  |                    | 117   |  |                   |   | 208   |                    |  |   | 1,259        |  |  |         | 1,584  |  |                        |   | 39,845  |                                      |  |   | 41,429    |  |  |   |  | 
|                          |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Total                     |  | $                  | 9,896 |  |                   | $ | 5,589 |                    |  | $ | 26,651       |  |  | $       | 42,136 |  |                        | $ | 974,930 |                                      |  | $ | 1,017,066 |  |  | $ |  | 
|                          |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 

The adequacy of the allowance for loan loss is determined by management through evaluation of the loss probable on
individual nonperforming, delinquent and high dollar loans, economic and business trends, growth and composition of the loan portfolio and historical loss experience, as well as other relevant factors.

The following summarizes the allowance for loan loss activity for the nine month period ended March 31, 2010



|                                                               |  |   |        |  
|-------------------------------------------------------------- |  | - | ------ | -
|Beginning balance                                              |  | $ | 17,960 |  
|Provision for losses - mortgage loans                          |  |   | 4,727  |  
|Provision for losses - consumer loans                          |  |   | 127    |  
|Provision for (recovery of) losses - commercial business loans |  |   | (3     | )
|Loans recovered                                                |  |   | 34     |  
|Loans charged off                                              |  |   | (5,188 | )
|                                                               |  |   |        |  
|Ending balance                                                 |  | $ | 17,657 |  
|                                                               |  |   |        |  



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following table presents the Allowance for Loan Losses and Recorded Investment in Financing
Receivables at March 31, 2011:



|                                                                |  |                    |         |   |                    |   |         |             |  |   |            |   |  |               |        |   |                         |   |       |       |  |   |        |   |  |   |           |  
|--------------------------------------------------------------- |  | ------------------ | ------- | - | ------------------ | - | ------- | ----------- |  | - | ---------- | - |  | ------------- | ------ | - | ----------------------- | - | ----- | ----- |  | - | ------ | - |  | - | --------- | -
|                                                                |  | 1-4 familyMortgage |         |   | CommercialMortgage |   |         | Home Equity |  |   | Automobile |   |  | OtherConsumer |        |   | CommercialBusinessLoans |   |       | Total | 
|Allowance for Loan Losses:                                      |  |                    |         |   |                    |   |         |             |  |   |            |   |  |               |        |   |                         |   |       |       |  |   |        |   |  |   |           |  
|Beginning balance at June 30, 2010:                             |  | $                  | 10,440  |   |                    | $ | 3,340   |             |  | $ | 2,091      |   |  | $             | 907    |   |                         | $ | 155   |       |  | $ | 2,276  |   |  | $ | 19,209    |  
|Charge-offs                                                     |  |                    | (2,593  | ) |                    |   | (46     | )           |  |   | (183       | ) |  |               | (46    | ) |                         |   | (69   | )     |  |   | (58    | ) |  |   | (2,995    | )
|Recoveries                                                      |  |                    | 15      |   |                    |   |        |             |  |   |           |   |  |               | 34     |   |                         |   |      |       |  |   | 27     |   |  |   | 76        |  
|Provisions                                                      |  |                    | 2,106   |   |                    |   | 537     |             |  |   | 64         |   |  |               | 33     |   |                         |   |      |       |  |   |       |   |  |   | 2,740     |  
|Ending balance at March 31, 2011                                |  | $                  | 9,968   |   |                    | $ | 3,831   |             |  | $ | 1,972      |   |  | $             | 928    |   |                         | $ | 86    |       |  | $ | 2,245  |   |  | $ | 19,030    |  
|Ending balance: individually evaluated for impairment           |  | $                  | 5,252   |   |                    | $ | 619     |             |  | $ | 158        |   |  | $             | 115    |   |                         | $ | 27    |       |  | $ | 49     |   |  | $ | 6,220     |  
|Ending balance: collectively evaluated for impairment           |  | $                  | 4,716   |   |                    | $ | 3,212   |             |  | $ | 1,814      |   |  | $             | 813    |   |                         | $ | 59    |       |  | $ | 2,196  |   |  | $ | 12,810    |  
|Ending balance: loans acquired with deteriorated
credit quality |  | $                  |        |   |                    | $ |        |             |  | $ |           |   |  | $             |       |   |                         | $ |      |       |  | $ |       |   |  | $ |          |  
|Recorded Investment:                                            |  |                    |         |   |                    |   |         |             |  |   |            |   |  |               |        |   |                         |   |       |       |  |   |        |   |  |   |           |  
|Ending balance                                                  |  | $                  | 633,105 |   |                    | $ | 159,435 |             |  | $ | 145,479    |   |  | $             | 28,047 |   |                         | $ | 9,571 |       |  | $ | 41,429 |   |  | $ | 1,017,066 |  
|Ending balance: individually evaluated for impairment           |  | $                  | 34,091  |   |                    | $ | 2,013   |             |  | $ | 564        |   |  | $             | 228    |   |                         | $ | 27    |       |  | $ | 848    |   |  | $ | 37,771    |  
|Ending balance: collectively evaluated for impairment           |  | $                  | 599,014 |   |                    | $ | 157,422 |             |  | $ | 144,915    |   |  | $             | 27,819 |   |                         | $ | 9,544 |       |  | $ | 40,581 |   |  | $ | 979,295   |  

NOTE 6. COMPREHENSIVE INCOME

Sources of comprehensive income (loss) not included in net income are unrealized gains and losses on certain investments in equity
securities, mortgage-backed securities, corporate debt and swaps on interest rate contracts. For the nine months ended March 31, 2011 and 2010, total comprehensive income (loss) amounted to $5,908 and $(872), respectively.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS

US GAAP requires a hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets
and liabilities at fair value. This hierarchy requires the use of observable market data when available. The three broad levels of hierarchy are as follows:



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

The following table presents the assets and liabilities reported on the consolidated statements of financial condition at
their fair value as of March 31, 2011 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity
securities in the available-for-sale (AFS) security portfolio are measured at fair value using quoted market prices and classified within Level I of the valuation hierarchy. Mutual funds in the available-for-sale security portfolio are
measured at fair value using Level II valuation hierarchy. Interest rate swaps are priced using other similar financial instruments and are classified as Level II.

Financial Instruments - Measured on a recurring basis



|                                |  |                |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 
|------------------------------- |  | -------------- | - |  | ------------- | - | ----- | --------- |  | - | ----- |  |  | ------- | ----- |  | -------- | - | --- | --------- |  | - | ------ |  |  | - | - |  |  | - | ------ | 
|                                |  | March 31, 2011 |   |  | June 30, 2010 |  
|                                |  | Level I        |   |  | Level II      |   |       | Level III |  |   | Total |  |  | Level I |       |  | Level II |   |     | Level III |  |   | Total  | 
|Available for sale securities:  |  |                |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 
|CMOs  Non Agency (Residential) |  | $              |  |  |               | $ |      |           |  | $ |      |  |  | $       |      |  |          | $ |    |           |  | $ | 59,804 |  |  | $ |  |  |  | $ | 59,804 | 
|Common Equities                 |  |                | 1 |  |               |   |      |           |  |   |      |  |  |         | 1     |  |          |   | 682 |           |  |   |       |  |  |   |  |  |  |   | 682    | 
|Mutual Fund  ARM mortgages     |  |                |  |  |               |   | 5,242 |           |  |   |      |  |  |         | 5,242 |  |          |   |    |           |  |   | 5,284  |  |  |   |  |  |  |   | 5,284  | 
|Interest rate swaps             |  |                |  |  |               |   | 403   |           |  |   |      |  |  |         | 403   |  |          |   |    |           |  |   | 494    |  |  |   |  |  |  |   | 494    | 
|                                |  |                |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 
|Total                           |  | $              | 1 |  |               | $ | 5,645 |           |  | $ |      |  |  | $       | 5,646 |  |          | $ | 682 |           |  | $ | 65,582 |  |  | $ |  |  |  | $ | 66,264 | 
|                                |  |                |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following table presents the assets measured on a nonrecurring basis on the consolidated statements
of financial condition at their fair value as of March 31, 2011. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by the reporting entity based on the best
information available under each circumstance, the asset valuation is classified as Level III inputs. Pooled trust preferred securities and impaired loans are measured using Level III valuation hierarchy. Our pooled trust preferred securities are
collateralized by the trust preferred securities of individual banks, thrifts and bank holding companies, and to a lesser extent, insurance companies. There has been little or no active trading in these securities for approximately twenty-four
months; therefore it was more appropriate to determine estimated fair value using a discounted cash flow analysis. The discount rate applied to the cash flows is determined by evaluating the current market yields for comparable corporate and
structured credit products along with an evaluation of the risks associated with the cash flows of the comparable security. Due to the fact that there is no active market for the pooled trust preferred collateralized debt obligations, one key
reference point is the market yield for the single issue trust preferred securities issued by banks and thrifts for which there is more activity than for the pooled securities. Adjustments are then made to reflect the credit and structural
differences between these two security types.

The estimated fair value of impaired loans is based upon the estimated fair value of the
collateral less estimated selling costs when the loan is collateral dependent, or based upon the present value of expected future cash flows available to pay the loan. Collateral values are generally based upon appraisals from approved, independent
state certified appraisers.

The estimated fair value of foreclosed real estate is comprised of commercial and residential real estate
properties obtained in partial or total satisfaction of loan obligations. Foreclosed real estate acquired in settlement of indebtedness is recorded at the lower of the carrying amount of the loan or fair value less costs to sell. Subsequently, these
assets are carried at the lower of the carrying value or fair value less costs to sell. Accordingly, it may be necessary to record nonrecurring fair value adjustments. Fair value, when recorded, is generally based upon appraisals by licensed or
certified appraisers and is classified as Level II.



|                                                                                       |  |         |   |  |          |   |       |           |  |   |        |  |  |   |        | 
|-------------------------------------------------------------------------------------- |  | ------- | - |  | -------- | - | ----- | --------- |  | - | ------ |  |  | - | ------ | 
|                                                                                       |  | Level I |   |  | Level II |   |       | Level III |  |   | Total  | 
|Assets Measured on a Nonrecurring Basis:                                               |  |         |   |  |          |   |       |           |  |   |        |  |  |   |        | 
|Other than temporarily impaired (OTTI)  Held to maturity trust preferred securities |  | $       |  |  |          | $ |      |           |  | $ | 11,016 |  |  | $ | 11,016 | 
|Impaired loans                                                                         |  |         |  |  |          |   |      |           |  |   | 10,463 |  |  |   | 10,463 | 
|Impaired foreclosed real estate                                                        |  |         |  |  |          |   | 3,575 |           |  |   |       |  |  |   | 3,575  | 

The carrying value of impaired loans was $16,683 with an allowance for loss of $6,220 at March 31, 2011. The
carrying value of the foreclosed real estate was $4,399 with an allowance of $824 at March 31, 2011, and the charge to earnings during the March 31, 2011 quarter related to impaired foreclosed real estate was $120.

US GAAP requires the determination of fair value for certain assets, liabilities and contingent liabilities. The carrying amount approximates fair
value for the following categories:



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Cash and Noninterest-Bearing Deposits, which includes noninterest-bearing demand deposits

Federal Funds Sold

Interest-Earning Deposits in Other Banks

Accrued interest

Cash Surrender Value
(CSV) of Bank Owned Life Insurance (BOLI)

Checking, savings and money market accounts

The following methods and assumptions were used to estimate the fair value of other classes of financial instruments as of March 31, 2011 and
June 30, 2010.

Investment Securities: The fair values of investment securities are obtained from the Interactive Data
Corporation pricing service and various investment brokers for securities not available from public sources. Prices on certain trust preferred securities were calculated using a discounted cash flow model based upon market spreads for longer term
securities as permitted for Level III assets when market quotes are not available. See accompanying notes for additional information on investment securities.

Loans Receivable: Fair values were estimated by discounting contractual cash flows using interest rates currently being offered for loans with similar credit quality adjusted for prepayment
assumptions.

Deposit Liabilities: Fair values of commercial investment agreements and fixed-maturity certificates of deposit
are estimated using a discounted cash flow calculation that applies interest rates currently being offered on commercial investment agreements or time deposits of similar remaining maturities.

Advances from Federal Home Loan Bank: Fair value is determined by discounting the advances using estimated incremental borrowing rates for
similar types of borrowing arrangements.

Term Debt and Other Debt: Fair value is determined by discounting the term and other
debt using estimated incremental borrowing rates for similar types of borrowing arrangements.

Off-Balance-Sheet Instruments: Fair
value for off-balance-sheet instruments (primarily loan commitments) are estimated using internal valuation models and are limited to fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the
counterparties credit standing. Unused consumer and commercial lines of credit are assumed equal to the outstanding commitment amount due to the variable interest rate attached to these lines of credit.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following table presents additional information about financial assets and liabilities measured at
fair value:



|                                            |  |                |           |  |               |   |           |            |  |   |           |  |  |   |           | 
|------------------------------------------- |  | -------------- | --------- |  | ------------- | - | --------- | ---------- |  | - | --------- |  |  | - | --------- | 
|                                            |  | March 31, 2011 |           |  | June 30, 2010 |  
|                                            |  |                |           |  | Carrying      |   |           |            |  |   | Carrying  | 
|                                            |  | Fair Value     |           |  | Value         |   |           | Fair Value |  |   | Value     | 
|Financial Assets:                           |  |                |           |  |               |   |           |            |  |   |           |  |  |   |           | 
|Cash and non-interest-earning deposits      |  | $              | 15,492    |  |               | $ | 15,492    |            |  | $ | 17,736    |  |  | $ | 17,736    | 
|Federal funds sold                          |  |                | 156,218   |  |               |   | 156,218   |            |  |   | 135,773   |  |  |   | 135,773   | 
|Interest-earning deposits in other banks    |  |                | 3,835     |  |               |   | 3,835     |            |  |   | 801       |  |  |   | 801       | 
|Investment securities available for sale    |  |                | 5,243     |  |               |   | 5,243     |            |  |   | 65,770    |  |  |   | 65,770    | 
|Investment securities held to maturity      |  |                | 481,082   |  |               |   | 484,223   |            |  |   | 437,931   |  |  |   | 443,452   | 
|FHLB stock                                  |  |                | 12,958    |  |               |   | 12,958    |            |  |   | 14,357    |  |  |   | 14,357    | 
|Loans receivable                            |  |                | 1,043,996 |  |               |   | 1,017,066 |            |  |   | 1,087,009 |  |  |   | 1,050,755 | 
|Accrued interest receivable                 |  |                | 5,738     |  |               |   | 5,738     |            |  |   | 7,409     |  |  |   | 7,409     | 
|Cash surrender value of BOLI                |  |                | 26,093    |  |               |   | 26,093    |            |  |   | 25,288    |  |  |   | 25,288    | 
|Financial Liabilities:                      |  |                |           |  |               |   |           |            |  |   |           |  |  |   |           | 
|Checking, savings and money market accounts |  | $              | 730,713   |  |               | $ | 730,713   |            |  | $ | 696,364   |  |  | $ | 696,364   | 
|Certificates of deposit                     |  |                | 772,013   |  |               |   | 750,173   |            |  |   | 812,339   |  |  |   | 791,709   | 
|Advances from Federal Home Loan Bank        |  |                | 167,638   |  |               |   | 150,862   |            |  |   | 204,699   |  |  |   | 185,973   | 
|Term debt                                   |  |                | 22,279    |  |               |   | 21,875    |            |  |   | 24,244    |  |  |   | 23,750    | 
|Other debt                                  |  |                | 12,280    |  |               |   | 12,925    |            |  |   | 13,156    |  |  |   | 13,865    | 
|Interest rate swap                          |  |                | 402       |  |               |   | 402       |            |  |   | 494       |  |  |   | 494       | 
|Accrued interest payable                    |  |                | 850       |  |               |   | 850       |            |  |   | 902       |  |  |   | 902       | 
|Off-balance sheet loan instruments          |  | $              | 19        |  |               | $ |          |            |  | $ | 118       |  |  | $ |          | 

NOTE 8. INVESTMENT SECURITIES

Investment significant accounting policies are as follows:

Securities  Held to Maturity, Available for Sale and Other than Temporary Impairment

Certain debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and
recorded at amortized cost. Trading securities are recorded at fair value with changes in fair value included in earnings. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values,
are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using
the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The recent accounting guidance amends the recognition guidance for other-than-temporary impairments of
debt securities and expands the financial statement disclosures for other-than-temporary impairment losses on debt and equity securities. The recent guidance replaced the intent and ability indication in current guidance by specifying
that (a) if a company does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered
other-than-temporarily impaired unless there is a credit loss. When an entity does not intend to sell the security, and it is more likely than not the entity will not have to sell the security before recovery of its cost basis, it will recognize the
credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held-to-maturity debt securities, the amount of an other-than-temporary impairment recorded in other
comprehensive income for the noncredit portion of a previous other-than-temporary impairment should be amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security.

As a result of this guidance, Parkvales consolidated statements of operations as of March 31, 2011 and March 31, 2010 reflect
the full impairment (that is, the difference between the securitys amortized cost basis and fair value) on debt securities that Parkvale intends to sell or would more-likely-than-not be required to sell before the expected recovery of the
amortized cost basis. For available-for-sale and held-to-maturity debt securities that management has no intent to sell and believes that it more-likely-than-not will not be required to sell prior to recovery, only the credit loss component of the
impairment is recognized in earnings, while the non-credit loss is recognized in other comprehensive income, net of applicable taxes.

For
equity securities, when Parkvale has decided to sell an impaired available-for-sale security and Parkvale does not expect the fair value of the security to fully recover before the expected time of sale, the security is deemed other-than-temporarily
impaired in the period in which the decision to sell is made. Parkvale recognizes an impairment loss when the impairment is deemed other-than-temporary even if a decision to sell has not been made.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Federal Home Loan Bank Stock

Parkvale, as a member of the Federal Home Loan Bank (FHLB) system, is required to maintain an investment in capital stock of the FHLB. Based on redemption provisions of the FHLB, the stock has no quoted
market value and is carried at cost. In December 2008, the FHLB declared a moratorium on the redemption of its stock. At its discretion, the FHLB may declare dividends on the stock. However, since 2009 the FHLB suspended its dividend. Management
reviews for impairment based on the ultimate recoverability of the cost basis in the FHLB stock.

Members do not purchase stock in the FHLB
for the same reasons that traditional equity investors acquire stock in an investor-owned enterprise. Rather, members purchase stock to obtain access to the low-cost products and services offered by the FHLB. Unlike equity securities of traditional
for-profit enterprises, the stock of FHLB does not provide its holders with an opportunity for capital appreciation because, by regulation, FHLB stock can only be purchased, redeemed and transferred at par value.

The Banks FHLB stock totaled $12,958 at March 31, 2011 and $14,357 at June 30, 2010. The Bank accounts for the stock based on U.S. GAAP,
which requires the investment to be carried at cost and evaluated for impairment based on the ultimate recoverability of the par value.

The
Bank periodically evaluates its FHLB investment for possible impairment based on, among other things, the capital adequacy of the FHLB and its overall financial condition. The FHLB exceeds all regulatory capital requirements established by the
Federal Housing Finance Agency, the regulator of the FHLB. Failure by the FHLB to meet this regulatory capital requirement would require an in-depth analysis of other factors including:



| |  |  | the members ability to access liquidity from the FHLB;
| | - |  | -------------------------------------------------------



| |  |  | the members funding cost advantage with the FHLB compared to alternative sources of funds;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | a decline in the market value of FHLBs net assets relative to book value which may or may not affect future financial performance or cash flow;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the FHLBs ability to obtain credit and source liquidity, for which one indicator is the credit rating of the FHLB;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the FHLBs commitment to make payments taking into account its ability to meet statutory and regulatory payment obligations and the level of such
payments in relation to the FHLBs operating performance; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the prospects of amendments to laws that affect the rights and obligations of the FHLB.
| | - |  | ---------------------------------------------------------------------------------------

The Bank believes its holdings in the stock are ultimately recoverable at par value at March 31, 2011 and, therefore, determined that FHLB stock was
not other-than-temporarily impaired. In addition, the Bank has ample liquidity and does not require redemption of its FHLB stock in the foreseeable future.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



At March 31, 2011 and June 30, 2010, the following comprises Parkvales investment
portfolio:



|                                                    |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|--------------------------------------------------- |  | -------------- | ------- |  | ------------- | - | ------- | -------------- |  | - | ---------- |  |  | - | ------- | 
|                                                    |  | March 31, 2011 |         |  | June 30, 2010 |  
|                                                    |  | Amortized Cost |         |  | Fair Value    |   |         | Amortized Cost |  |   | Fair Value | 
|Available for Sale Investments                      |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|CMOs  Non Agency (Residential)                     |  |                |        |  |               |   |        |                |  | $ | 59,804     |  |  | $ | 59,804  | 
|Mutual Funds  ARM mortgages                        |  |                | 5,500   |  |               |   | 5,242   |                |  |   | 5,500      |  |  |   | 5,284   | 
|Common equities                                     |  |                | 1       |  |               |   | 1       |                |  |   | 474        |  |  |   | 682     | 
|                                                    |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Total available for sale investments                |  | $              | 5,501   |  |               | $ | 5,243   |                |  | $ | 65,778     |  |  | $ | 65,770  | 
|                                                    |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|                                                    |  |               
|                                                    |  | March 31, 2011 |         |  | June 30, 2010 |  
|                                                    |  | Amortized Cost |         |  | Fair Value    |   |         | Amortized Cost |  |   | Fair Value | 
|Held to Maturity Investments                        |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|U.S. Government and agency obligations              |  | $              | 148,232 |  |               | $ | 148,135 |                |  | $ | 194,248    |  |  | $ | 195,920 | 
|Municipal obligations                               |  |                | 27,478  |  |               |   | 27,881  |                |  |   | 21,641     |  |  |   | 22,345  | 
|Corporate debt:                                     |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Short to medium term corporate debt                 |  |                | 30,607  |  |               |   | 31,539  |                |  |   | 27,112     |  |  |   | 28,352  | 
|Pooled trust preferred securities                   |  |                | 21,182  |  |               |   | 17,590  |                |  |   | 24,229     |  |  |   | 16,849  | 
|Individual trust preferred securities               |  |                | 9,340   |  |               |   | 8,459   |                |  |   | 9,322      |  |  |   | 7,977   | 
|Mortgage-backed securities:                         |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Agency                                              |  |                | 179,412 |  |               |   | 180,076 |                |  |   | 93,248     |  |  |   | 95,055  | 
|Agency Collateralized Mortgage Obligations
(CMOs) |  |                | 8,124   |  |               |   | 8,262   |                |  |   | 10,357     |  |  |   | 10,630  | 
|CMOs  non agency                                   |  |                | 59,848  |  |               |   | 59,140  |                |  |   | 63,295     |  |  |   | 60,803  | 
|                                                    |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Total held to maturity investments                  |  | $              | 484,223 |  |               | $ | 481,082 |                |  | $ | 443,452    |  |  | $ | 437,931 | 
|                                                    |  |                |         |  |               |   |         |                |  |   |            |  |  |   |         | 

The amortized cost and fair value of debt securities at March 31, 2011, by contractual maturity, is included in the
table below. Expected maturities will differ from contractual maturities because the borrowers may have the right to call or prepay the obligation.



|                                       |  |               |         |  |            |   |         | 
|-------------------------------------- |  | ------------- | ------- |  | ---------- | - | ------- | 
|                                       |  | AmortizedCost |         |  | Fair Value |  
|Due in one year or less                |  | $             | 12,515  |  |            | $ | 12,665  | 
|Due after one year through five years  |  |               | 96,887  |  |            |   | 98,440  | 
|Due after five years through ten years |  |               | 125,706 |  |            |   | 125,058 | 
|Due after ten years                    |  |               | 249,115 |  |            |   | 244,919 | 
|                                       |  |               |         |  |            |   |         | 
|Total debt securities                  |  | $             | 484,223 |  |            | $ | 481,082 | 
|                                       |  |               |         |  |            |   |         | 

Liquidity concerns in the financial markets have made it difficult to obtain reliable market quotations on some
infrequently traded securities that are held to maturity. Corporate debt has been valued using financial models permitted by guidance in Accounting Standards Codification (ASC) 820 for Level III (see Fair Value Note) assets as active
markets did not exist at March 31, 2011 and June 30, 2010 to provide reliable market quotes. The assets included in Level III pricing relate to pooled trust preferred securities. The trust preferred market has been severely impacted by the
deteriorating economy and the lack of liquidity in the credit markets.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The unrealized losses on investments are primarily the result of volatility in interest rates, changes
in spreads over treasuries and certain investments falling out of favor with investors due to illiquidity in the financial markets. Based on the credit-worthiness of the issuers and discounted cash flow analyses, management determined that the
remaining investments in debt and equity securities were not other-than-temporarily impaired. The following table represents gross unrealized losses and fair value of investments aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position at March 31, 2011:



|                                       |  |                                          |         |  |                                            |   |       |            |  |   |                |  |  |            |        |  |                |   |         |  |  |   |        | 
|-------------------------------------- |  | ---------------------------------------- | ------- |  | ------------------------------------------ | - | ----- | ---------- |  | - | -------------- |  |  | ---------- | ------ |  | -------------- | - | ------- |  |  | - | ------ | 
|                                       |  | Less than 12 months of unrealized losses |         |  | Greater than 12 monthsof unrealized losses |   |       | Total      | 
|                                       |  | Fair Value                               |         |  | Unrealizedloss                             |   |       | Fair Value |  |   | Unrealizedloss |  |  | Fair Value |        |  | Unrealizedloss |  
|Available for Sale Investments         |  |                                          |         |  |                                            |   |       |            |  |   |                |  |  |            |        |  |                |   |         |  |  |   |        | 
|Mutual funds  ARM mortgages           |  | $                                        |        |  |                                            | $ |      |            |  | $ | 5,242          |  |  | $          | 258    |  |                | $ | 5,242   |  |  | $ | 258    | 
|Held to Maturity Investments           |  |                                          |         |  |                                            |   |       |            |  |   |                |  |  |            |        |  |                |   |         |  |  |   |        | 
|U.S. Government and agency obligations |  |                                          | 86,742  |  |                                            |   | 862   |            |  |   |               |  |  |            |       |  |                |   | 86,742  |  |  |   | 862    | 
|Municipal obligations                  |  |                                          | 10,668  |  |                                            |   | 116   |            |  |   |               |  |  |            |       |  |                |   | 10,668  |  |  |   | 116    | 
|Corporate debt                         |  |                                          | 9,167   |  |                                            |   | 69    |            |  |   |               |  |  |            |       |  |                |   | 9,167   |  |  |   | 69     | 
|Pooled trust preferred securities      |  |                                          | 431     |  |                                            |   | 124   |            |  |   | 8,129          |  |  |            | 6,516  |  |                |   | 8,560   |  |  |   | 6,640  | 
|Individual trust preferred securities  |  |                                          |        |  |                                            |   |      |            |  |   | 5,109          |  |  |            | 1,020  |  |                |   | 5,109   |  |  |   | 1,020  | 
|Non agency CMOs                       |  |                                          | 104     |  |                                            |   | 31    |            |  |   | 19,915         |  |  |            | 2,977  |  |                |   | 20,019  |  |  |   | 3,008  | 
|Mortgage-backed securities             |  |                                          | 101,292 |  |                                            |   | 1,326 |            |  |   | 22             |  |  |            | 1      |  |                |   | 101,314 |  |  |   | 1,327  | 
|                                       |  |                                          |         |  |                                            |   |       |            |  |   |                |  |  |            |        |  |                |   |         |  |  |   |        | 
|Totals                                 |  | $                                        | 208,404 |  |                                            | $ | 2,528 |            |  | $ | 38,417         |  |  | $          | 10,772 |  |                | $ | 246,821 |  |  | $ | 13,300 | 
|                                       |  |                                          |         |  |                                            |   |       |            |  |   |                |  |  |            |        |  |                |   |         |  |  |   |        | 

The following table represents gross unrealized losses and fair value of investments aggregated by investment category
and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2010:



|                                       |  |                                          |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 
|-------------------------------------- |  | ---------------------------------------- | ------ |  | ------------------------------------------ | - | -- | ---------- |  | - | -------------- |  |  | ---------- | ------ |  | -------------- | - | ------ |  |  | - | ------ | 
|                                       |  | Less than 12 months of unrealized losses |        |  | Greater than 12 monthsof unrealized losses |   |    | Total      | 
|                                       |  | Fair Value                               |        |  | Unrealizedloss                             |   |    | Fair Value |  |   | Unrealizedloss |  |  | Fair Value |        |  | Unrealizedloss |  
|Available for Sale Investments         |  |                                          |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 
|Mutual funds  ARM mortgages           |  | $                                        |       |  |                                            | $ |   |            |  | $ | 4,760          |  |  | $          | 240    |  |                | $ | 4,760  |  |  | $ | 240    | 
|Held to Maturity Investments           |  |                                          |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 
|U.S. Government and agency obligations |  |                                          | 29,990 |  |                                            |   | 9  |            |  |   |               |  |  |            |       |  |                |   | 29,990 |  |  |   | 9      | 
|Pooled trust preferred securities      |  |                                          |       |  |                                            |   |   |            |  |   | 10,197         |  |  |            | 7,380  |  |                |   | 10,197 |  |  |   | 7,380  | 
|Individual trust preferred securities  |  |                                          |       |  |                                            |   |   |            |  |   | 5,054          |  |  |            | 1,550  |  |                |   | 5,054  |  |  |   | 1,550  | 
|Non agency CMOs                       |  |                                          |       |  |                                            |   |   |            |  |   | 18,024         |  |  |            | 4,879  |  |                |   | 18,024 |  |  |   | 4,879  | 
|Mortgage-backed securities             |  |                                          | 5,300  |  |                                            |   | 47 |            |  |   |               |  |  |            |       |  |                |   | 5,300  |  |  |   | 47     | 
|                                       |  |                                          |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 
|Totals                                 |  | $                                        | 35,290 |  |                                            | $ | 56 |            |  | $ | 38,035         |  |  | $          | 14,049 |  |                | $ | 73,325 |  |  | $ | 14,105 | 
|                                       |  |                                          |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 



27



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Available for sale investments.

Mutual Funds. Parkvale has investments in two adjustable rate mortgage mutual funds with an aggregate amortized cost of $5,500 at March 31, 2011. The larger of the two investments, which had a
fair value of $5,242 at March 31, 2011, has had an unrealized loss in excess of one year of $258 and $240 at March 31, 2011 and at June 30, 2010, respectively. Parkvale evaluated the near-term prospects of the issuer of the mutual
fund in relation to the severity and duration of the impairment. Based on this evaluation and Parkvales ability to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, Parkvale does not
consider the remaining value of this investment to be other-than-temporarily impaired at March 31, 2011.

Common Equities. At
March 31, 2011, Parkvale had investments in three different common equities, which had an aggregate amortized cost of $1 and an aggregate fair value of $1 at March 31, 2011 and an aggregate amortized cost of $474 and an aggregate fair
value of $682 at June 30, 2010.

Held to maturity securities.

U.S. Government and Agency Obligations.At March 31, 2011, the $148,135 fair value of Parkvales investments in U.S. Government and Agency obligations was slightly lower than the $148,232
amortized cost of such investments. Certain of these investments show unrealized losses of less than one year of $862 at the balance sheet date. The contractual terms of those investments do not permit the issuer to settle the securities at a price
less than the face value of the investment. Parkvale intends to hold these securities to the contractual maturity of such investments and it is more likely than not that Parkvale will not be required to sell the investments before recovery of its
amortized cost.

Trust Preferred Securities. Trust preferred securities are very long-term (usually 30-year maturity) instruments with
characteristics of both debt and equity. Most of the Corporations investments in trust preferred securities are of pooled issues, each made up of 23 or more companies with geographic and size diversification. Unless otherwise noted, the
Corporations pooled trust preferred securities are substantially secured by bank and thrift holding companies (approximately 85% in the aggregate) and by insurance companies (approximately 15% in the aggregate). No single company represents
more 5% of any individual pooled offering. While certain companies are in more than one pool, no single company represents more than a 5% interest in the aggregate pooled investments. The pooled trust preferred investments were all investment grade
at purchase with an initial average investment grade rating of A. As a result of the overall credit market and the number of underlying issuers deferring interest payments, as well as issuers defaulting, the rating agencies have downgraded the
securities to below investment grade as of March 31, 2011. All of these investments are classified as held to maturity.



28



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Management believes trust preferred valuations have been negatively affected by an inactive market and
concerns that the underlying banks and insurance companies may have significant exposure to losses from sub-prime mortgages, defaulted collateralized debt obligations or other concerns. When evaluating these investments, a determination is made of
the credit portion and the noncredit portion of impairment. The credit portion is recognized in earnings and represents the expected shortfall in future cash flows. The noncredit portion is recognized in other comprehensive income and represents the
difference between the fair value of the security and the amount of credit related impairment, which is discussed in the following paragraphs. A discounted cash flow analysis provides the best estimate of the credit related portion of the impairment
for these securities. Parkvales pooled trust preferred collateralized debt obligations are measured for other than temporary impairment within the scope of US GAAP, by determining whether it is probable that an adverse change in estimated
cash flows has occurred. The discounted cash flow analysis is considered to be the primary evidence when determining whether credit related impairment exists.

Managements estimates and results of a discounted cash flow test are significantly affected by other variables such as the estimate of future cash flows, credit worthiness of the underlying banks
and insurance companies (issuer) and determination of probability of default of the underlying collateral. Changes in the variable assumptions could produce different conclusions for each security. Current available information is
evaluated in estimating the future cash flows of these securities and a determination is made regarding whether or not there have been favorable or adverse changes in estimated cash flows from the cash flows previously projected. Consideration is
given to the structure and term of the pool and the financial condition of the underlying issuers. Specifically, the evaluation incorporates factors such as over-collateralization and interest coverage tests, interest rates and appropriate risk
premiums, the timing and amount of interest and principal payments and the allocation of payments to the various tranches. Current estimates of cash flows are based on the most recent trustee reports, announcements of deferrals or defaults, and
assumptions regarding expected future default rates, prepayment and recovery rates and other relevant information. In constructing these assumptions, the following is considered:



| |  |  | that current defaults would have no recovery;
| | - |  | ---------------------------------------------



| |  |  | that some individually analyzed deferrals will cure at rates varying from 10% to 90% after the deferral period ends;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | recent historical performance metrics, including profitability, capital ratios, loan charge-offs and loan reserve ratios, for the underlying
institutions that would indicate a higher probability of default by the institution;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | that institutions identified as possessing a higher probability of default would recover at a rate of 10% for banks and 15% for insurance companies;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | that financial performance of the financial sector continues to be affected by the economic environment resulting in an expectation of additional
deferrals and defaults in the future;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | whether the security is currently deferring interest; and
| | - |  | ---------------------------------------------------------



| |  |  | the external rating of the security and recent changes to its external rating.
| | - |  | ------------------------------------------------------------------------------



29



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



In addition to the above factors, the excess subordination levels for each pooled trust preferred
security are calculated. The results of this excess subordination allows management to identify those pools that are a greater risk for a future break in cash flows so that issuers in those pools can be monitored more closely for potential
deterioration of credit quality.

A significant portion of the Corporations unrealized losses relate primarily to investments in trust
preferred securities, which consist of single issuer and pooled securities. The portfolio of trust preferred collateralized debt obligations consists of 16 pooled issues and 8 single issuer securities. The single issuer securities are primarily from
Pennsylvania regional banks. Investments in pooled securities are primarily mezzanine tranches, except for 2 investments in senior tranches, and are secured by over-collateralization or default protection provided by subordinated tranches.

At March 31, 2011, the 16 pooled trust preferred securities have an amortized cost basis of $21,182 and an estimated fair value of
$17,590, while the single-issuer trust preferred securities have an amortized cost basis of $9,340 and an estimated fair value of $8,459. The net unrealized losses on the trust preferred securities at March 31, 2011, which aggregated $3,592 on
the pooled securities and $881 on the individual securities, are attributable to temporary illiquidity and the uncertainty affecting these markets, as well as changes in interest rates.

At March 31, 2011, as permitted by the debt instruments, there are 11 pooled trust preferred securities with an amortized cost basis of $7,982 that have for one reason or another chosen to defer
payments. Interest payments aggregating $465 have been capitalized to the balance of the securities as permitted by the underlying trust agreement and interest payments aggregating $2,078 have been deferred since the respective securities began to
defer payments. Deferred payments are not included in interest income. Interest payments totaling $267 were deferred during the quarter ended March 31, 2011 and no payments were capitalized during the quarter.

Contractual terms of the investments do not permit debtors to settle the security at a price less than the face value of the investments and as such, it
is expected that the remaining trust preferred securities will not be settled at a price less than the current carrying value of the investments. The Corporation has concluded from detailed cash flow analysis performed as of March 31, 2011 that
it is probable that all contractual principal and interest payments will be collected on all of its single-issuer and pooled trust preferred securities, except for those on which OTTI was recognized on the pooled trust preferred securities.

Because Parkvale has the ability and intent to hold the investments until a recovery of fair value, which may be maturity, and it is more
likely than not that Parkvale will not be required to sell the investments before recovery of its amortized cost, Parkvale does not consider the remaining value of these assets to be other-than-temporarily impaired at March 31, 2011. However,
continued interest deferrals and/or insolvencies by participating issuers could result in a further writedown of one or more of the trust preferred investments in the future.



30



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following table provides information relating to the Corporations trust preferred securities
as of March 31, 2011.



|                                        |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|--------------------------------------- |  | ---------- | ------ | --------- | ------ |  | ------------- |  | ------ | ---------- | ------ |  | --------------------- |  | ------ | ------------------- | ------ | ----------- |  | ---- | ------------------ |  | -- | ----------------------- |  |  | ----------------------------------------------- | - |  | ------------------------------------------------------ | ---- | - |  |  | ---- | - |  |  | ---- | -
|Deal                                    |  | Note Class |        | Par Value |        |  | AmortizedCost |  |        | Fair Value |        |  | UnrealizedGain (Loss) |  |        | LowestCreditRatings |        | # ofIssuers |  |      | ActualDefault %(1) |  |    | ActualDeferral %(1) (2) |  |  | ExpectedDefaults (%of performingcollateral) (3) |   |  | ExcessSubordination(as a % ofperformingcollateral) (4) |     
|PooledInvestments                       |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|P1                                      |  | C1         |        |           | 5,000  |  |               |  | 350    |            |        |  | 777                   |  |        |                     | 427    |             |  | C    |                    |  | 69 |                         |  |  | 20.5                                            | % |  |                                                        | 19.0 | % |  |  | 14.0 | % |  |  | 0.0  | %
|P2                                      |  | A2A        |        |           | 5,000  |  |               |  | 2,020  |            |        |  | 2,517                 |  |        |                     | 497    |             |  | CCC- |                    |  | 64 |                         |  |  | 1.8                                             | % |  |                                                        | 22.0 | % |  |  | 13.9 | % |  |  | 9.5  | %
|P3                                      |  | C1         |        |           | 4,592  |  |               |  | 736    |            |        |  | 1,145                 |  |        |                     | 409    |             |  | C    |                    |  | 85 |                         |  |  | 1.6                                             | % |  |                                                        | 7.4  | % |  |  | 14.8 | % |  |  | 0.0  | %
|P4                                      |  | C1         |        |           | 5,058  |  |               |  | 354    |            |        |  | 1,062                 |  |        |                     | 708    |             |  | C    |                    |  | 72 |                         |  |  | 0.0                                             | % |  |                                                        | 11.2 | % |  |  | 14.8 | % |  |  | 0.0  | %
|P5                                      |  | C1         |        |           | 5,023  |  |               |  | 151    |            |        |  | 348                   |  |        |                     | 197    |             |  | C    |                    |  | 93 |                         |  |  | 13.3                                            | % |  |                                                        | 17.4 | % |  |  | 14.2 | % |  |  | 0.0  | %
|P6                                      |  | C1         |        |           | 3,075  |  |               |  | 31     |            |        |  | 62                    |  |        |                     | 31     |             |  | C    |                    |  | 68 |                         |  |  | 19.1                                            | % |  |                                                        | 16.9 | % |  |  | 15.0 | % |  |  | 0.0  | %
|P8                                      |  | C          |        |           | 3,219  |  |               |  | 128    |            |        |  | 190                   |  |        |                     | 62     |             |  | C    |                    |  | 56 |                         |  |  | 1.2                                             | % |  |                                                        | 18.6 | % |  |  | 13.3 | % |  |  | 0.0  | %
|P9                                      |  | B          |        |           | 2,008  |  |               |  | 80     |            |        |  | 424                   |  |        |                     | 344    |             |  | C    |                    |  | 54 |                         |  |  | 12.2                                            | % |  |                                                        | 26.4 | % |  |  | 11.8 | % |  |  | 0.0  | %
|P10                                     |  | B1         |        |           | 5,000  |  |               |  | 4,885  |            |        |  | 2,580                 |  |        |                     | (2,305 | )           |  | CCC  |                    |  | 24 |                         |  |  | 0.0                                             | % |  |                                                        | 5.8  | % |  |  | 11.1 | % |  |  | 11.3 | %
|P11                                     |  | Mezz       |        |           | 1,500  |  |               |  | 555    |            |        |  | 431                   |  |        |                     | (124   | )           |  | C    |                    |  | 23 |                         |  |  | 18.8                                            | % |  |                                                        | 21.1 | % |  |  | 8.4  | % |  |  | 0.0  | %
|P12                                     |  | B2         |        |           | 1,005  |  |               |  | 293    |            |        |  | 323                   |  |        |                     | 30     |             |  | C    |                    |  | 33 |                         |  |  | 14.6                                            | % |  |                                                        | 16.1 | % |  |  | 11.4 | % |  |  | 0.0  | %
|P13                                     |  | B          |        |           | 3,909  |  |               |  | 3,759  |            |        |  | 1,080                 |  |        |                     | (2,679 | )           |  | C    |                    |  | 45 |                         |  |  | 14.4                                            | % |  |                                                        | 16.2 | % |  |  | 13.5 | % |  |  | 0.0  | %
|P14                                     |  | A1         |        |           | 4,618  |  |               |  | 4,301  |            |        |  | 2,913                 |  |        |                     | (1,388 | )           |  | CCC  |                    |  | 50 |                         |  |  | 20.3                                            | % |  |                                                        | 9.2  | % |  |  | 13.9 | % |  |  | 28.2 | %
|P15                                     |  | B          |        |           | 5,000  |  |               |  | 1,700  |            |        |  | 1,556                 |  |        |                     | (144   | )           |  | C    |                    |  | 34 |                         |  |  | 25.5                                            | % |  |                                                        | 12.2 | % |  |  | 16.7 | % |  |  | 0.0  | %
|P16                                     |  | C1         |        |           | 5,000  |  |               |  | 1,089  |            |        |  | 1,089                 |  |        |                     |       |             |  | C    |                    |  | 45 |                         |  |  | 17.2                                            | % |  |                                                        | 11.1 | % |  |  | 10.9 | % |  |  | 0.0  | %
|P17                                     |  | C1         |        |           | 5,000  |  |               |  | 750    |            |        |  | 1,093                 |  |        |                     | 343    |             |  | C    |                    |  | 42 |                         |  |  | 18.5                                            | % |  |                                                        | 15.5 | % |  |  | 10.6 | % |  |  | 0.0  | %
|                                        |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Subtotal                                |  | 16         |        |           | 64,007 |  |               |  | 21,182 |            |        |  | 17,590                |  |        |                     | (3,592 | )           |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Single Issuer Investments               |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|S1                                      |  | N/A        |        |           | 1,000  |  |               |  | 931    |            |        |  | 770                   |  |        |                     | (161   | )           |  | BB+  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S2                                      |  | N/A        |        |           | 2,000  |  |               |  | 1,970  |            |        |  | 1,541                 |  |        |                     | (429   | )           |  | BB+  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S3                                      |  | N/A        |        |           | 3,000  |  |               |  | 2,781  |            |        |  | 2,443                 |  |        |                     | (338   | )           |  | A-   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S4                                      |  | N/A        |        |           | 500    |  |               |  | 447    |            |        |  | 355                   |  |        |                     | (92    | )           |  | BB-  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S5                                      |  | N/A        |        |           | 1,000  |  |               |  | 1,005  |            |        |  | 1,082                 |  |        |                     | 77     |             |  | NR   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S6                                      |  | N/A        |        |           | 700    |  |               |  | 710    |            |        |  | 722                   |  |        |                     | 12     |             |  | NR   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S7                                      |  | N/A        |        |           | 529    |  |               |  | 496    |            |        |  | 540                   |  |        |                     | 44     |             |  | B+   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S8                                      |  | N/A        |        |           | 1,000  |  |               |  | 1,000  |            |        |  | 1,006                 |  |        |                     | 6      |             |  | BB+  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|                                        |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Subtotal                                |  | 8          |        |           | 9,729  |  |               |  | 9,340  |            |        |  | 8,459                 |  |        |                     | (881   | )           |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Grand total of Trust Preferred holdings |  |            | 73,736 |           |        |  | 30,522        |  |        |            | 26,049 |  |                       |  | (4,473 | )                   |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  | 

The above listings do not include 7 trust preferred investments written off in prior periods.

Notes:



|(1) | As a percentage of the total collateral.
|--- | ----------------------------------------

|(2) | Includes deferrals that have not paid current interest payments as permitted by the debt instruments.
|--- | -----------------------------------------------------------------------------------------------------

|(3) | Expected defaults are determined by an analysis of each security.
|--- | -----------------------------------------------------------------

|(4) | Excess subordination measures the performing collateral coverage of the outstanding liabilities (as a % of performing collateral).
|--- | ----------------------------------------------------------------------------------------------------------------------------------



31



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Non agency CMOs. The non agency CMO securities of $59,848 at March 31, 2011 are supported by
underlying collateral that was originated as follows:



|                |  |                |        |  |            |   |        | 
|--------------- |  | -------------- | ------ |  | ---------- | - | ------ | 
|Year originated |  | Amortized Cost |        |  | Fair Value |  
|2003            |  | $              | 18,609 |  |            | $ | 20,222 | 
|2004            |  |                | 27,778 |  |            |   | 26,619 | 
|2005            |  |                | 3,934  |  |            |   | 4,125  | 
|2007            |  |                | 5,787  |  |            |   | 4,433  | 
|2008            |  |                | 3,740  |  |            |   | 3,741  | 
|                |  |                |        |  |            |   |        | 
|                |  | $              | 59,848 |  |            | $ | 59,140 | 
|                |  |                |        |  |            |   |        | 

The non agency CMO portfolio at March 31, 2011 contains investments that were all rated AAA at the time of purchase.
The amortized cost and fair value by their latest investment rating at March 31, 2011 is as follows:



|                              |  |                |        |  |            |   |        | 
|----------------------------- |  | -------------- | ------ |  | ---------- | - | ------ | 
|                              |  | Amortized Cost |        |  | Fair Value |  
|AAA by Moodys, S&P, or Fitch |  | $              | 22,327 |  |            | $ | 23,301 | 
|AA by Moodys or S&P          |  |                | 5,882  |  |            |   | 6,328  | 
|A by Moodys, S&P, or Fitch   |  |                | 3,740  |  |            |   | 3,741  | 
|Baa by Moodys                |  |                | 4,871  |  |            |   | 5,751  | 
|BB by S&P                     |  |                | 17,106 |  |            |   | 15,482 | 
|B by Finch                    |  |                | 3,178  |  |            |   | 2,689  | 
|CCC by Fitch                  |  |                | 2,609  |  |            |   | 1,744  | 
|D by S&P                      |  |                | 135    |  |            |   | 104    | 
|                              |  |                |        |  |            |   |        | 
|                              |  | $              | 59,848 |  |            | $ | 59,140 | 
|                              |  |                |        |  |            |   |        | 

To date, with the exception of one security with an amortized cost of $134, all such securities have made scheduled
payments of principal and interest on a timely basis with additional collateral provided by support tranches in these structured debt obligations. OTTI charges of $1,800 were recognized in prior periods regarding the security for which scheduled
payments were not received.

General. At March 31, 2011, Parkvale has unrealized losses that are greater than one year aggregating
$10,514 on held to maturity securities. These unrealized losses over one year relate primarily to investments in pooled and individual trust preferred securities and non-agency CMOs as detailed in the preceding tables. The unrealized losses relate
to illiquidity and the uncertainty affecting these markets, interest rate changes, higher spreads to treasuries at March 31, 2011 compared to the purchase dates and concerns of future bank failures. Pooled trust preferred securities with
unrealized losses for more than 12 months relate to 4 pooled trust preferred securities aggregating $14,645, representing $8,129 of fair value with $6,516 of unrealized losses. Individual trust preferred securities with unrealized losses for more
than 12 months relate to 4 individual securities aggregating $6,129, representing $5,109 of fair value with $1,020 of unrealized losses.



32



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Other-Than-Temporary- Impairment

Securities with a remaining carrying value as of March 31, 2011 that have incurred OTTI charges are summarized as follows:



|                                |  |                         |        |  |                       |   |        |                  |  |   |                      |  |  |                  |       |  |  |   |        | 
|------------------------------- |  | ----------------------- | ------ |  | --------------------- | - | ------ | ---------------- |  | - | -------------------- |  |  | ---------------- | ----- |  |  | - | ------ | 
|Security                        |  | UnadjustedCarryingValue |        |  | OTTICharge toearnings |   |        | OTTICharge toOCI |  |   | 3/31/11CarryingValue |  |  | 3/31/11FairValue |      
|Pooled trust preferred security |  | $                       | 48,857 |  |                       | $ | 19,904 |                  |  | $ | 20,718               |  |  | $                | 8,236 |  |  | $ | 11,016 | 

The following chart shows the balance of other comprehensive income charges related to fair value:



|                                     |  |                                  |        |  
|------------------------------------ |  | -------------------------------- | ------ | -
|                                     |  | Pooled trustpreferred securities |       
|Balance at June 30, 2010             |  | $                                | 19,868 |  
|Total losses  realized/unrealized   |  |                                  | 3,046  |  
|Included as a charge to earnings     |  |                                  | (2,197 | )
|Change to other comprehensive income |  |                                  |       |  
|                                     |  |                                  |        |  
|Balance at March 31, 2011            |  | $                                | 20,717 |  
|                                     |  |                                  |        |  

The following table displays the cumulative credit component of OTTI charges recognized in earnings on debt securities
for which a portion of an OTTI is recognized in other comprehensive income at March 31, 2011:



|                                                                                                 |  |                                  |        | 
|------------------------------------------------------------------------------------------------ |  | -------------------------------- | ------ | 
|                                                                                                 |  | Pooled trustpreferred securities |       
|Balance at June 30, 2010                                                                         |  | $                                | 17,707 | 
|Addition for the credit component on debt securities in which OTTI was not previously recognized |  |                                  | 2,197  | 
|                                                                                                 |  |                                  |        | 
|Balance at March 31, 2011                                                                        |  | $                                | 19,904 | 
|                                                                                                 |  |                                  |        | 
|The amount of securities with OTTI charges to earnings are as follows:                           | 
|Recorded in September 30, 2010 quarter                                                           |  | $                                | 996    | 
|Recorded in December 31, 2010 quarter                                                            |  |                                  | 946    | 
|Recorded in March 31, 2011 quarter                                                               |  |                                  | 255    | 

During the March 31, 2010 quarter, two pooled trust preferred securities and three non agency CMO securities
considered to be other than temporarily impaired were written down to fair value with a net charge to earnings of $1,044. During the three months ended March 31, 2011, charges of $255 on OTTI investments were recognized as net impairment losses
in earnings. The current quarter charges were due to OTTI related to two pooled trust preferred securities. Write-downs were based on individual securities credit performance and the issuers inability to make its contractual principal
and interest payments. Should credit quality continue to deteriorate, it is possible that additional write-downs may be required. Based on the credit worthiness of the issuers, management determined that the remaining investments in debt and equity
securities were not other-than-temporarily impaired at March 31, 2011.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



NOTE 9. GOODWILL AND MARKET VALUATION

Goodwill of $25,634 shown on the Statement of Financial Condition relates to acquisitions in fiscal 2002 (Masontown) and 2005
(Advance). The operations of both acquisitions have been fully integrated into Parkvales operations. All of the offices and business activities of both Masontown and Advance have been retained, remain open and are performing as expected. The
market price of Parkvales common stock was $9.75 per share at March 31, 2011, which is below the book value of $16.31 at such date. The difference between the market value and the book value at March 31, 2011 is primarily related to
the significant deterioration in the financial markets, a weakening economy and a near global credit crisis. Goodwill is tested on an annual basis as of June 30 of each year in conjunction with the Corporations fiscal year end but can be
tested for impairment at any time if circumstances warrant.

Because the market value of Parkvales common stock has been below the book
value during fiscal 2011, an independent third party was retained during the December 31, 2010 quarter to assist in determining whether an impairment of goodwill was appropriate. In a report dated January 13, 2011, the third party
certified goodwill non-impairment based on the discounted cash flow estimate of fair value, and deal value to book value of equity ratios observed in recent comparable banking sector merger and acquisition transactions. Anecdotal evidence for
goodwill non-impairment is also seen in the strong underlying financial foundations for Parkvales fair value. The third party reviewed the premiums paid in acquisitions of financial institutions that were announced or completed between
October 1, 2007 and November 30, 2010. The third party reviewed the premiums paid in 41 acquisitions in the mid-Atlantic states during such period, as well as 363 acquisitions nationwide during such period. In addition to reviewing the
book value multiples of all acquisitions announced or completed during the above period, the third party also reviewed the multiples for those acquisitions announced or completed since June 30, 2008, which were lower than the multiples for the
entire period noted above.

Based on the above report, management determined that goodwill was not impaired at March 31, 2011 or
December 31, 2010. The annual testing of goodwill as required was performed as of June 30, 2010 and in a similar report issued by the independent third party on July 23, 2010, goodwill non-impairment was certified as of June 30,
2010. If Parkvales stock continues to trade significantly below its book value, if discounted cash flow estimates materially decline, or if the multiples in other acquisitions of financial institutions continue to decline, then a goodwill
impairment charge may become appropriate in a future quarter.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



NOTE 10. EARNINGS PER SHARE (EPS)

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended
March 31:



|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|---------------------------------------- |  | ---------------------------- | --------- |  | --------------------------- | - | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                         |  | Three months ended
March 31, |           |  | Nine months ended
March 31, |  
|                                         |  | 2011                         |           |  | 2010                        |   |           | 2011 |  |   | 2010      | 
|Numerator for basic and diluted EPS:     |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Net income                               |  | $                            | 1,947     |  |                             | $ | 1,354     |      |  | $ | 6,011     |  |  | $ | 4,356     | 
|Less: Preferred stock dividend           |  |                              | 397       |  |                             |   | 397       |      |  |   | 1,191     |  |  |   | 1,191     | 
|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Net income to common stockholders        |  | $                            | 1,550     |  |                             | $ | 957       |      |  | $ | 4,820     |  |  | $ | 3,165     | 
|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Denominator:                             |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Weighted average shares for basic EPS    |  |                              | 5,582,407 |  |                             |   | 5,527,818 |      |  |   | 5,547,111 |  |  |   | 5,461,373 | 
|Effect of dilutive stock options         |  |                              | 2,808     |  |                             |   |          |      |  |   | 1,369     |  |  |   |          | 
|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Weighted average shares for dilutive EPS |  |                              | 5,585,215 |  |                             |   | 5,527,818 |      |  |   | 5,548,480 |  |  |   | 5,461,373 | 
|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Net income per common share:             |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Basic                                    |  | $                            | 0.28      |  |                             | $ | 0.17      |      |  | $ | 0.87      |  |  | $ | 0.58      | 
|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 
|Diluted                                  |  | $                            | 0.28      |  |                             | $ | 0.17      |      |  | $ | 0.87      |  |  | $ | 0.58      | 
|                                         |  |                              |           |  |                             |   |           |      |  |   |           |  |  |   |           | 

NOTE 11. NEW ACCOUNTING PRONOUNCEMENTS

In July 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-20, Receivables (Topic
310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The disclosures will provide financial statement users with additional information about the nature of credit risks inherent in entities
financing receivables, how credit risk is analyzed and assessed when determining the allowance for credit losses and the reasons for the change in the allowance for credit losses. This requirement is effective for all periods ending on or after
December 15, 2010, although certain disclosures will have a deferred effective date. Parkvale has adopted the additional accounting standards and the required additional disclosure, which have no impact on the consolidated financial statements.

On January 19, 2011, the FASB issued ASU 2011-10: Receivables (Topic 310) Deferral of the Effective Date of Disclosures about Troubled
Debt Restructurings in Update 2010 -20. The disclosures associated with ASU 2010-20 were originally scheduled to be effective for public entities for the periods beginning on or after December 15, 2010. Due to significant stakeholder concerns,
the disclosures relating to Troubled Debt Restructuring have been deferred to a later date, anticipated to be effective for interim and annual periods ending after June 15, 2011. The adoption of this standard is not anticipated to have a
material effect on the financial statements, results of operations or liquidity of the Corporation.

On April 5, 2011, the FASB issued
ASU 2011-02: A Creditors Determination of Whether a Restructuring is a Troubled Debt Restructuring. The ASU is clarifying when a loan modification or restructuring is considered a troubled debt restructuring. The guidance is effective for
the first interim period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For purposes of measuring impairment on newly considered impaired receivables an entity
should apply the guidance prospectively in the first interim period beginning on or after June 15, 2011. The disclosures relating to troubled debt restructurings will be required in the first interim period beginning on or after
June 15, 2011. The adoption of this ASU is not expected to have a material impact on the Corporations consolidated financial statements.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



On December 20, 2010, the FASB issued ASU No. 2010-28, Intangibles-Goodwill and Other (Topic
350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. This ASU is a consensus of the FASB Emerging Issues Task Force (EITF). The amendments are effective for public entities for
fiscal years, and interim periods, beginning after December 15, 2010. Early adoption is not permitted. Non-public entities have an additional year to comply (December 15, 2011). For public entities, the disclosures as of the end of a
reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning
on or after December 15, 2010. The adoption of this standard is not anticipated to have a material effect on the financial statements, results of operations or liquidity of the Corporation.

Item 2.

PARKVALE FINANCIAL CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND
RESULTS OF OPERATIONS

The following is managements discussion and analysis of the significant changes in the results of operations,
capital resources and liquidity presented in the accompanying consolidated financial statements for Parkvale Financial Corporation. The Corporations consolidated financial condition and results of operations consist almost entirely of Parkvale
Banks financial condition and results of operations. Current performance does not guarantee, and may not be indicative of, similar performance in the future. The financial statements as of and for the quarter ended March 31, 2011 are
unaudited and, as such, are subject to year-end audit review.

Forward-Looking Statements:

In addition to historical information, this filing may contain forward-looking statements. We have made forward-looking statements in this document that
are subject to risks and uncertainties. Forward-looking statements include the information concerning possible or assumed future results of operations of the Corporation and its subsidiaries. When we use words such as believe, expect, anticipate or
similar expressions, we are making forward-looking statements.

The statements in this filing that are not historical fact are forward-looking
statements. Forward-looking information should not be construed as guarantees of future performance. Actual results may differ from expectations contained in such forward-looking information as a result of various factors, including but not limited
to the interest rate environment, economic policy or conditions, federal and state banking and tax regulations and competitive factors in the marketplace. Each of these factors could affect estimates, assumptions, uncertainties and risks considered
in the development of forward-looking information and could cause actual results to differ materially from managements expectations regarding future performance.

Shareholders should note that many factors, some of which are discussed elsewhere in this document, could affect the future financial results of the Corporation and its subsidiaries and could cause those
results to differ materially from those expressed in our forward-looking statements contained in this document. These factors include the following: operating, legal and regulatory risks; economic, political and competitive forces affecting our
businesses; and the risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.



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Critical Accounting Policies, Judgments and Estimates:

The accounting and reporting policies of the Corporation and its subsidiaries conform to accounting principles generally accepted in the United States of
America (U.S. GAAP) and general practices within the financial services industry. All significant inter-company transactions are eliminated in consolidation, and certain reclassifications are made when necessary to conform the previous years
financial statements to the current years presentation. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities as of the dates of
the balance sheets and revenues and expenditures for the periods presented. Therefore, actual results could differ significantly from those estimates. Accounting policies involving significant judgments and assumptions by management, which have or
could have a material impact on the carrying value of certain assets or comprehensive income, are considered critical accounting policies. The Corporation recognizes the following as critical accounting policies: Allowance for Loan Loss, Carrying
Value of Investment Securities, Valuation of Foreclosed Real Estate, Carrying Value of Goodwill and Other Intangible Assets and Valuation Allowance of Deferred Tax Asset.

The Corporations critical accounting policies and judgments disclosures are contained in the Corporations June 30, 2010 Annual Report filed on September 13, 2010, as amended on
November 12, 2010 and on September 9, 2011. Management believes that there have been no material changes since June 30, 2010 except for adoption of FASB ASU 2010-20 during the quarter ended December 31, 2010. The Corporation has
not substantively changed its application of the foregoing policies, and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.

Balance Sheet Data:

(Dollar amounts in thousands, except per share data)



|                                                 |  |               |           |  |               |   |           | 
|------------------------------------------------ |  | ------------- | --------- |  | ------------- | - | --------- | 
|                                                 |  | March 31,     |          
|                                                 |  | 2011          |           |  | 2010          |  
|                                                 |  | (As Restated) |           |  | (As Restated) |  
|Total assets                                     |  | $             | 1,800,221 |  |               | $ | 1,895,147 | 
|Loans, net                                       |  |               | 998,936   |  |               |   | 1,033,004 | 
|Interest-earning deposits and federal funds sold |  |               | 160,053   |  |               |   | 152,621   | 
|Total investments                                |  |               | 489,466   |  |               |   | 571,495   | 
|Deposits                                         |  |               | 1,480,886 |  |               |   | 1,513,442 | 
|FHLB advances                                    |  |               | 150,862   |  |               |   | 186,030   | 
|Shareholders equity                             |  |               | 122,793   |  |               |   | 147,877   | 
|Book value per common share                      |  | $             | 16.31     |  |               | $ | 21.00     | 

Statistical Profile:



|                                                      |  |                                 |       |   |                                |   |       |      |  |   |               |   |  |   |       |  
|----------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---- |  | - | ------------- | - |  | - | ----- | -
|                                                      |  | Three Months EndedMarch 31, (1) |       |   | Nine Months EndedMarch 31, (1) |  
|                                                      |  | 2011                            |       |   | 2010                           |   |       | 2011 |  |   | 2010          |  
|                                                      |  |                                 |       |   | (As Restated)                  |   |       |      |  |   | (As Restated) |  
|Average yield earned on all interest-earning assets   |  |                                 | 3.85  | % |                                |   | 4.20  | %    |  |   | 3.91          | % |  |   | 4.32  | %
|Average rate paid on all interest-bearing liabilities |  |                                 | 1.65  | % |                                |   | 2.07  | %    |  |   | 1.74          | % |  |   | 2.30  | %
|Average interest rate spread                          |  |                                 | 2.20  | % |                                |   | 2.13  | %    |  |   | 2.17          | % |  |   | 2.02  | %
|Net yield on average interest-earning assets          |  |                                 | 2.19  | % |                                |   | 2.12  | %    |  |   | 2.16          | % |  |   | 2.07  | %
|Other expenses to average assets                      |  |                                 | 1.74  | % |                                |   | 1.67  | %    |  |   | 1.72          | % |  |   | 1.63  | %
|Taxes to pre-tax income                               |  |                                 | 30.27 | % |                                |   | 24.40 | %    |  |   | 24.99         | % |  |   | 10.87 | %
|Dividend payout ratio                                 |  |                                 | 7.14  | % |                                |   | 29.41 | %    |  |   | 6.90          | % |  |   | 25.86 | %
|Return on average assets                              |  |                                 | 0.43  | % |                                |   | 0.28  | %    |  |   | 0.44          | % |  |   | 0.30  | %
|Return on average equity                              |  |                                 | 5.71  | % |                                |   | 3.51  | %    |  |   | 5.95          | % |  |   | 3.81  | %
|Average equity to average total assets                |  |                                 | 7.58  | % |                                |   | 8.11  | %    |  |   | 7.39          | % |  |   | 7.99  | %
|Dividends per share                                   |  | $                               | 0.02  |   |                                | $ | 0.05  |      |  | $ | 0.06          |   |  | $ | 0.15  |  



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|                                                                        |  |               |       |   |               |  |       |  
|----------------------------------------------------------------------- |  | ------------- | ----- | - | ------------- |  | ----- | -
|                                                                        |  | At March 31,  |      
|                                                                        |  | 2011          |       |   | 2010          | 
|                                                                        |  | (As Restated) |       |   | (As Restated) | 
|One year gap to total assets                                            |  |               | 9.58  | % |               |  | 13.12 | %
|Intangibles to total equity                                             |  |               | 22.66 | % |               |  | 19.43 | %
|Ratio of nonperforming loans and foreclosed real estate to total assets |  |               | 1.76  | % |               |  | 1.79  | %
|Number of full-service offices                                          |  |               | 47    |   |               |  | 47    |  



|(1) | The applicable income and expense figures have been annualized in calculating the percentages.
|--- | ----------------------------------------------------------------------------------------------

Nonperforming Loans and Foreclosed Real Estate:

A weak national economy and to a lesser
extent local housing sector and credit markets contributed towards an increased level of non-performing assets, which peaked at September 30, 2009. Nonperforming loans (delinquent 90 days or more) and real estate owned in the aggregate
represented 1.76%, 1.91% and 1.79% of total assets at March 31, 2011, June 30, 2010 and March 31, 2010, respectively. Such non-performing assets at March 31, 2011 have decreased to $31.8 million from $35.2 million at
June 30, 2010, and include $22.3 million of non-accrual loans. Please refer to the loan charts and analysis in the notes to unaudited interim consolidated financial statements that precede this section.

As of March 31, 2011, single-family mortgage loans delinquent 90 days or more include 50 loans aggregating $20.4 million purchased from others and
serviced by national service providers with a cost basis ranging from $40,000 to $728,000 and 40 loans aggregating $2.9 million in Parkvales retail market area. Of these total 90 loans, 9 have a cost basis of $500,000 or greater. Management
believes that the delinquent 1-4 family mortgage loans are adequately collateralized with the exception of 39 loans aggregating $13.8 million, which have the necessary related allowances for losses provided. Loans 180 days or more delinquent are
individually evaluated for collateral values in accordance with banking regulations with specific reserves recorded as appropriate.

At
March 31, 2011, modifications have been performed at market terms on 126 1-4 family mortgage loans totaling $20.3 million, primarily related to extension of maturity dates and extension of interest-only payment periods of thirty-six months or
less. These modified loans are all performing at March 31, 2011. The discounted cash flow analysis related to these modifications results in an insignificant impact over the life of the loan.

Commercial business loans 90 days or more delinquent of $1.2 million at March 31, 2011 include a $799,000 relationship to a coal extraction and
reclamation entity. The commercial relationship is in the process of collection and management believes the facility is adequately collateralized.

Parkvale has $25.5 million of loans classified as substandard at March 31, 2011. The substandard loans have exhibited signs of weakness, or have been recently modified or refinanced and are being
monitored to assess if new payment terms are followed by the borrowers. These loans have exhibited characteristics which warrant special monitoring. Examples of these concerns include irregular payment histories, questionable collateral values,
investment properties having cash flows insufficient to service debt, and other financial inadequacies of the borrower. These loans are regularly monitored with efforts being directed towards resolving the underlying concerns and achieving a
performing status



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classification of such loans.

Foreclosed real estate of $9.4 million at March 31,
2011 consists of $5.6 million of single-family dwellings, including three units in a single-family residential development with a net book value of $856,000. At March 31, 2011, foreclosed real estate also includes eight commercial real estate
properties with an aggregate value of $3.8 million, including two commercial real estate properties with a net book value of $1.1 million formerly used as automobile dealerships, a medical facility with a net book value of $1.1 million and a
hospital with a net book value of $982,000 that has ceased business operations. Foreclosed real estate properties are recorded at the lower of the carrying amount or fair value of the property less costs to sell, with reserves established when
deemed necessary.

Loans are placed on nonaccrual status when, in managements judgment, the probability of collection of principal and
interest is deemed to be insufficient to warrant further accrual. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income. As a result, uncollected interest income is not included in
earnings for nonaccrual loans. The amount of interest income on nonaccrual loans that had not been recognized in interest income was $1.3 million at March 31, 2011 and $1.1 million at March 31, 2010. Parkvale provides an allowance for the
loss of accrued but uncollected interest on mortgage, consumer and commercial business loans that are 90 days or more contractually past due.

Allowance for Loan Losses:

The
allowance for loan losses was $19.0 million at March 31, 2011, $19.2 million at June 30, 2010 and $17.7 million at March 31, 2010 or 1.87%, 1.83% and 1.68% of gross loans respectively. The adequacy of the allowance for loan loss is
determined by management through evaluation of the loss probable on individual nonperforming, delinquent and high dollar loans, economic and business trends, growth and composition of the loan portfolio and historical loss experience, as well as
other relevant factors.

Parkvale continually monitors the loan portfolio to identify potential portfolio risks and to detect potential credit
deterioration in the early stages. Reserves are then established based upon the evaluation of the inherent risks in the loan portfolio. Changes to the levels of reserves are made quarterly based upon perceived changes in risk. When evaluating the
risk elements within the loan portfolio, Parkvale has a substantial portion of the loans secured by real estate as noted in the loan footnote. In addition to the $633.1 million of 1-4 family mortgage loans, the majority of the consumer loans
represent either second mortgages in the form of term loans and home equity lines of credit or first lien positions on home loans. The Bank does not underwrite subprime loans, negative amortization loans or discounted teaser rates on ARM loans.
Included in the 1-4 family mortgage portfolio is $471.1 of amortizing loans and $162.0 million of interest only loans as of March 31, 2011. The initial interest only period for $62.0 million of the aggregate $162.0 million has expired, and the
loans are contractually amortizing at March 31, 2011. Originated adjustable 1-4 family mortgage loans are made at competitive market rates in the primary lending areas of the Bank with add-on margins ranging from 250 to 300 basis points to
either the constant maturity treasury yields or Libor. Adjustable-rate 1-4 family mortgage loans purchased in the secondary market that are serviced by national service providers are prudently underwritten with emphasis placed on loans to value of
less than 80% combined with high FICO scores. The purchased loan portfolio is geographically diversified throughout the United States and is generally considered well collateralized. Aside from the states where Parkvale has offices, no other state
exceeds 5% of the mortgage loan portfolio. While management believes the allowance is adequate to absorb estimated credit losses in its existing loan portfolio, future adjustments may be necessary in circumstances where



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economic conditions change and affect the assumptions used in evaluating the adequacy of the allowance for loan losses.

Liquidity and Capital Resources:

Federal funds sold increased $20.4 million or 15.1% from
June 30, 2010 to March 31, 2011. Investment securities held to maturity increased $40.8 million or 9.2% from June 30, 2010 to March 31, 2011, primarily due to purchases of agency mortgage-backed securities. Interest-earning
deposits in other institutions increased $3.0 million or 378.8%. Loans, net of allowance, decreased $33.4 million or 3.2% from June 30, 2010 to March 31, 2011. The decrease in the loan portfolio was primarily due to a $27.6 million or 4.2%
decline in one-to-four family residential loans and a decrease of $6.8 million or 19.4% in automobile loans. Deposits decreased $7.2 million or 0.5% from June 30, 2010 to March 31, 2011, FHLB advances decreased $35.1 million or 18.8% due
to the maturity of six advances aggregating $35 million at costs of 4.12% to 6.05%, escrow for taxes and insurance decreased $751,000 or 10.0% and other debt decreased $940,000 or 6.8%. Parkvale Banks FHLB advance available maximum borrowing
capacity is $706.6 million at March 31, 2011. If Parkvale were to experience a deposit decrease in excess of the available cash resources and cash equivalents, the FHLB and Federal Reserve could be utilized to fund a rapid decrease in deposits.

TARP Capital Purchase Program: On October 14, 2008, the United States Department of the Treasury (the Treasury)
announced a voluntary Capital Purchase Program (the CPP) under which the Treasury will purchase senior preferred shares from qualifying financial institutions. The plan is part of the $700 billion Emergency Economic Stabilization Act
signed into law in October 2008.

On December 23, 2008, pursuant to the CPP established by the Treasury, Parkvale entered into a Letter
Agreement, which incorporates by reference the Securities Purchase Agreement - Standard Terms, with the Treasury (the Agreement), pursuant to which Parkvale issued and sold to the Treasury for an aggregate purchase price of $31,762,000
in cash (i) 31,762 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value $1.00 per share, having a liquidation preference of $1,000 per share (the Series A Preferred Stock), and (ii) a ten-year
warrant to purchase up to 376,327 shares of common stock, par value $1.00 per share, of Parkvale (Common Stock), at an initial exercise price of $12.66 per share, subject to certain anti-dilution and other adjustments (the
Warrant).

The Series A Preferred Stock pays cumulative dividends at a rate of 5% per annum on the liquidation preference for
the first five years, and thereafter at a rate of 9% per annum. The Series A Preferred Stock has no maturity date and ranks senior to the Common Stock (and pari passu with Parkvales other authorized shares of preferred stock, of which no
shares are currently outstanding) with respect to the payment of dividends and distributions and amounts payable in the unlikely event of any future liquidation or dissolution of Parkvale. Parkvale may redeem the Series A Preferred Stock at a price
of $1,000 per share plus accrued and unpaid dividends, subject to the concurrence of the Treasury and its federal banking regulators. Prior to December 23, 2011, unless the Corporation has redeemed the Series A Preferred Stock or the Treasury
has transferred the Series A Preferred Stock to a third party, the consent of the Treasury will be required for the Corporation to increase its Common Stock dividend or repurchase its Common Stock or other equity or capital securities, other than in
certain circumstances specified in the Agreement.

The Warrant is immediately exercisable. The Warrant provides for an adjustment of the
exercise price and the number of shares of Common Stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of Common



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Stock, and upon certain issuances of Common Stock at or below a specified price relative to the then-current market price of Common Stock. The Warrant expires ten years from the issuance date.
Pursuant to the Agreement, the Treasury has agreed not to exercise voting power with respect to any shares of Common Stock issued upon exercise of the Warrant.

Term Debt: On December 30, 2008, the Corporation entered into a Loan Agreement with PNC Bank, National Association (PNC) for a term loan in the amount of $25.0 million (the
Loan). The Loan pays interest at a rate equal to LIBOR plus three hundred and twenty five basis points, payable quarterly. Principal on the Loan is due and payable in fifteen consecutive quarterly payments of $625,000, commencing on
March 31, 2010, with the remaining outstanding balance, which is scheduled to be $15,625,000, due and payable on December 31, 2013 (the Maturity Date). The outstanding balance due under the credit facility may be repaid, at any
time, in whole or in part at the Corporations option. In connection with the Loan, the Corporation executed a Term Note, dated December 30, 2008, to evidence the Loan and a Pledge Agreement, dated December 30, 2008, whereby the
Corporation granted PNC a security interest in the outstanding capital stock of Parkvale Savings Bank, the wholly owned subsidiary of the Corporation. The Loan Agreement contains customary and standard provisions regarding representations and
warranties of the Corporation, covenants and events of default. If the Corporation has an event of default, the interest rate of the loan may increase by 2% during the period of default. The Corporation was in compliance with all terms and
conditions of the Loan Agreement, as amended, at March 31, 2011.

On January 7, 2009, the Corporation entered into swap arrangements
with PNC to convert portions of the LIBOR floating interest rates to fixed interest rates for three and five years. Under the swap agreements after the effects of the add-on of 325 basis points to LIBOR, $5.0 million matures on December 31,
2011 at a rate of 4.92% to 6.92% and an additional $15.0 million matures on December 31, 2013 at a rate of 5.41% to 7.41%.

In January
2009, the Corporation entered into interest rate swap contracts to modify the interest rate characteristics of designated debt instruments from variable to fixed in order to reduce the impact of changes in future cash flows due to interest rate
changes. The Corporation hedged its exposure to the variability of future cash flows for all forecasted transactions for a maximum of three to five years for hedges converting an aggregate of $20.0 million in floating-rate debt to fixed. The
fair value of these derivatives, net of taxes, totals a loss of $262,000 at March 31, 2011, and is reported as a contra account in other liabilities and offset in accumulated other comprehensive income for the effective portion of the
derivatives. Ineffectiveness of these swaps, if any, is recognized immediately in earnings. The change in value of these derivatives during the quarter ended March 31, 2011 resulted in no adjustment to current earnings, as the swaps were
measured as effective.

Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual
terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or customer owes the Corporation, and results in credit risk to the Corporation. When the fair value of a derivative
instrument contract is negative, the Corporation owes the customer or counterparty and therefore, has no credit risk.

Capital: Of the
$56.8 million of gross proceeds from the sale of the Series A Preferred Stock and the Loan from PNC, the Corporation contributed $50 million to the Bank as additional Tier 1 capital at the Bank. As noted above, the PNC Loan is being repaid
quarterly, with a final principal payment of $15.6 million due on December 31, 2013, and the dividend rate on the Series A Preferred Stock will increase



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from 5% to 9% per annum after the five-year anniversary date of the issuance of such stock. The Bank may not pay any dividends to the Corporation unless the Bank receives prior non-objection
of its regulators.

Shareholders equity was $122.8 million or 6.82% of total assets at March 31, 2011. During the nine months ended
March 31, 2011, shareholders equity increased by $4.9 million due primarily to net income of $6.0 million, offset by declaration of common and preferred stock dividends of $1.5 million. The other comprehensive loss is due primarily to
non-credit related OTTI charges recognized on held to maturity investment securities. The Corporation is restricted from repurchasing additional shares of its Common Stock prior to December 23, 2011 unless it either redeems the Series A
Preferred Stock or receives the written consent of the Treasury.

The Bank is required to maintain Tier 1 (Core) capital equal to at least 4%
of the institutions adjusted total assets and Total (Supplementary) Risk-Based capital equal to at least 8% of its risk-weighted assets. At March 31, 2011, Parkvale Bank was in compliance with all applicable regulatory requirements, with
Tier 1 Core, Tier 1 Risk-Based and Total Risk-Based ratios of 6.64%, 10.37% and 11.50%, respectively. The regulatory capital ratios for Parkvale Bank at March 31, 2011 are calculated as follows:



|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|------------------------------------------- |  | ----------------- | --------- | - | ----------------------- | - | --------- | ---------------------- |  | - | --------- | -
|(Dollars in 000s)                          |  | Tier 1CoreCapital |           |   | Tier 1Risk-BasedCapital |   |           | TotalRisk-BasedCapital | 
|Equity capital (1)                          |  | $                 | 141,001   |   |                         | $ | 141,001   |                        |  | $ | 141,001   |  
|Less non-allowable intangible assets        |  |                   | (27,829   | ) |                         |   | (27,829   | )                      |  |   | (27,829   | )
|Less non-allowable deferred tax asset       |  |                   | (8,461    | ) |                         |   | (8,461    | )                      |  |   | (8,461    | )
|Plus permitted valuation allowances (2)     |  |                   |          |   |                         |   |          |                        |  |   | 12,810    |  
|Plus accumulated other comprehensive income |  |                   | 13,097    |   |                         |   | 13,097    |                        |  |   | 13,097    |  
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Total regulatory capital                    |  |                   | 117,808   |   |                         |   | 117,808   |                        |  |   | 130,618   |  
|Minimum required capital                    |  |                   | 71,017    |   |                         |   | 45,432    |                        |  |   | 90,865    |  
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Excess regulatory capital                   |  | $                 | 46,791    |   |                         | $ | 72,376    |                        |  | $ | 39,753    |  
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Adjusted total assets (1)                   |  | $                 | 1,775,427 |   |                         | $ | 1,135,807 |                        |  | $ | 1,135,807 |  
|Regulatory capital as a percentage          |  |                   | 6.64      | % |                         |   | 10.37     | %                      |  |   | 11.50     | %
|Minimum capital required as a percentage    |  |                   | 4.00      | % |                         |   | 4.00      | %                      |  |   | 8.00      | %
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Excess regulatory capital as a percentage   |  |                   | 2.64      | % |                         |   | 6.37      | %                      |  |   | 3.50      | %
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Well capitalized requirement                |  |                   | 5.00      | % |                         |   | 6.00      | %                      |  |   | 10.00     | %
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  



|(1) | Represents amounts for the consolidated Bank as reported to the Pennsylvania Department of Banking and FDIC on Form 041 for the quarter ended March 31, 2011.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Limited to 1.25% of risk adjusted total assets.
|--- | -----------------------------------------------

Results of Operations - Comparison of Three Months Ended March 31, 2011 and 2010:

For the three months ended March 31, 2011, net income was $1.9 million, representing a 43.8% increase compared to net income of $1.4 million for the quarter ended March 31, 2010. Income
available to common shareholders, after the payment of dividends on preferred stock, was $1.6 million or $0.28 per diluted common share for the quarter ended March 31, 2011 compared to income available to common shareholders of $1.0 million or
$0.17 per diluted common share for the quarter ended March 31, 2010. The $593,000 increase in income available to common shareholders for the March 31, 2011 quarter reflects a $789,000 decrease in non-cash debt security impairment charges
and a $473,000 decrease in the



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provision for loan losses. These factors were partially offset by a $315,000 decrease in net interest income and a $408,000 increase in income tax expense, reflecting a higher level of pre-tax
income.

Interest Income:

Parkvale had interest income of $16.0 million during the three months ended March 31, 2011 versus $18.6 million during the comparable period in 2010.
The $2.7 million or 14.2% decrease is the result of a 35 basis point decrease in the average yield from 4.20% in the March 2010 quarter to 3.85% in the current quarter and a $112.0 million or 6.3% decrease in the average balance of interest-earning
assets. Interest income from loans decreased $1.4 million or 9.7%, resulting from a decrease in the average outstanding loan balances of $34.0 million or 3.3% and a 35 basis point decrease in the average yield from 5.26% in 2010 to 4.91% in 2011.
The decrease in the loan portfolio was primarily due to a decline in single-family residential mortgage loans. The average loan yield decreased due to lower prevailing rates on new loans along with ARM loans repricing down due to lower indices for
periodic rate adjustments. Investment interest income decreased by $1.3 million or 27.1% due to a decrease of $59.4 million or 10.2% in the average balance and a 62 basis point decrease in the average yield from 3.28% in 2010 to 2.66% in 2011.
Interest income earned on federal funds sold decreased by $11,000 or 12.5% from the 2010 quarter due to a decrease of $18.6 million or 13.0% in the average balance. The current Federal Reserve target rate is 0.25%. The weighted average yield on all
interest-earning assets was 3.81% at March 31, 2011 and 4.11% at March 31, 2010.

Interest Expense:

Interest expense decreased $2.3 million or 25.3% from the 2010 to the 2011 quarter. The decrease was due to a 42 basis point decrease in the average rate
paid on deposits and borrowings from 2.07% in 2010 to 1.65% in 2011 and a decrease in the average deposits and borrowings of $74.3 million or 4.3%. At March 31, 2011, the average rate payable on liabilities was 1.22% for deposits, 4.65% for
borrowings, 5.14% for term debt and 1.61% for combined deposits, borrowings and debt.

Net Interest Income:

Net interest income was $9.1 million for the quarter ended March 31, 2011 compared to $9.4 million for the quarter ended March 31, 2010. The
$315,000 decrease is attributable to a net decrease of $37.7 million of net earning assets, partially offset by a 7 basis point increase in the average interest rate spread from 2.13% in 2010 to 2.20% in 2011.

Provision for Loan Losses:

The
provision for loan losses is an amount added to the allowance against which loan losses are charged. The provision for loan losses for the quarter ended March 31, 2011 decreased by $473,000 or 40.6% from the 2010 quarter based upon an analysis
of credit factors related to the Banks portfolio and related reserve levels as of March 31, 2011. Aggregate valuation allowances were 1.87%, 1.83% and 1.68% of gross loans at March 31, 2011, June 30, 2010 and March 31,
2010, respectively.

Nonperforming loans, impaired loans and real estate owned (net of reserves) aggregated $31.8 million, $35.2 million and
$33.9 million at March 31, 2011, June 30, 2010 and March 31, 2010, representing 1.76%, 1.91% and 1.79% of total assets at the respective balance sheet dates. Total loan loss reserves at March 31, 2011 were $19.0 million,
compared to $19.2 million at June 30, 2010 and $17.7 million at March 31, 2010. Management considers loan loss reserves sufficient when compared to the value of the underlying collateral. See Nonperforming Loans and Foreclosed Real
Estate and Allowance for Loan Losses concerning trends experienced. Collateral is considered and evaluated when establishing the



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provision for loan losses and the sufficiency of the allowance for loan losses. Management believes the allowance for loan losses is adequate to cover the amount of probable loan losses.

Noninterest Income:

Total
noninterest income for the March 31, 2011 quarter increased by $712,000 or 47.2%, primarily due to lower levels of non-cash debt security impairment charges recognized in earnings, which decreased to $255,000 during the March 31, 2011
quarter compared to $1.0 million during the prior year period. The March 31, 2011 quarter writedowns were due to the other than temporary impairment of two pooled trust preferred securities resulting primarily from the deterioration of and
payment deferral by underlying issuers during the current quarter. The impairment charge recognized during the March 31, 2010 quarter related to two pooled trust preferred and three non agency CMO securities. The net gain on sale of assets
decreased by $167,000 compared to the March 2010 quarter, as there were no sales in the March 2011 quarter. Noninterest income included an increase of $141,000 or 9.5% of service charges on deposit accounts, and decreases of $37,000 or 9.8% of
service charges and other fees, and $14,000 or 2.7% of other income. Annuity fee and commission income included in other income was $224,000 in the 2011 quarter compared to $238,000 in the 2010 quarter.

Noninterest Expense:

Total noninterest
expense decreased by $131,000 or 1.6% for the three months ended March 31, 2011 compared to the March 31, 2010 quarter, due to decreases of $155,000 or 4.1% of compensation and employee benefits expense, and $85,000 or 6.8% in office
occupancy offset by an increase of $50,000 or 5.8% in FDIC insurance related to a higher premium rate charged by the FDIC and a $61,000 or 3.9% increase in other expenses. Annualized noninterest expense as a percentage of average assets was 1.74%
for the quarter ended March 31, 2011 and 1.67% for the quarter ended March 31, 2010, reflecting lower levels of average assets during the March 2011 quarter.

Income Tax Expense:

Income tax expense for the three months ended March 31, 2011 was
$845,000 compared to $437,000 for the March 2010 quarter, primarily due to a higher level of pre-tax income. The overall effective tax rates were 30.3% and 24.4% for the three months ended March 31, 2011 and 2010, respectively. The effective
rates in both March 2011 and 2010 are lower than the federal statutory rate of 35.0% due to tax benefits resulting from tax-exempt instruments.

Results of Operations - Comparison of Nine Months Ended March 31, 2011 and 2010:

For the nine month period ended March 31, 2011, net income was $6.0 million compared to net income of $4.4 million for the nine month period ended March 31, 2010. After giving effect to the
dividends on the preferred stock, the income available to common shareholders was $4.8 million or $0.87 per diluted common share for the nine months ended March 31, 2011 compared to income available to common shareholders of $3.2 million or
$0.58 per diluted common share for the nine months ended March 31, 2010. The $1.7 million increase in income available to common shareholders for the nine months ended March 31, 2011 reflects a $2.4 million decrease in non-cash debt
security impairment charges, a $2.1 million decrease in the provision for loan losses and a $521,000 increase in other non-interest income. These factors were partially offset by a $1.5 million increase in income tax expense, a $1.0 million decrease
in gain on sale of assets, a $207,000 increase in FDIC insurance premiums and a $652,000 decrease in net interest income. The increase in income tax expense reflects a higher level of pre-tax income for the nine months ended March 31, 2011.



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Interest Income:

Parkvale had interest income of $49.2 million during the nine months ended March 31, 2011 versus $58.0 million during the comparable period in 2010. The decrease of $8.8 million or 15.1% is
attributable to a 41 basis point decrease in the average yield from 4.32% in 2010 to 3.91% in 2010 and a decrease in the average interest-earning asset portfolio of $109.0 million or 6.1%. Interest income from loans decreased by $4.5 million or
10.5% due to a decrease in the average loan balance of $48.3 million or 4.5% and a 33 basis point decrease in the average yield from 5.34% in 2010 to 5.01% in 2011. The average loan yield decreased due to lower prevailing rates on new loans along
with ARM loans repricing down due to lower indices for periodic rate adjustments. Income from investments decreased by $4.3 million or 28.6% from 2010 due to a 72 basis point decrease in the average yield from 3.50% in 2010 to 2.78% in 2011 and a
decrease of $57.3 million or 10.1% in the average investment balance. Interest income earned on federal funds sold decreased by $7,000 or 2.4% from the nine months ended March 31, 2010 due to a decrease in the average Federal Fund balance of
$3.4 million or 2.2%.

Interest Expense:

Interest expense decreased by $8.1 million or 26.9% during the nine months ended March 31, 2011 versus 2010. The decrease was due to a 56 basis point decrease in the average rate paid from 2.30% in
2010 to 1.74% in 2011 as a result of lower prevailing market rates for retail deposits and a decrease in the average deposits and borrowings of $55.5 million or 3.2%.

Net Interest Income:

Net interest income decreased to $27.2 million for the nine months
ended March 31, 2011 compared to $27.8 million for the nine months ended March 31, 2010. The $652,000 or 2.3 % decrease is attributable to a net decrease of $53.5 million or 123.9% in net earning assets, offset by a 15 basis point
increase in the average interest rate spread from 2.02% in 2010 to 2.17% in 2011.

Provision for Loan Losses:

Provision for loan losses decreased by $2.1 million or 43.5% from the nine-month period ended March 31, 2010 to the nine months ended March 31,
2011. Aggregate valuation allowances were 1.87% of gross loans at March 31, 2011, 1.83% of gross loans at June 30, 2010 and 1.68% of gross loans at March 31, 2010. Total loan loss reserves at March 31, 2011 were $19.0 million.

Noninterest Income:

Noninterest income increased by $1.9 million or 36.5% for the nine months ended March 31, 2011 from the nine months ended March 31, 2010 due
primarily to a lower level of writedowns of investment securities. The net impairment loss recognized in earnings for the nine months ended March 31, 2011 was $2.2 million compared to $4.6 million for the nine months ended March 31, 2010.
The prior period writedowns include $3.6 million of pooled trust preferred securities and $962,000 of collateralized mortgage obligations. Net gain on sale of assets decreased by $1.0 million due to prior period gains of $2.3 million of recovery on
sale of previously written down securities and a $108,000 gain on sale of tail-end mortgage-backed securities. Service charges on deposits increased by $298,000 or 6.3%. Other fees and service charges for all types of products decreased by $1,000 or
0.1%. Other income increased by $224,000 or 14.2%. Annuity fee and commission income included in other income was $776,000 for the nine months ended March 31, 2011 compared to $645,000 for the nine months ended March 31, 2010.

Noninterest Expense:

Noninterest
expenses increased by $237,000 or 1.0% for the nine-month period ended March 31, 2011 from the comparable period in 2010. The increase in noninterest expense is primarily attributable to a $301,000



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or 6.8% increase in other expense related to increased costs associated with maintaining foreclosed real estate and a $207,000 or 8.3% increase in FDIC insurance expense. These increases were
offset by a decrease of $187,000 or 1.7% in compensation and employee benefits due to a reduction in the amount of incentive compensation being accrued. Parkvale is not able to pay or accrue any cash bonuses to its five most highly compensated
employees until the Series A Preferred Stock is redeemed, and other benefits are also being reduced. Office occupancy expense decreased by $177,000 or 5.1% compared to the prior period. Marketing expense increased by $18,000 or 7.6%. Annualized
noninterest expenses as a percentage of average assets were 1.72% for the nine months ended March 31, 2011 compared to 1.63% for the nine months ended March 31, 2010.

Income Tax Expense:

Income tax expense for the nine months ended March 31, 2011 was
$2.0 million compared to $531,000 for the previous nine months ended March 31, 2010. The $1.5 million increase is primarily due to higher pre-tax income in the current nine months, compounded by a higher level of tax valuation allowance
reversals in fiscal 2010. The lower level of pre-tax income in the nine months ended March 31, 2010 was due to higher security writedowns and loan loss provisions. The effective tax rates are 25.0% and 10.9% for the nine months ended
March 31, 2011 and 2010, respectively. The effective tax rate in the nine months of fiscal 2011 is lower than the statutory rate of 35% due to a tax refund, a reversal of tax valuation allowance from the sale of equity securities, and the tax
benefits resulting from tax-exempt instruments. The effective tax rate in the nine months of fiscal 2010 is lower than the statutory rate of 35% primarily due to reversal of a $734,000 tax valuation allowance from the sale of preferred stock
investments, combined with the tax benefits from tax-exempt instruments.

Impact of Inflation and Changing Prices:

The financial statements and related data presented herein have been prepared in accordance with U.S. GAAP, which requires the measurement of financial
position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, substantially all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institutions performance than the effects of general levels of inflation. Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services as measured by the consumer price index.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk are presented at June 30, 2010 in Item 7A of Parkvale Financial
Corporations Form 10-K, filed with the SEC on September 13, 2010, as amended on November 12, 2010 and on September 9, 2011.

Item 4. Controls and Procedures

Disclosure controls
and procedures are monitored and supervised by Parkvales management, including the CEO and Chief Financial Officer, regarding the effectiveness of the design and operation of Parkvales disclosure controls and procedures. As previously
disclosed in the Notes to Unaudited Interim Consolidated Financial Statements under the heading Restatement of Consolidated Financial Statements included in Item 1 hereof, management along with the Companys independent
registered public accounting firm, during the course of the fiscal 2011 annual audit, identified a deficiency that represented a material weakness in internal control over the Companys financial reporting, which resulted in a restatement of
the Companys financial statements for fiscal 2010 and 2009. As a result, Parkvales management, including the CEO and Chief Financial Officer, concluded



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that Parkvales disclosure controls and procedures were not effective as of March 31, 2011. There have been no changes in Parkvales internal controls or in other factors that
materially affected, or that are reasonably likely to materially affect, Parkvales internal controls, other than the following corrective actions which were taken in order to address the material weakness in the Companys internal control
described above. Management has evaluated the effect of the facts leading to this error and the Companys prior conclusions of the adequacy of its internal control over financial reporting and disclosure controls and procedures reported on as
part of the filings. Management is committed to maintaining effective internal control over financial reporting and has taken steps to remediate the internal control weakness, including the manual accrual related to FDIC insurance premiums.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

Risk factor disclosures are presented at June 30, 2010 in Item 1A of the Corporations Form 10-K, filed with the SEC on
September 13, 2010, as amended on November 12, 2010 and on September 9, 2011. Management believes that there have been no material changes in Parkvales risk factors since June 30, 2010.

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



|(a) | During the quarter, Parkvale Financial Corporation sold from Treasury shares 6,683 shares at a market price of $9.18 to the Executive Deferred Compensation Plan and 484
shares at a market price of $10.98 to the Supplemental Executive Benefit Plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable
|--- | --------------



|(c) | Not applicable
|--- | --------------

Item 3. Defaults Upon
Senior Securities

None

Item 4. Reserved

N/A

Item 5. Other Information

None

Item 6. Exhibits.
The following exhibits are filed herewith:



| | 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

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



|                        |  |  |  |                                |  |                                           
|----------------------- |  |  |  | ------------------------------ |  | ------------------------------------------
|                        |  |  |  | Parkvale Financial Corporation
|                        |  |  | 
|DATE: September 9, 2011 |  |  |  | By:                            |  | /s/    GILBERT A.
RIAZZI                  
|                        |  |  |  |                                |  | Gilbert A. Riazzi                         
|                        |  |  |  |                                |  | Vice President and Chief Financial Officer
|                        |  |  | 
|DATE: September 9, 2011 |  |  |  | By:                            |  | /s/    ROBERT J. MCCARTHY,
JR.            
|                        |  |  |  |                                |  | Robert J. McCarthy, Jr.                   
|                        |  |  |  |                                |  | President and Chief Executive Officer     



48