##### Table of Contents





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 DECEMBER 31, 2010

COMMISSION FILE NO: 0-17411





PARKVALE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)







|               |  |                       
|-------------- |  | ----------------------
|Pennsylvania   |  | 25-1556590            
|(State of      |  | (I.R.S. Employer      
|incorporation) |  | Identification 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 February 10, 2011 was $10.39 per share. Number of shares of Common Stock outstanding as of February 10, 2011 was 5,582,362.









---

##### Table of Contents

PARKVALE FINANCIAL CORPORATION

INDEX



|                                                                                                                        |  |      |       | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | 
|                                                                                                                        |  | Page |      
|Part I. Financial Information                                                                                           |  |      |       | 
|                                                                                                                        | 
|Item 1.                                                                                                                 |  |      |       | 
|Consolidated Statements of Financial Condition as of December 31, 2010 (Unaudited) and June 
30, 2010                   |  |      | 4     | 
|                                                                                                                        | 
|Consolidated Statements of Operations for the three months and six months ended December 
31, 2010 and 2009 (Unaudited) |  |      | 5     | 
|                                                                                                                        | 
|Consolidated Statements of Cash Flows for the six months ended December 31, 2010 and 2009
(Unaudited)                   |  |      | 6-7   | 
|                                                                                                                        | 
|Consolidated Statements of Shareholders Equity for the six months ended December 
31, 2010 and 2009 (Unaudited)        |  |      | 8     | 
|                                                                                                                        | 
|Notes to Unaudited Interim Consolidated Financial Statements                                                            |  |      | 9-36  | 
|                                                                                                                        | 
|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                                                                                                              |  |      | 49    | 
|                                                                                                                        | 
|Exhibits                                                                                                                |  |      |       | 
|EX31.1                                                                                                                 |  |      |       | 
|EX31.2                                                                                                                 |  |      |       | 
|EX32.1                                                                                                                 |  |      |       | 



2



---

##### Table of Contents

PART I.

Explanatory Note

This Amendment on Form 10-Q/A amends our Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 2010, filed with the Securities and Exchange Commission (SEC) on February 14, 2011. We are filing this Amendment to correct the consolidated financial
statements of Parkvale Financial Corporation (the Company) as of December 31, 2010 and June 30, 2010 and for each of the periods ended December 31, 2010 and 2009.

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 December 31, 2010 and June 30, 2010 and for the three and six months ended
December 31, 2009.



3



---

##### Table of Contents

Item 1.

PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar amounts in thousands, except share data)



|                                                                                                                    |  |                  |           |   |               |   |           |  
|------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | - | ------------- | - | --------- | -
|                                                                                                                    |  | December 31,2010 |           |   | June 30,2010  |  
|                                                                                                                    |  | (As Restated)    |           |   | (As Restated) |  
|                                                                                                                    |  | (Unaudited)      |           |   |               |  
|ASSETS                                                                                                              |  |                  |           |   |               |   |           |  
|Cash and noninterest-earning deposits                                                                               |  | $                | 17,097    |   |               | $ | 17,736    |  
|Federal funds sold                                                                                                  |  |                  | 106,550   |   |               |   | 135,773   |  
|                                                                                                                    |  |                  |           |   |               |   |           |  
|Cash and cash equivalents                                                                                           |  |                  | 123,647   |   |               |   | 153,509   |  
|Interest-earning deposits in other banks                                                                            |  |                  | 3,362     |   |               |   | 801       |  
|Investment securities available for sale at fair value (cost of $5,501 at December 31 and $65,778 at
June 30)       |  |                  | 5,245     |   |               |   | 65,770    |  
|Investment securities held to maturity (fair value of $499,734 at December 31 and $437,931 at June 30)              |  |                  | 501,852   |   |               |   | 443,452   |  
|Federal Home Loan Bank Stock, at cost                                                                               |  |                  | 13,640    |   |               |   | 14,357    |  
|Loans, net of allowance of $19,621 at December 31 and $19,209 at June 30                                            |  |                  | 1,017,834 |   |               |   | 1,032,363 |  
|Foreclosed real estate, net                                                                                         |  |                  | 8,869     |   |               |   | 8,637     |  
|Office properties and equipment, net                                                                                |  |                  | 17,045    |   |               |   | 17,374    |  
|Goodwill                                                                                                            |  |                  | 25,634    |   |               |   | 25,634    |  
|Intangible assets                                                                                                   |  |                  | 2,422     |   |               |   | 2,877     |  
|Prepaid expenses and other assets                                                                                   |  |                  | 70,495    |   |               |   | 76,535    |  
|                                                                                                                    |  |                  |           |   |               |   |           |  
|Total assets                                                                                                        |  | $                | 1,790,045 |   |               | $ | 1,841,309 |  
|                                                                                                                    |  |                  |           |   |               |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                |  |                  |           |   |               |   |           |  
|LIABILITIES                                                                                                         |  |                  |           |   |               |   |           |  
|Deposits                                                                                                            |  | $                | 1,458,571 |   |               | $ | 1,488,073 |  
|Advances from Federal Home Loan Bank                                                                                |  |                  | 165,875   |   |               |   | 185,973   |  
|Term debt                                                                                                           |  |                  | 22,500    |   |               |   | 23,750    |  
|Other debt                                                                                                          |  |                  | 11,294    |   |               |   | 13,865    |  
|Advance payments from borrowers for taxes and insurance                                                             |  |                  | 6,965     |   |               |   | 7,526     |  
|Other liabilities                                                                                                   |  |                  | 3,775     |   |               |   | 4,249     |  
|                                                                                                                    |  |                  |           |   |               |   |           |  
|Total liabilities                                                                                                   |  |                  | 1,668,980 |   |               |   | 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                                                                                          |  |                  | 2,235     |   |               |   | 2,734     |  
|Treasury stock at cost (1,159,215 shares at December 31 and 1,205,683 shares at June 30)                            |  |                  | (24,222   | ) |               |   | (25,193   | )
|Accumulated other comprehensive loss                                                                                |  |                  | (13,740   | ) |               |   | (13,413   | )
|Retained earnings                                                                                                   |  |                  | 118,295   |   |               |   | 115,248   |  
|                                                                                                                    |  |                  |           |   |               |   |           |  
|Total shareholders equity                                                                                          |  |                  | 121,065   |   |               |   | 117,873   |  
|                                                                                                                    |  |                  |           |   |               |   |           |  
|Total liabilities and shareholders equity                                                                          |  | $                | 1,790,045 |   |               | $ | 1,841,309 |  
|                                                                                                                    |  |                  |           |   |               |   |           |  



4



---

##### Table of Contents

PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except per share data)

(Unaudited)



|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|------------------------------------------------------------------ |  | ------------------------------ | ------ | - | ---------------------------- | - | ------ | ---- |  | - | ------------- | - |  | - | ------ | -
|                                                                   |  | Three months endedDecember 31, |        |   | Six months endedDecember 31, |  
|                                                                   |  | 2010                           |        |   | 2009                         |   |        | 2010 |  |   | 2009          |  
|                                                                   |  |                                |        |   | (As Restated)                |   |        |      |  |   | (As Restated) |  
|Interest income:                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Loans                                                              |  | $                              | 12,814 |   |                              | $ | 14,231 |      |  | $ | 25,861        |   |  | $ | 29,023 |  
|Investments                                                        |  |                                | 3,464  |   |                              |   | 4,964  |      |  |   | 7,134         |   |  |   | 10,096 |  
|Federal funds sold                                                 |  |                                | 85     |   |                              |   | 105    |      |  |   | 207           |   |  |   | 203    |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Total interest income                                              |  |                                | 16,363 |   |                              |   | 19,300 |      |  |   | 33,202        |   |  |   | 39,322 |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Interest expense:                                                  |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Deposits                                                           |  |                                | 4,767  |   |                              |   | 7,386  |      |  |   | 9,995         |   |  |   | 15,379 |  
|Borrowings                                                         |  |                                | 2,384  |   |                              |   | 2,824  |      |  |   | 5,136         |   |  |   | 5,535  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Total interest expense                                             |  |                                | 7,151  |   |                              |   | 10,210 |      |  |   | 15,131        |   |  |   | 20,914 |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Net interest income                                                |  |                                | 9,212  |   |                              |   | 9,090  |      |  |   | 18,071        |   |  |   | 18,408 |  
|Provision for loan losses                                          |  |                                | 1,015  |   |                              |   | 1,398  |      |  |   | 2,049         |   |  |   | 3,687  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Net interest income after provision for losses                     |  |                                | 8,197  |   |                              |   | 7,692  |      |  |   | 16,022        |   |  |   | 14,721 |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Noninterest Income:                                                |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Other-than-temporary impairment losses recognized in earnings      |  |                                | (946   | ) |                              |   | (3,240 | )    |  |   | (3,981        | ) |  |   | (6,001 | )
|Non-credit related losses recognized in other comprehensive income |  |                                |       |   |                              |   | 2,458  |      |  |   | 2,039         |   |  |   | 2,458  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Net impairment losses recognized in earnings                       |  |                                | (946   | ) |                              |   | (782   | )    |  |   | (1,942        | ) |  |   | (3,543 | )
|Service charges on deposit accounts                                |  |                                | 1,665  |   |                              |   | 1,615  |      |  |   | 3,424         |   |  |   | 3,267  |  
|Other service charges and fees                                     |  |                                | 381    |   |                              |   | 359    |      |  |   | 762           |   |  |   | 726    |  
|Net gain on sale of investments                                    |  |                                | 194    |   |                              |   | 1,103  |      |  |   | 1,366         |   |  |   | 2,205  |  
|Other                                                              |  |                                | 522    |   |                              |   | 511    |      |  |   | 1,292         |   |  |   | 1,054  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Total noninterest income                                           |  |                                | 1,816  |   |                              |   | 2,806  |      |  |   | 4,902         |   |  |   | 3,709  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Noninterest Expense:                                               |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Compensation and employee benefits                                 |  |                                | 3,472  |   |                              |   | 3,625  |      |  |   | 7,400         |   |  |   | 7,432  |  
|Office occupancy                                                   |  |                                | 1,047  |   |                              |   | 1,095  |      |  |   | 2,114         |   |  |   | 2,206  |  
|Marketing                                                          |  |                                | 94     |   |                              |   | 93     |      |  |   | 178           |   |  |   | 160    |  
|FDIC insurance                                                     |  |                                | 904    |   |                              |   | 873    |      |  |   | 1,798         |   |  |   | 1,641  |  
|Office supplies, telephone and postage                             |  |                                | 538    |   |                              |   | 463    |      |  |   | 1,010         |   |  |   | 933    |  
|Other                                                              |  |                                | 1,597  |   |                              |   | 1,393  |      |  |   | 3,202         |   |  |   | 2,962  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Total noninterest expense                                          |  |                                | 7,652  |   |                              |   | 7,542  |      |  |   | 15,702        |   |  |   | 15,334 |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Income before income taxes                                         |  |                                | 2,361  |   |                              |   | 2,956  |      |  |   | 5,222         |   |  |   | 3,096  |  
|Income tax expense                                                 |  |                                | 520    |   |                              |   | 679    |      |  |   | 1,158         |   |  |   | 94     |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Net income                                                         |  |                                | 1,841  |   |                              |   | 2,277  |      |  |   | 4,064         |   |  |   | 3,002  |  
|Less: Preferred stock dividend                                     |  |                                | 397    |   |                              |   | 397    |      |  |   | 794           |   |  |   | 794    |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Income to common shareholders                                      |  | $                              | 1,444  |   |                              | $ | 1,880  |      |  | $ | 3,270         |   |  | $ | 2,208  |  
|                                                                   |  |                                |        |   |                              |   |        |      |  |   |               |   |  |   |        |  
|Net income per common basic share                                  |  | $                              | 0.26   |   |                              | $ | 0.35   |      |  | $ | 0.59          |   |  | $ | 0.41   |  
|Net income per common diluted share                                |  | $                              | 0.26   |   |                              | $ | 0.35   |      |  | $ | 0.59          |   |  | $ | 0.41   |  



5



---

##### Table of Contents

PARKVALE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)



|                                                                   |  |                              |          |   |               |   |          |  
|------------------------------------------------------------------ |  | ---------------------------- | -------- | - | ------------- | - | -------- | -
|                                                                   |  | Six months endedDecember 31, |         
|                                                                   |  | 2010                         |          |   | 2009          |  
|                                                                   |  |                              |          |   | (As Restated) |  
|Cash flows from operating activities:                              |  |                              |          |   |               |   |          |  
|Interest received                                                  |  | $                            | 33,814   |   |               | $ | 38,828   |  
|Loan fees received                                                 |  |                              | 358      |   |               |   | 182      |  
|Other fees and commissions received                                |  |                              | 4,932    |   |               |   | 4,490    |  
|Interest paid                                                      |  |                              | (15,239  | ) |               |   | (20,882  | )
|Cash paid to suppliers and others                                  |  |                              | (11,217  | ) |               |   | (31,617  | )
|Income taxes refund                                                |  |                              | 3,750    |   |               |   |         |  
|                                                                   |  |                              |          |   |               |   |          |  
|Net cash provided by (used in) operating activities                |  |                              | 16,398   |   |               |   | (8,999   | )
|Cash flows from investing activities:                              |  |                              |          |   |               |   |          |  
|Proceeds from sale of investment securities available for sale     |  |                              | 51,308   |   |               |   | 2,192    |  
|Proceeds from maturities of investment securities held to maturity |  |                              | 149,541  |   |               |   | 180,056  |  
|Purchase of investment securities held to maturity                 |  |                              | (202,022 | ) |               |   | (256,644 | )
|(Purchase) maturity of deposits in other banks                     |  |                              | (2,561   | ) |               |   | 3,307    |  
|Loan sales                                                         |  |                              |         |   |               |   | 7,527    |  
|Purchase of loans                                                  |  |                              | (10,722  | ) |               |   |         |  
|Principal collected on loans                                       |  |                              | 141,221  |   |               |   | 135,861  |  
|Loans made to customers, net of loans in process                   |  |                              | (118,292 | ) |               |   | (91,292  | )
|Other                                                              |  |                              | (93      | ) |               |   | (149     | )
|                                                                   |  |                              |          |   |               |   |          |  
|Net cash provided by (used in) investing activities                |  |                              | 8,380    |   |               |   | (19,142  | )
|Cash flows from financing activities:                              |  |                              |          |   |               |   |          |  
|Net increase in checking and savings accounts                      |  |                              | 11,517   |   |               |   | 51,673   |  
|Net (decrease) in certificates of deposit                          |  |                              | (41,019  | ) |               |   | (34,779  | )
|Repayment of FHLB advances                                         |  |                              | (19,997  | ) |               |   | (13      | )
|Net (decrease) in other borrowings                                 |  |                              | (2,571   | ) |               |   | (5,776   | )
|Repayment of term debt                                             |  |                              | (1,250   | ) |               |   |         |  
|Net (decrease) in borrowers advances for taxes and insurance      |  |                              | (561     | ) |               |   | (680     | )
|Dividends paid                                                     |  |                              | (1,181   | ) |               |   | (1,336   | )
|Contribution to benefit plans                                      |  |                              | 422      |   |               |   | 588      |  
|                                                                   |  |                              |          |   |               |   |          |  
|Net cash (used in) provided by financing activities                |  |                              | (54,640  | ) |               |   | 9,677    |  
|                                                                   |  |                              |          |   |               |   |          |  
|Net (decrease) in cash and cash equivalents                        |  |                              | (29,862  | ) |               |   | (18,464  | )
|Cash and cash equivalents at beginning of period                   |  |                              | 153,509  |   |               |   | 165,891  |  
|                                                                   |  |                              |          |   |               |   |          |  
|Cash and cash equivalents at end of period                         |  | $                            | 123,647  |   |               | $ | 147,427  |  
|                                                                   |  |                              |          |   |               |   |          |  



6



---

##### Table of Contents

Reconciliation of net income to net cash provided by operating activities:



|                                                                                  |  |                              |        |  |               |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------- | - | ------- | -
|                                                                                  |  | Six months endedDecember 31, |       
|                                                                                  |  | 2010                         |        |  | 2009          |  
|                                                                                  |  |                              |        |  | (As Restated) |  
|Net income                                                                        |  | $                            | 4,064  |  |               | $ | 3,002   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |        |  |               |   |         |  
|Depreciation and amortization                                                     |  |                              | 877    |  |               |   | 965     |  
|(Accretion) and amortization of loan fees and discounts                           |  |                              | 158    |  |               |   | (969    | )
|Loan fees collected and deferred and (premiums paid)                              |  |                              | 42     |  |               |   | (2      | )
|Provision for loan losses                                                         |  |                              | 2,049  |  |               |   | 3,687   |  
|Net writedown on sale of securities                                               |  |                              | 576    |  |               |   | 1,338   |  
|Decrease in accrued interest receivable                                           |  |                              | 369    |  |               |   | 414     |  
|Decrease (increase) in other assets                                               |  |                              | 5,670  |  |               |   | (14,672 | )
|Increase in accrued interest payable                                              |  |                              | 6      |  |               |   | 146     |  
|Increase (decrease) in other liabilities                                          |  |                              | 2,587  |  |               |   | (2,908  | )
|                                                                                  |  |                              |        |  |               |   |         |  
|Total adjustments                                                                 |  |                              | 12,334 |  |               |   | (12,001 | )
|                                                                                  |  |                              |        |  |               |   |         |  
|Net cash provided by (used in) operating activities                               |  | $                            | 16,398 |  |               |   | ($8,999 | )
|                                                                                  |  |                              |        |  |               |   |         |  

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 $4.3 million for the six months ended December 31, 2010 and $2.8 million for the six months ended December 31,
2009, 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.



7



---

##### Table of Contents

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, six months ended December 31, 2010                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | 4,064   |   |  |   | 4,064   |  
|Accumulated other comprehensive income (loss):                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Change in swap liability, net of tax                                                  |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (160     | )                        |  |   |         |   |  |   |         |  
|Change in unrealized gain (loss) on securities, net of deferred tax benefit of ($113) |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | 322      |                          |  |   |         |   |  |   |         |  
|Reclassification adjustment, net of taxes of $263                                     |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (489     | )                        |  |   |         |   |  |   | (327    | )
|                                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Comprehensive income                                                                  |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   | 3,737   |  
|Dividends declared on common stock at $0.02 per share                                 |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | (223    | ) |  |   | (223    | )
|Dividends on preferred stock                                                          |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | (794    | ) |  |   | (794    | )
|Sale of treasury stock to ESOP                                                        |  |                |        |  |             |   |       |                          |  |   | (549          | ) |  |                                            | 971      |   |                  |  |          |                          |  |   |         |   |  |   | 422     |  
|Recognition of stock option compensation expense                                      |  |                |        |  |             |   |       |                          |  |   | 50            |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   | 50      |  
|                                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Balance, December 31, 2010, As Restated                                               |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,235         |   |  |                                            | ($24,222 | ) |                  |  | ($13,740 | )                        |  | $ | 118,295 |   |  | $ | 121,065 |  
|                                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|                                                                                      |  |                |        |  |             |   |      
|                                                                                      |  | 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, six months ended December 31, 2009, As Restated                           |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | 3,002   |   |  |   | 3,002   |  
|Accumulated other comprehensive                                                       |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Income (loss):                                                                        |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Change in swap liability                                                              |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (201     | )                        |  |   |         |   |  |   |         |  
|Change in unrealized gain (loss) on securities, net of deferred tax benefit of $(128) |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (201     | )                        |  |   |         |   |  |   |         |  
|Reclassification adjustment, net of taxes of $(805)                                   |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  | (1,400   | )                        |  |   |         |   |  |   | (1,802  | )
|                                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Comprehensive income                                                                  |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   | 1,200   |  
|Dividends declared on common stock at $0.10 per share                                 |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | (546    | ) |  |   | (546    | )
|Dividends on preferred stock                                                          |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   | (794    | ) |  |   | (794    | )
|Sale of treasury stock to ESOP                                                        |  |                |        |  |             |   |       |                          |  |   | (1,160        | ) |  |                                            | 1,748    |   |                  |  |          |                          |  |   |         |   |  |   | 588     |  
|Recognition of stock option compensation expense                                      |  |                |        |  |             |   |       |                          |  |   | 27            |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   | 27      |  
|                                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  
|Balance, December 31, 2009, As Restated                                               |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,983         |   |  |                                            | ($25,566 | ) |                  |  | ($1,812  | )                        |  | $ | 136,397 |   |  | $ | 150,499 |  
|                                                                                      |  |                |        |  |             |   |       |                          |  |   |               |   |  |                                            |          |   |                  |  |          |                          |  |   |         |   |  |   |         |  



8



---

##### Table of Contents

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 December 31, 2010 and June 30, 2010 and for the three and six months ended
December 31, 2009.

The following tables set forth the consolidated restated financial statements as of December 31,
2010 and June 30, 2010 and for the three and six months ended December 31, 2009 previously filed in the Companys quarterly report on Form 10-Q for the period ended December 31, 2010.



9



---

##### 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 December 31, 2010 and June 30, 2010:

CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION

(Dollar amounts in thousands)



|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | - | ---------- | -- | ------ | ----------- |  | - | ----------- | - |  | ---------- | --------- | - | ----------- | -- | ------ | - |  | - | --------- | -
|                                                                                                                    |  | December 31, |           |   | June 30,   |   
|                                                                                                                    |  | 2010         |           |   |            |    |        | 2010        |  |   | 2010        |   |  |            |           |   | 2010        |   
|                                                                                                                    |  | As Reported  |           |   | Adjustment |    |        | As Restated |  |   | As Reported |   |  | Adjustment |           |   | As Restated |   
|                                                                                                                    |  | (Unaudited)  |           |   |            |    |        | (Unaudited) |  |   |             |   |  |            |           |   |             |   
|Assets                                                                                                              |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Cash and noninterest-earning deposits                                                                               |  | $            | 17,097    |   |            |    |        |             |  | $ | 17,097      |   |  | $          | 17,736    |   |             |    |        |   |  | $ | 17,736    |  
|Federal funds sold                                                                                                  |  |              | 106,550   |   |            |    |        |             |  |   | 106,550     |   |  |            | 135,773   |   |             |    |        |   |  |   | 135,773   |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Cash and cash equivalents                                                                                           |  |              | 123,647   |   |            |    |        |             |  |   | 123,647     |   |  |            | 153,509   |   |             |    |        |   |  |   | 153,509   |  
|Interest-earning deposits in other banks                                                                            |  |              | 3,362     |   |            |    |        |             |  |   | 3,362       |   |  |            | 801       |   |             |    |        |   |  |   | 801       |  
|Investment securities available for sale, at fair value (cost of $5,501 at December 31 and $65,778 at
June 30)      |  |              | 5,245     |   |            |    |        |             |  |   | 5,245       |   |  |            | 65,770    |   |             |    |        |   |  |   | 65,770    |  
|Investment securities held to maturity (fair value of $499,734 at December 31 and $437,931 at June 30)              |  |              | 501,852   |   |            |    |        |             |  |   | 501,852     |   |  |            | 443,452   |   |             |    |        |   |  |   | 443,452   |  
|Federal Home Loan Bank Stock, at cost                                                                               |  |              | 13,640    |   |            |    |        |             |  |   | 13,640      |   |  |            | 14,357    |   |             |    |        |   |  |   | 14,357    |  
|Loans, net of allowance of $19,621 at December 31 and $19,209 at June 30                                            |  |              | 1,017,834 |   |            |    |        |             |  |   | 1,017,834   |   |  |            | 1,032,363 |   |             |    |        |   |  |   | 1,032,363 |  
|Foreclosed real estate, net                                                                                         |  |              | 8,869     |   |            |    |        |             |  |   | 8,869       |   |  |            | 8,637     |   |             |    |        |   |  |   | 8,637     |  
|Office properties and equipment, net                                                                                |  |              | 17,045    |   |            |    |        |             |  |   | 17,045      |   |  |            | 17,374    |   |             |    |        |   |  |   | 17,374    |  
|Goodwill                                                                                                            |  |              | 25,634    |   |            |    |        |             |  |   | 25,634      |   |  |            | 25,634    |   |             |    |        |   |  |   | 25,634    |  
|Intangible assets and deferred charges                                                                              |  |              | 2,422     |   |            |    |        |             |  |   | 2,422       |   |  |            | 2,877     |   |             |    |        |   |  |   | 2,877     |  
|Prepaid expenses and other assets (a)                                                                               |  |              | 71,566    |   |            |    | (1,071 | )           |  |   | 70,495      |   |  |            | 77,606    |   |             |    | (1,071 | ) |  |   | 76,535    |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Total assets                                                                                                        |  | $            | 1,791,116 |   |            | ($ | 1,071  | )           |  | $ | 1,790,045   |   |  | $          | 1,842,380 |   |             | ($ | 1,071  | ) |  | $ | 1,841,309 |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Liabilities and Shareholders Equity                                                                                |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |  
|Liabilities                                                                                                         |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |  
|Deposits                                                                                                            |  | $            | 1,458,571 |   |            |    |        |             |  | $ | 1,458,571   |   |  | $          | 1,488,073 |   |             |    |        |   |  | $ | 1,488,073 |  
|Advances from Federal Home Loan Bank                                                                                |  |              | 165,875   |   |            |    |        |             |  |   | 165,875     |   |  |            | 185,973   |   |             |    |        |   |  |   | 185,973   |  
|Other debt                                                                                                          |  |              | 11,294    |   |            |    |        |             |  |   | 11,294      |   |  |            | 13,865    |   |             |    |        |   |  |   | 13,865    |  
|Term Debt                                                                                                           |  |              | 22,500    |   |            |    |        |             |  |   | 22,500      |   |  |            | 23,750    |   |             |    |        |   |  |   | 23,750    |  
|Advance payments from borrowers for taxes and insurance                                                             |  |              | 6,965     |   |            |    |        |             |  |   | 6,965       |   |  |            | 7,526     |   |             |    |        |   |  |   | 7,526     |  
|Other liabilities                                                                                                   |  |              | 3,775     |   |            |    |        |             |  |   | 3,775       |   |  |            | 4,249     |   |             |    |        |   |  |   | 4,249     |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Total liabilities                                                                                                   |  |              | 1,668,980 |   |            |    |       |             |  |   | 1,668,980   |   |  |            | 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                                                                                          |  |              | 2,235     |   |            |    |        |             |  |   | 2,235       |   |  |            | 2,734     |   |             |    |        |   |  |   | 2,734     |  
|Treasury stock at cost - 1,159,215 shares at December 31 and 1,205,683 shares at June 30                            |  |              | (24,222   | ) |            |    |        |             |  |   | (24,222     | ) |  |            | (25,193   | ) |             |    |        |   |  |   | (25,193   | )
|Accumulated other comprehensive (loss)                                                                              |  |              | (13,740   | ) |            |    |        |             |  |   | (13,740     | ) |  |            | (13,413   | ) |             |    |        |   |  |   | (13,413   | )
|Retained earnings (a)                                                                                               |  |              | 119,366   |   |            |    | (1,071 | )           |  |   | 118,295     |   |  |            | 116,319   |   |             |    | (1,071 | ) |  |   | 115,248   |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Total shareholders equity                                                                                          |  | $            | 122,136   |   |            | ($ | 1,071  | )           |  | $ | 121,065     |   |  | $          | 118,944   |   |             | ($ | 1,071  | ) |  | $ | 117,873   |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  
|Total liabilities and shareholders equity                                                                          |  | $            | 1,791,116 |   |            | ($ | 1,071  | )           |  | $ | 1,790,045   |   |  | $          | 1,842,380 |   |             | ($ | 1,071  | ) |  | $ | 1,841,309 |  
|                                                                                                                    |  |              |           |   |            |    |        |             |  |   |             |   |  |            |           |   |             |    |        |   |  |   |           |  



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



10



---

##### 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 operations for the three and six months ended December 31, 2009:

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except per share data)



|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|------------------------------------------------------------------ |  | ------------------------------- | ------ | - | ----------------------------- | -- | ---- | ---------- |  | - | ---------- | - |  | ---------- | ------ | - | ---------- | -- | ---- | - |  | - | ------ | -
|                                                                   |  | Three months ended December 31, |        |   | Six months ended December 31, |   
|                                                                   |  | 2009                            |        |   |                               |    |      | 2009       |  |   | 2009       |   |  |            |        |   | 2009       |   
|                                                                   |  | AsReported                      |        |   | Adjustment                    |    |      | AsRestated |  |   | AsReported |   |  | Adjustment |        |   | AsRestated |   
|Interest Income:                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Loans                                                              |  | $                               | 14,231 |   |                               |    |      |            |  | $ | 14,231     |   |  | $          | 29,023 |   |            |    |      |   |  | $ | 29,023 |  
|Investments                                                        |  |                                 | 4,964  |   |                               |    |      |            |  |   | 4,964      |   |  |            | 10,096 |   |            |    |      |   |  |   | 10,096 |  
|Federal funds sold                                                 |  |                                 | 105    |   |                               |    |      |            |  |   | 105        |   |  |            | 203    |   |            |    |      |   |  |   | 203    |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Total interest income                                              |  |                                 | 19,300 |   |                               |    |     |            |  |   | 19,300     |   |  |            | 39,322 |   |            |    |     |   |  |   | 39,322 |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Interest Expense:                                                  |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Deposits                                                           |  |                                 | 7,386  |   |                               |    |      |            |  |   | 7,386      |   |  |            | 15,379 |   |            |    |      |   |  |   | 15,379 |  
|Borrowings                                                         |  |                                 | 2,824  |   |                               |    |      |            |  |   | 2,824      |   |  |            | 5,535  |   |            |    |      |   |  |   | 5,535  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Total interest expense                                             |  |                                 | 10,210 |   |                               |    |     |            |  |   | 10,210     |   |  |            | 20,914 |   |            |    |     |   |  |   | 20,914 |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Net interest income                                                |  |                                 | 9,090  |   |                               |    |     |            |  |   | 9,090      |   |  |            | 18,408 |   |            |    |     |   |  |   | 18,408 |  
|Provision for loan losses                                          |  |                                 | 1,398  |   |                               |    |      |            |  |   | 1,398      |   |  |            | 3,687  |   |            |    |      |   |  |   | 3,687  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Net interest income after provision for loan losses                |  |                                 | 7,692  |   |                               |    |     |            |  |   | 7,692      |   |  |            | 14,721 |   |            |    |     |   |  |   | 14,721 |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Noninterest Income:                                                |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Other-than-temporary impairment losses recognized in earnings      |  |                                 | (3,240 | ) |                               |    |      |            |  |   | (3,240     | ) |  |            | (6,001 | ) |            |    |      |   |  |   | (6,001 | )
|Non-credit related losses recognized in other comprehensive income |  |                                 | 2,458  |   |                               |    |      |            |  |   | 2,458      |   |  |            | 2,458  |   |            |    |      |   |  |   | 2,458  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Net impairment losses recognized in earnings                       |  |                                 | (782   | ) |                               |    |      |            |  |   | (782       | ) |  |            | (3,543 | ) |            |    |     |   |  |   | (3,543 | )
|Service charges on deposit accounts                                |  |                                 | 1,615  |   |                               |    |      |            |  |   | 1,615      |   |  |            | 3,267  |   |            |    |      |   |  |   | 3,267  |  
|Other service charges and fees                                     |  |                                 | 359    |   |                               |    |      |            |  |   | 359        |   |  |            | 726    |   |            |    |      |   |  |   | 726    |  
|Net gain on sale of assets                                         |  |                                 | 1,103  |   |                               |    |      |            |  |   | 1,103      |   |  |            | 2,205  |   |            |    |      |   |  |   | 2,205  |  
|Other                                                              |  |                                 | 511    |   |                               |    |      |            |  |   | 511        |   |  |            | 1,054  |   |            |    |      |   |  |   | 1,054  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Total noninterest income                                           |  |                                 | 2,806  |   |                               |    |     |            |  |   | 2,806      |   |  |            | 3,709  |   |            |    |     |   |  |   | 3,709  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Noninterest Expense:                                               |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Compensation and employee benefits                                 |  |                                 | 3,625  |   |                               |    |      |            |  |   | 3,625      |   |  |            | 7,432  |   |            |    |      |   |  |   | 7,432  |  
|Office occupancy                                                   |  |                                 | 1,095  |   |                               |    |      |            |  |   | 1,095      |   |  |            | 2,206  |   |            |    |      |   |  |   | 2,206  |  
|Marketing                                                          |  |                                 | 93     |   |                               |    |      |            |  |   | 93         |   |  |            | 160    |   |            |    |      |   |  |   | 160    |  
|FDIC insurance (a)                                                 |  |                                 | 645    |   |                               |    | 228  |            |  |   | 873        |   |  |            | 1,213  |   |            |    | 428  |   |  |   | 1,641  |  
|Office supplies, telephone and postage                             |  |                                 | 463    |   |                               |    |      |            |  |   | 463        |   |  |            | 933    |   |            |    |      |   |  |   | 933    |  
|Other                                                              |  |                                 | 1,393  |   |                               |    |      |            |  |   | 1,393      |   |  |            | 2,962  |   |            |    |      |   |  |   | 2,962  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Total noninterest expense                                          |  |                                 | 7,314  |   |                               |    | 228  |            |  |   | 7,542      |   |  |            | 14,906 |   |            |    | 428  |   |  |   | 15,334 |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Income before income tax expense                                   |  |                                 | 3,184  |   |                               |    | (228 | )          |  |   | 2,956      |   |  |            | 3,524  |   |            |    | (428 | ) |  |   | 3,096  |  
|Income tax expense (b)                                             |  |                                 | 759    |   |                               |    | (80  | )          |  |   | 679        |   |  |            | 244    |   |            |    | (150 | ) |  |   | 94     |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Net income                                                         |  | $                               | 2,425  |   |                               | ($ | 148  | )          |  | $ | 2,277      |   |  | $          | 3,280  |   |            | ($ | 278  | ) |  | $ | 3,002  |  
|Preferred Stock Dividend                                           |  |                                 | 397    |   |                               |    |      |            |  |   | 397        |   |  |            | 794    |   |            |    |      |   |  |   | 794    |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Income to common stockholders                                      |  | $                               | 2,028  |   |                               | ($ | 148  | )          |  | $ | 1,880      |   |  | $          | 2,486  |   |            | ($ | 278  | ) |  | $ | 2,208  |  
|                                                                   |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Net income per common share:                                       |  |                                 |        |   |                               |    |      |            |  |   |            |   |  |            |        |   |            |    |      |   |  |   |        |  
|Basic                                                              |  | $                               | 0.38   |   |                               | ($ | 0.03 | )          |  | $ | 0.35       |   |  | $          | 0.46   |   |            | ($ | 0.05 | ) |  | $ | 0.41   |  
|Diluted                                                            |  | $                               | 0.38   |   |                               | ($ | 0.03 | )          |  | $ | 0.35       |   |  | $          | 0.46   |   |            | ($ | 0.05 | ) |  | $ | 0.41   |  



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

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



11



---

##### 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 cash flows for the six months ended December 31, 2009:

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)



|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|--------------------------------------------------------------------------------- |  | ---------------------------------- | -------- | - | ------------ | -- | --- | ----------- |  | -- | -------- | -
|                                                                                  |  | Six months ended
December 31, 2009 |         
|                                                                                  |  | As Reported                        |          |   | Adjust-ments |    |     | As Restated | 
|Cash flows from operating activities:                                             |  |                                    |          |   |              |    |     |             |  |    |          |  
|Interest received                                                                 |  | $                                  | 38,828   |   |              |    |     |             |  | $  | 38,828   |  
|Loan fees received                                                                |  |                                    | 182      |   |              |    |     |             |  |    | 182      |  
|Other fees and commissions received                                               |  |                                    | 4,490    |   |              |    |     |             |  |    | 4,490    |  
|Interest paid                                                                     |  |                                    | (20,882  | ) |              |    |     |             |  |    | (20,882  | )
|Cash paid to suppliers and others                                                 |  |                                    | (31,617  | ) |              |    |     |             |  |    | (31,617  | )
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net cash (used in) operating activities                                           |  |                                    | (8,999   | ) |              |    |    |             |  |    | (8,999   | )
|Cash flows from investing activities:                                             |  |                                    |          |   |              |    |     |             |  |    |          |  
|Proceeds from sales of investment securities available for sale                   |  |                                    | 2,192    |   |              |    |     |             |  |    | 2,192    |  
|Proceeds from maturities of investment securities held to maturity                |  |                                    | 180,056  |   |              |    |     |             |  |    | 180,056  |  
|Purchase of investment securities held to maturity                                |  |                                    | (256,644 | ) |              |    |     |             |  |    | (256,644 | )
|Maturity of deposits in other banks                                               |  |                                    | 3,307    |   |              |    |     |             |  |    | 3,307    |  
|Loans sales                                                                       |  |                                    | 7,527    |   |              |    |     |             |  |    | 7,527    |  
|Principal collected on loans                                                      |  |                                    | 135,861  |   |              |    |     |             |  |    | 135,861  |  
|Loans made to customers, net of loans in process                                  |  |                                    | (91,292  | ) |              |    |     |             |  |    | (91,292  | )
|Other                                                                             |  |                                    | (149     | ) |              |    |     |             |  |    | (149     | )
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net cash (used in) investing activities                                           |  |                                    | (19,142  | ) |              |    |    |             |  |    | (19,142  | )
|Cash flows from financing activities:                                             |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net increase in checking and savings accounts                                     |  |                                    | 51,673   |   |              |    |     |             |  |    | 51,673   |  
|Net (decrease) in certificates of deposit                                         |  |                                    | (34,779  | ) |              |    |     |             |  |    | (34,779  | )
|Repayment of FHLB advances                                                        |  |                                    | (13      | ) |              |    |     |             |  |    | (13      | )
|Net (decrease) in other borrowings                                                |  |                                    | (5,776   | ) |              |    |     |             |  |    | (5,776   | )
|Net (decrease) in borrowers advances for taxes and insurance                     |  |                                    | (680     | ) |              |    |     |             |  |    | (680     | )
|Dividends paid                                                                    |  |                                    | (1,336   | ) |              |    |     |             |  |    | (1,336   | )
|Contribution to benefit plans                                                     |  |                                    | 588      |   |              |    |     |             |  |    | 588      |  
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net cash provided by financing activities                                         |  |                                    | 9,677    |   |              |    |    |             |  |    | 9,677    |  
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net (decrease) in cash and cash equivalents                                       |  |                                    | (18,464  | ) |              |    |    |             |  |    | (18,464  | )
|Cash and cash equivalents at beginning of period                                  |  |                                    | 165,891  |   |              |    |     |             |  |    | 165,891  |  
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Cash and cash equivalents at end of period                                        |  | $                                  | 147,427  |   |              | $  |    |             |  | $  | 147,427  |  
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Reconciliation of net income to net cash provided by operating activities:        |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net income                                                                        |  | $                                  | 3,280    |   |              | ($ | 278 | )           |  | $  | 3,002    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                    |          |   |              |    |     |             |  |    |          |  
|Depreciation and amortization                                                     |  |                                    | 965      |   |              |    |     |             |  |    | 965      |  
|(Accretion) and amortization of loan fees and discounts                           |  |                                    | (969     | ) |              |    |     |             |  |    | (969     | )
|Loan fees collected and deferred and (premiums paid)                              |  |                                    | (2       | ) |              |    |     |             |  |    | (2       | )
|Provision for loan losses                                                         |  |                                    | 3,687    |   |              |    |     |             |  |    | 3,687    |  
|Net writedown on sale of securities                                               |  |                                    | 1,338    |   |              |    |     |             |  |    | 1,338    |  
|Decrease in accrued interest receivable                                           |  |                                    | 414      |   |              |    |     |             |  |    | 414      |  
|Decrease (increase) in other assets                                               |  |                                    | (14,950  | ) |              |    | 278 |             |  |    | (14,672  | )
|Increase in accrued interest payable                                              |  |                                    | 146      |   |              |    |     |             |  |    | 146      |  
|Increase (decrease) in other liabilities                                          |  |                                    | (2,908   | ) |              |    |     |             |  |    | (2,908   | )
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Total adjustments                                                                 |  |                                    | (12,279  | ) |              |    | 278 |             |  |    | (12,001  | )
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  
|Net cash (used in) operating activities                                           |  | ($                                 | 8,999    | ) |              | $  |    |             |  | ($ | 8,999    | )
|                                                                                  |  |                                    |          |   |              |    |     |             |  |    |          |  



12



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following table presents a reconciliation of the effects of adjustments made to the
Companys previously reported consolidated statements of shareholders equity for 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 December 31, 2009, As Reported |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,983         |  |  | ($                                         | 25,566 | ) |                  | ($ | 1,812  | )                        |  | $ | 137,411 |   |  | $ | 151,513 |  
|Restatement Adjustments:                  |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |        |   |                  |    |        |                          |  |   |         |   |  |   |         |  
|Net income                                |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |        |   |                  |    |        |                          |  |   | (278    | ) |  |   | (278    | )
|Cumulative effect of restatement          |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |        |   |                  |    |        |                          |  |   | (736    | ) |  |   | (736    | )
|Balance at December 31, 2009, As Restated |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,983         |  |  | ($                                         | 25,566 | ) |                  | ($ | 1,812  | )                        |  | $ | 136,397 |   |  | $ | 150,499 |  
|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 December 31, 2010, As Reported |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,235         |  |  | ($                                         | 24,222 | ) |                  | ($ | 13,740 | )                        |  | $ | 119,366 |   |  | $ | 122,136 |  
|Restatement Adjustments:                  |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |        |   |                  |    |        |                          |  |   |         |   |  |   |         |  
|Cumulative effect of restatement          |  |                |        |  |             |   |       |                          |  |   |               |  |  |                                            |        |   |                  |    |        |                          |  |   | (1,071  | ) |  |   | (1,071  | )
|Balance at December 31, 2010, As Restated |  | $              | 31,762 |  |             | $ | 6,735 |                          |  | $ | 2,235         |  |  | ($                                         | 24,222 | ) |                  | ($ | 13,740 | )                        |  | $ | 118,295 |   |  | $ | 121,065 |  



13



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



NOTE 2. STATEMENTS OF OPERATIONS

The statements of operations for the six months ended December 31, 2010 and 2009 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 six months ended December 31, 2010 are not necessarily
indicative of the results that may be expected for 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s 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
December 31, 2010 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:



|                                            |  |                   |           |   |               |   |           |  
|------------------------------------------- |  | ----------------- | --------- | - | ------------- | - | --------- | -
|                                            |  | December 31, 2010 |           |   | June 30, 2010 |  
|Mortgage loans:                             |  |                   |           |   |               |   |           |  
|1-4 Family                                  |  | $                 | 646,988   |   |               | $ | 660,685   |  
|Commercial                                  |  |                   | 164,373   |   |               |   | 159,991   |  
|                                            |  |                   |           |   |               |   |           |  
|                                            |  |                   | 811,361   |   |               |   | 820,676   |  
|Consumer loans:                             |  |                   |           |   |               |   |           |  
|Home Equity                                 |  |                   | 146,724   |   |               |   | 147,567   |  
|Automobile                                  |  |                   | 30,128    |   |               |   | 34,817    |  
|Other Consumer                              |  |                   | 9,249     |   |               |   | 7,250     |  
|                                            |  |                   |           |   |               |   |           |  
|                                            |  |                   | 186,101   |   |               |   | 189,634   |  
|Commercial business loans                   |  |                   | 39,055    |   |               |   | 40,445    |  
|                                            |  |                   |           |   |               |   |           |  
|Total gross loans                           |  |                   | 1,036,517 |   |               |   | 1,050,755 |  
|Less: Loans in process                      |  |                   | 2         |   |               |   | 135       |  
|Allowance for loan losses                   |  |                   | 19,621    |   |               |   | 19,209    |  
|Unamortized premiums and deferred loan fees |  |                   | (940      | ) |               |   | (952      | )
|                                            |  |                   |           |   |               |   |           |  
|Loans, net                                  |  | $                 | 1,017,834 |   |               | $ | 1,032,363 |  
|                                            |  |                   |           |   |               |   |           |  



14



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



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 the three classes, home equity loans, automobile loans and other loans. The commercial segment consists 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 Company 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 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 Company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 Company 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.



15



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



Loans whose terms are modified are classified as troubled debt restructurings if the Company 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.

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%, 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 Company 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 Company generally contain a due on sale clause allowing the Company to declare the unpaid principal balance due and payable upon
the sale of the security property. The Company 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 Company currently originates most of its consumer loans in its primary market area and surrounding areas. The
Company originates consumer loans primarily on a direct basis. Consumer loans generally have higher interest rates and shorter terms



16



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



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 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 professional 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.

Nonaccrual, substandard and doubtful loans are assessed for impairment.
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 Companys internal risk rating system as of
December 31, 2010:



|                          |  |      |           |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|------------------------- |  | ---- | --------- |  | -------------- | - | ----- | ----------- |  | - | -------- |  |  | ----- | -- |  |  | - | --------- | 
|                          |  | Pass |           |  | SpecialMention |   |       | Substandard |  |   | Doubtful |  |  | Total |   
|Mortgage loans:           |  |      |           |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|1-4 family                |  | $    | 621,311   |  |                | $ | 3,772 |             |  | $ | 21,905   |  |  | $     |   |  |  | $ | 646,988   | 
|Commercial                |  |      | 160,559   |  |                |   | 447   |             |  |   | 3,367    |  |  |       |   |  |  |   | 164,373   | 
|Lease Financing           |  |      |          |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |          | 
|Home equity               |  |      |          |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |          | 
|Consumer - credit card    |  |      |          |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |          | 
|Consumer loans:           |  |      |           |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|Home Equity               |  |      | 145,673   |  |                |   |      |             |  |   | 1,051    |  |  |       |   |  |  |   | 146,724   | 
|Automobile                |  |      | 29,876    |  |                |   |      |             |  |   | 252      |  |  |       |   |  |  |   | 30,128    | 
|Other Consumer            |  |      | 9,227     |  |                |   |      |             |  |   |         |  |  |       | 22 |  |  |   | 9,249     | 
|Commercial business loans |  |      | 34,659    |  |                |   | 11    |             |  |   | 4,385    |  |  |       |   |  |  |   | 39,055    | 
|                          |  |      |           |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 
|Total                     |  | $    | 1,001,305 |  |                | $ | 4,230 |             |  | $ | 30,960   |  |  | $     | 22 |  |  | $ | 1,036,517 | 
|                          |  |      |           |  |                |   |       |             |  |   |          |  |  |       |    |  |  |   |           | 

Pass-rated loans consist of facilities which 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 sound net worth and paying capacity of the obligor or of the collateral pledged,



17



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



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 December 31, 2010:



|                                      |  |   |        | 
|------------------------------------- |  | - | ------ | 
|Mortgage loans:                       |  |   |        | 
|1-4 family                            |  | $ | 21,905 | 
|Commercial                            |  |   | 796    | 
|Consumer loans:                       |  |   |        | 
|Home Equity                           |  |   | 751    | 
|Automobile                            |  |   | 190    | 
|Commercial real estate - construction |  |   |        | 
|Lease Financing                       |  |   |        | 
|Other Consumer                        |  |   | 22     | 
|Commercial business loans             |  |   | 3,046  | 
|                                      |  |   |        | 
|Total                                 |  | $ | 26,710 | 
|                                      |  |   |        | 

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 December 31,
2010:



|                                    |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|----------------------------------- |  | ---------------------- | ------ |  | ---------------------- | - | ------ | ---------------- |  | - | ------------------------- |  |  | ------------------------- | ------ |  |  | - | --- | 
|                                    |  | Net RecordedInvestment |        |  | UnpaidPrincipalBalance |   |        | RelatedAllowance |  |   | AverageRecordedInvestment |  |  | Interest IncomeRecognized |       
|With no related allowance recorded: |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Mortgage loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|1-4 family                          |  | $                      | 19,454 |  |                        | $ | 19,454 |                  |  | $ |                          |  |  | $                         | 19,167 |  |  | $ | 246 | 
|Commercial                          |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Consumer loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Home Equity                         |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Automobile                          |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Other Consumer                      |  |                        |       |  |                        |   |       |                  |  |   |                          |  |  |                           |       |  |  |   |    | 
|Commercial business loans           |  |                        | 2,672  |  |                        |   | 2,672  |                  |  |   |                          |  |  |                           | 2,672  |  |  |   |    | 
|With an allowance recorded:         |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Mortgage loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|1-4 family                          |  | $                      | 10,232 |  |                        | $ | 15,710 |                  |  | $ | 5,478                     |  |  | $                         | 10,371 |  |  | $ |    | 
|Commercial                          |  |                        | 1,336  |  |                        |   | 1,861  |                  |  |   | 525                       |  |  |                           | 1,429  |  |  |   | 14  | 
|Consumer loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Home Equity                         |  |                        | 415    |  |                        |   | 591    |                  |  |   | 176                       |  |  |                           | 121    |  |  |   |    | 
|Automobile                          |  |                        | 155    |  |                        |   | 284    |                  |  |   | 129                       |  |  |                           | 125    |  |  |   |    | 
|Other Consumer                      |  |                        |       |  |                        |   | 18     |                  |  |   | 18                        |  |  |                           |       |  |  |   |    | 
|Commercial business loans           |  |                        |       |  |                        |   | 49     |                  |  |   | 49                        |  |  |                           |       |  |  |   |    | 
|Total:                              |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Mortgage loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|1-4 family                          |  | $                      | 29,686 |  |                        | $ | 35,164 |                  |  | $ | 5,478                     |  |  | $                         | 29,538 |  |  | $ | 246 | 
|Commercial                          |  |                        | 1,336  |  |                        |   | 1,861  |                  |  |   | 525                       |  |  |                           | 1,429  |  |  |   | 14  | 
|Consumer loans:                     |  |                        |        |  |                        |   |        |                  |  |   |                           |  |  |                           |        |  |  |   |     | 
|Home Equity                         |  |                        | 415    |  |                        |   | 591    |                  |  |   | 176                       |  |  |                           | 121    |  |  |   |    | 
|Automobile                          |  |                        | 155    |  |                        |   | 284    |                  |  |   | 129                       |  |  |                           | 125    |  |  |   |    | 
|Other Consumer                      |  |                        |       |  |                        |   | 18     |                  |  |   | 18                        |  |  |                           |       |  |  |   |    | 
|Commercial business loans           |  |                        | 2,672  |  |                        |   | 2,721  |                  |  |   | 49                        |  |  |                           | 2,672  |  |  |   |    | 



18



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



At December 31, 2010, modifications have been performed at market terms on 125 loans totaling
$19,454 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 December 31, 2010, are included in the reported $22,126 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 December 31, 2010:



|                                      |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|------------------------------------- |  | ------------------ | ----- |  | ----------------- | - | ----- | ------------------ |  | - | ------------ |  |  | ------- | ------ |  | ---------------------- | - | ------- | ------------------------------------ |  | - | --------- |  |  | - | - | 
|                                      |  | 30-59 DaysPast Due |       |  | 60-89DaysPast Due |   |       | Greaterthan90 Days |  |   | TotalPastDue |  |  | Current |        |  | Total LoansReceivables |   |         | LoansReceivable> 90 Daysand Accruing | 
|Mortgage loans:                       |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|1-4 family                            |  | $                  | 5,428 |  |                   | $ | 4,601 |                    |  | $ | 26,675       |  |  | $       | 36,704 |  |                        | $ | 573,580 |                                      |  | $ | 646,988   |  |  | $ |  | 
|Commercial                            |  |                    | 922   |  |                   |   | 201   |                    |  |   | 1,393        |  |  |         | 2,516  |  |                        |   | 159,341 |                                      |  |   | 164,373   |  |  |   |  | 
|Commercial real estate - construction |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Lease Financing                       |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Home equity                           |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Consumer - credit card                |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Consumer loans:                       |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Home Equity                           |  |                    | 851   |  |                   |   | 200   |                    |  |   | 812          |  |  |         | 1,863  |  |                        |   | 142,998 |                                      |  |   | 146,724   |  |  |   |  | 
|Automobile                            |  |                    | 383   |  |                   |   | 78    |                    |  |   | 276          |  |  |         | 737    |  |                        |   | 28,654  |                                      |  |   | 30,128    |  |  |   |  | 
|Other Consumer                        |  |                    | 17    |  |                   |   | 5     |                    |  |   | 14           |  |  |         | 36     |  |                        |   | 9,177   |                                      |  |   | 9,249     |  |  |   |  | 
|Commercial business loans             |  |                    | 330   |  |                   |   | 27    |                    |  |   | 3,096        |  |  |         | 3,453  |  |                        |   | 32,149  |                                      |  |   | 39,055    |  |  |   |  | 
|                                      |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 
|Total                                 |  | $                  | 7,931 |  |                   | $ | 5,112 |                    |  | $ | 32,266       |  |  | $       | 45,309 |  |                        | $ | 945,899 |                                      |  | $ | 1,036,517 |  |  | $ |  | 
|                                      |  |                    |       |  |                   |   |       |                    |  |   |              |  |  |         |        |  |                        |   |         |                                      |  |   |           |  |  |   |   | 

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.



19



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The following summarizes the allowance for loan loss activity for the six month period ended
December 31:



|                                                               |  |      |        |   |      |   |        |  
|-------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                               |  | 2010 |        |   | 2009 |  
|Beginning balance                                              |  | $    | 19,209 |   |      | $ | 17,960 |  
|Provision for losses - mortgage loans                          |  |      | 2,004  |   |      |   | 3,616  |  
|Provision for losses - consumer loans                          |  |      | 49     |   |      |   | 74     |  
|Provision for (recovery of) losses - commercial business loans |  |      | (4     | ) |      |   | (3     | )
|Loans recovered                                                |  |      | 43     |   |      |   | 25     |  
|Loans charged off                                              |  |      | (1,680 | ) |      |   | (2,789 | )
|                                                               |  |      |        |   |      |   |        |  
|Ending balance                                                 |  | $    | 19,621 |   |      | $ | 18,883 |  
|                                                               |  |      |        |   |      |   |        |  

The following table presents the Allowance for Loan Losses and Recorded Investment in Financing Receivables at
December 31, 2010:



|                                                                |  |                    |         |  |                    |   |         |            |  |   |            |  |  |               |        |  |                         |   |       |       |  |   |        |  |  |   |           | 
|--------------------------------------------------------------- |  | ------------------ | ------- |  | ------------------ | - | ------- | ---------- |  | - | ---------- |  |  | ------------- | ------ |  | ----------------------- | - | ----- | ----- |  | - | ------ |  |  | - | --------- | 
|                                                                |  | 1-4 familyMortgage |         |  | CommercialMortgage |   |         | HomeEquity |  |   | Automobile |  |  | OtherConsumer |        |  | CommercialBusinessLoans |   |       | Total | 
|Allowance for Loan Losses:                                      |  |                    |         |  |                    |   |         |            |  |   |            |  |  |               |        |  |                         |   |       |       |  |   |        |  |  |   |           | 
|Balance at December 31, 2010                                    |  | $                  | 10,508  |  |                    | $ | 3,741   |            |  | $ | 2,199      |  |  | $             | 852    |  |                         | $ | 44    |       |  | $ | 2,277  |  |  | $ | 19,621    | 
|Ending balance: individually evaluated for impairment           |  | $                  | 5,478   |  |                    | $ | 525     |            |  | $ | 176        |  |  | $             | 129    |  |                         | $ | 18    |       |  | $ | 49     |  |  | $ | 6,375     | 
|Ending balance: collectively evaluated for impairment           |  | $                  | 5,030   |  |                    | $ | 3,216   |            |  | $ | 2,023      |  |  | $             | 723    |  |                         | $ | 26    |       |  | $ | 2,228  |  |  | $ | 13,246    | 
|Ending balance: loans acquired with deteriorated credit quality |  | $                  |        |  |                    | $ |        |            |  | $ |           |  |  | $             |       |  |                         | $ |      |       |  | $ |       |  |  | $ |          | 
|Recorded Investment:                                            |  |                    |         |  |                    |   |         |            |  |   |            |  |  |               |        |  |                         |   |       |       |  |   |        |  |  |   |           | 
|Ending balance                                                  |  | $                  | 646,988 |  |                    | $ | 164,373 |            |  | $ | 146,724    |  |  | $             | 30,128 |  |                         | $ | 9,249 |       |  | $ | 39,055 |  |  | $ | 1,036,517 | 
|Ending balance: individually evaluated for impairment           |  | $                  | 35,164  |  |                    | $ | 1,861   |            |  | $ | 591        |  |  | $             | 284    |  |                         | $ | 18    |       |  | $ | 2,721  |  |  | $ | 40,639    | 
|Ending balance: collectively evaluated for impairment           |  | $                  | 611,824 |  |                    | $ | 162,512 |            |  | $ | 146,133    |  |  | $             | 29,844 |  |                         | $ | 9,231 |       |  | $ | 36,334 |  |  | $ | 995,878   | 

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 six months ended December 31, 2010 and 2009, total comprehensive income amounted to $3,737 and $1,200, respectively.



20



---

##### Table of Contents

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 December 31, 2010 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



|                                |  |                   |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 
|------------------------------- |  | ----------------- | - |  | ------------- | - | ----- | --------- |  | - | ----- |  |  | ------- | ----- |  | -------- | - | --- | --------- |  | - | ------ |  |  | - | - |  |  | - | ------ | 
|                                |  | December 31, 2010 |   |  | 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     |  |                   |  |  |               |   | 5,244 |           |  |   |      |  |  |         | 5,244 |  |          |   |    |           |  |   | 5,284  |  |  |   |  |  |  |   | 5,284  | 
|Interest rate swaps             |  |                   |  |  |               |   | 515   |           |  |   |      |  |  |         | 515   |  |          |   |    |           |  |   | 494    |  |  |   |  |  |  |   | 494    | 
|                                |  |                   |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 
|Total                           |  | $                 | 1 |  |               | $ | 5,759 |           |  | $ |      |  |  | $       | 5,760 |  |          | $ | 682 |           |  | $ | 65,582 |  |  | $ |  |  |  | $ | 66,264 | 
|                                |  |                   |   |  |               |   |       |           |  |   |       |  |  |         |       |  |          |   |     |           |  |   |        |  |  |   |   |  |  |   |        | 



21



---

##### Table of Contents

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 December 31, 2010. 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 |  |         |  |  |          |  |      |           |  | $ | 10,521 |  |  | $ | 10,521 | 
|Impaired loans                                                                         |  |         |  |  |          |  |      |           |  |   | 12,138 |  |  |   | 12,138 | 
|Impaired foreclosed real estate                                                        |  |         |  |  |          |  | 3,847 |           |  |   |       |  |  |   | 3,847  | 

The carrying value of impaired loans was $18,513 with an allowance for loss of $6,375 at December 31, 2010. The
carrying value of the foreclosed real estate was $4,744 with an allowance of $897 at December 31, 2010, and the charge to earnings during the December 31, 2010 quarter related to impaired foreclosed real estate was $248.

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:



22



---

##### Table of Contents

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 December 31, 2010 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.



23



---

##### Table of Contents

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:



|                                            |  |                   |           |   |               |   |           |            |  |   |               |  |  |   |           | 
|------------------------------------------- |  | ----------------- | --------- | - | ------------- | - | --------- | ---------- |  | - | ------------- |  |  | - | --------- | 
|                                            |  | December 31, 2010 |           |   | June 30, 2010 |  
|                                            |  | Fair Value        |           |   | CarryingValue |   |           | Fair Value |  |   | CarryingValue | 
|Financial Assets:                           |  |                   |           |   |               |   |           |            |  |   |               |  |  |   |           | 
|Cash and non-interest-earning deposits      |  | $                 | 17,097    |   |               | $ | 17,097    |            |  | $ | 17,736        |  |  | $ | 17,736    | 
|Federal funds sold                          |  |                   | 106,550   |   |               |   | 106,550   |            |  |   | 135,773       |  |  |   | 135,773   | 
|Interest-earning deposits in other banks    |  |                   | 3,362     |   |               |   | 3,362     |            |  |   | 801           |  |  |   | 801       | 
|Investment securities available for sale    |  |                   | 5,245     |   |               |   | 5,245     |            |  |   | 65,770        |  |  |   | 65,770    | 
|Investment securities held to maturity      |  |                   | 499,734   |   |               |   | 501,852   |            |  |   | 437,931       |  |  |   | 443,452   | 
|FHLB stock                                  |  |                   | 13,640    |   |               |   | 13,640    |            |  |   | 14,357        |  |  |   | 14,357    | 
|Loans receivable                            |  |                   | 1,065,430 |   |               |   | 1,036,517 |            |  |   | 1,087,009     |  |  |   | 1,050,755 | 
|Accrued interest receivable                 |  |                   | 5,828     |   |               |   | 5,828     |            |  |   | 7,409         |  |  |   | 7,409     | 
|Cash surrender value of BOLI                |  |                   | 25,834    |   |               |   | 25,834    |            |  |   | 25,288        |  |  |   | 25,288    | 
|Financial Liabilities:                      |  |                   |           |   |               |   |           |            |  |   |               |  |  |   |           | 
|Checking, savings and money market accounts |  | $                 | 707,924   |   |               | $ | 707,924   |            |  | $ | 696,364       |  |  | $ | 696,364   | 
|Certificates of deposit                     |  |                   | 775,208   |   |               |   | 750,647   |            |  |   | 812,339       |  |  |   | 791,709   | 
|Advances from Federal Home Loan Bank        |  |                   | 183,850   |   |               |   | 165,875   |            |  |   | 204,699       |  |  |   | 185,973   | 
|Term debt                                   |  |                   | 23,015    |   |               |   | 22,500    |            |  |   | 24,244        |  |  |   | 23,750    | 
|Other debt                                  |  |                   | 10,717    |   |               |   | 11,294    |            |  |   | 13,156        |  |  |   | 13,865    | 
|Interest rate swap                          |  |                   | 515       |   |               |   | 515       |            |  |   | 494           |  |  |   | 494       | 
|Accrued interest payable                    |  |                   | 909       |   |               |   | 909       |            |  |   | 902           |  |  |   | 902       | 
|Off-balance sheet loan instruments          |  |                   | ($16      | ) |               | $ |          |            |  | $ | 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.



24



---

##### Table of Contents

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 December 31, 2010 and December 31, 2009
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.

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 $13,640 at December 31, 2010 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.



25



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



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 December 31, 2010 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.

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



|                                                    |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|--------------------------------------------------- |  | ----------------- | ------- |  | ------------- | - | ------- | -------------- |  | - | ---------- |  |  | - | ------- | 
|                                                    |  | December 31, 2010 |         |  | 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   |  |               |   | 5,244   |                |  |   | 5,500      |  |  |   | 5,284   | 
|Common equities                                     |  |                   | 1       |  |               |   | 1       |                |  |   | 474        |  |  |   | 682     | 
|                                                    |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Total available for sale investments                |  | $                 | 5,501   |  |               | $ | 5,245   |                |  | $ | 65,778     |  |  | $ | 65,770  | 
|                                                    |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|                                                    |  |                  
|                                                    |  | December 31, 2010 |         |  | June 30, 2010 |  
|                                                    |  | Amortized Cost    |         |  | Fair Value    |   |         | Amortized Cost |  |   | Fair Value | 
|Held to Maturity Investments                        |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|U.S. Government and agency obligations              |  | $                 | 158,440 |  |               | $ | 158,785 |                |  | $ | 194,248    |  |  | $ | 195,920 | 
|Municipal obligations                               |  |                   | 25,743  |  |               |   | 26,044  |                |  |   | 21,641     |  |  |   | 22,345  | 
|Corporate debt:                                     |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Short to medium term corporate debt                 |  |                   | 33,121  |  |               |   | 34,101  |                |  |   | 27,112     |  |  |   | 28,352  | 
|Pooled trust preferred securities                   |  |                   | 21,204  |  |               |   | 19,026  |                |  |   | 24,229     |  |  |   | 16,849  | 
|Individual trust preferred securities               |  |                   | 9,334   |  |               |   | 8,045   |                |  |   | 9,322      |  |  |   | 7,977   | 
|Mortgage-backed securities:                         |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Agency                                              |  |                   | 182,195 |  |               |   | 183,147 |                |  |   | 93,248     |  |  |   | 95,055  | 
|Agency Collateralized Mortgage Obligations (CMOs) |  |                   | 8,737   |  |               |   | 8,931   |                |  |   | 10,357     |  |  |   | 10,630  | 
|CMOs  non agency                                   |  |                   | 63,078  |  |               |   | 61,655  |                |  |   | 63,295     |  |  |   | 60,803  | 
|                                                    |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 
|Total held to maturity investments                  |  | $                 | 501,852 |  |               | $ | 499,734 |                |  | $ | 443,452    |  |  | $ | 437,931 | 
|                                                    |  |                   |         |  |               |   |         |                |  |   |            |  |  |   |         | 



26



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



The amortized cost and fair value of debt securities at December 31, 2010, 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                |  | $             | 25,558  |  |            | $ | 25,823  | 
|Due after one year through five years  |  |               | 122,049 |  |            |   | 123,835 | 
|Due after five years through ten years |  |               | 93,976  |  |            |   | 93,513  | 
|Due after ten years                    |  |               | 260,269 |  |            |   | 256,563 | 
|                                       |  |               |         |  |            |   |         | 
|Total debt securities                  |  | $             | 501,852 |  |            | $ | 499,734 | 
|                                       |  |               |         |  |            |   |         | 

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 ASC 820 for Level III (see Fair Value Note) assets as active markets did not exist at December 31, 2010 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.

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 December 31, 2010:



|                                       |  |                                         |         |  |                                            |   |       |           |  |   |                |  |  |            |       |  |                |   |         |  |  |   |        | 
|-------------------------------------- |  | --------------------------------------- | ------- |  | ------------------------------------------ | - | ----- | --------- |  | - | -------------- |  |  | ---------- | ----- |  | -------------- | - | ------- |  |  | - | ------ | 
|                                       |  | Less than 12 monthsof unrealized losses |         |  | Greater than 12 monthsof unrealized losses |   |       | Total     | 
|                                       |  | Fair Value                              |         |  | Unrealizedloss                             |   |       | FairValue |  |   | Unrealizedloss |  |  | Fair Value |       |  | Unrealizedloss |  
|Available for Sale Investments         |  |                                         |         |  |                                            |   |       |           |  |   |                |  |  |            |       |  |                |   |         |  |  |   |        | 
|Mutual funds  ARM mortgages           |  | $                                       |        |  |                                            | $ |      |           |  | $ | 4,728          |  |  | $          | 272   |  |                | $ | 4,728   |  |  | $ | 272    | 
|Held to Maturity Investments           |  |                                         |         |  |                                            |   |       |           |  |   |                |  |  |            |       |  |                |   |         |  |  |   |        | 
|U.S. Government and agency obligations |  |                                         | 61,941  |  |                                            |   | 742   |           |  |   |               |  |  |            |      |  |                |   | 61,941  |  |  |   | 742    | 
|Municipal obligations                  |  |                                         | 11,604  |  |                                            |   | 201   |           |  |   |               |  |  |            |      |  |                |   | 11,604  |  |  |   | 201    | 
|Corporate debt                         |  |                                         | 9,161   |  |                                            |   | 98    |           |  |   |               |  |  |            |      |  |                |   | 9,161   |  |  |   | 98     | 
|Pooled trust preferred securities      |  |                                         |        |  |                                            |   |      |           |  |   | 8,505          |  |  |            | 4,465 |  |                |   | 8,505   |  |  |   | 4,465  | 
|Individual trust preferred securities  |  |                                         |        |  |                                            |   |      |           |  |   | 4,689          |  |  |            | 1,435 |  |                |   | 4,689   |  |  |   | 1,435  | 
|Non agency CMOs                       |  |                                         | 146     |  |                                            |   | 21    |           |  |   | 24,110         |  |  |            | 3,455 |  |                |   | 24,256  |  |  |   | 3,476  | 
|Mortgage-backed securities             |  |                                         | 96,993  |  |                                            |   | 1,094 |           |  |   | 8              |  |  |            | 1     |  |                |   | 97,001  |  |  |   | 1,095  | 
|                                       |  |                                         |         |  |                                            |   |       |           |  |   |                |  |  |            |       |  |                |   |         |  |  |   |        | 
|Totals                                 |  | $                                       | 179,845 |  |                                            | $ | 2,156 |           |  | $ | 42,040         |  |  | $          | 9,628 |  |                | $ | 221,885 |  |  | $ | 11,784 | 
|                                       |  |                                         |         |  |                                            |   |       |           |  |   |                |  |  |            |       |  |                |   |         |  |  |   |        | 

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:



27



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



|                                       |  |                                         |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 
|-------------------------------------- |  | --------------------------------------- | ------ |  | ------------------------------------------ | - | -- | ---------- |  | - | -------------- |  |  | ---------- | ------ |  | -------------- | - | ------ |  |  | - | ------ | 
|                                       |  | Less than 12 monthsof unrealized losses |        |  | Greater than 12 monthsof unrealized losses |   |    | Total      | 
|                                       |  | FairValue                               |        |  | 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 | 
|                                       |  |                                         |        |  |                                            |   |    |            |  |   |                |  |  |            |        |  |                |   |        |  |  |   |        | 

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 December 31, 2010. The larger of the two investments, which
had a fair value of $4,728 at December 31, 2010, has had an unrealized loss in excess of one year of $272 and $240 at December 31, 2010 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 December 31, 2010.

Common Equities.
At December 31, 2010, Parkvale had investments in three different common equities, which had an aggregate amortized cost of $1 and an aggregate fair value of $1 at December 31, 2010 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 December 31, 2010, the $158,785 fair value of Parkvales investments in U.S. Government and Agency obligations was greater than the $158,440
book value of such investments. Certain of these investments show unrealized losses of less than one year of $742 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.



28



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



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 December 31, 2010. All of these investments are classified as held to maturity.

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. The following provides additional information for each of these variables.



| |  |  | Estimate of future cash flows - cash flows are constructed on Intex software. Intex is a proprietary software program recognized as the industry
standard for analyzing all types of collateralized debt obligations. It includes each deals structural features updated with information from trustee reports, including collateral/hedge agreement/cash flow detail, as it becomes available. A
present value analysis is then performed on the modeled cash flows to determine any cash flow shortages to Parkvales respective holdings, if any.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Credit analysis - A quarterly credit evaluation is performed for each of the issuers comprising the collateral across the various pooled trust
preferred securities. The credit evaluation considers all evidence available and includes the nature of the issuers business and geographic footprint. The analysis focuses on shareholders equity, loan loss reserves, non-performing
assets, credit quality ratios and capital adequacy.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Probability of default - A probability of default is determined for each issuer and is used to calculate the expected impact of future deferrals and
defaults in the expected cash flow analysis. Each issuer in the collateral pool is assigned a probability of default with an emphasis on near term probability. Issuers currently defaulted or deferring are assigned a 100% probability of loss, and
issuers currently deferring are assigned a 20% probability of recovery. All other issuers in the pool are assigned a probability of loss ranging from .36% to 100%, with ranges based upon the results of the credit analysis. The probability of loss of
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



29



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



| | ..36% is assigned to only the strongest financial institutions. The probability of default is updated quarterly with data provided by trustees and other sources.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

Managements estimates of discounted cash flows used to evaluate other-than-temporary impairment of pooled trust-preferred securities were based on
assumptions regarding the timing and amounts of deferrals and defaults that may occur based upon a credit analysis of each issuer, and changes in those assumptions could produce different conclusions for each security. 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 December 31, 2010, the 16 pooled trust preferred
securities have an amortized cost basis of $21,204 and an estimated fair value of $19,026, while the single-issuer trust preferred securities have an amortized cost basis of $9,334 and an estimated fair value of $8,045. The net unrealized losses on
the trust preferred securities at December 31, 2010, which aggregated $2,178 on the pooled securities and $1,289 on the individual securities, are attributable to temporary illiquidity and the uncertainty affecting these markets, as well as
changes in interest rates.

At December 31, 2010, as permitted by the debt instruments, there are 11 pooled trust preferred securities
with an amortized cost basis of $7,993 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 $1,811 have been deferred since the respective securities began to defer payments. Deferred payments are not included in interest income. Interest payments totaling $186 were deferred during the quarter ended
December 31, 2010 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 December 31, 2010 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 December 31, 2010. 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



---

##### 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 December 31, 2010.



|                                        |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|--------------------------------------- |  | ---------- | ------ | --------- | ------ |  | ------------- |  | ------ | ---------- | ------ |  | --------------------- |  | ------ | ------------------- | ------ | ----------- |  | ---- | ------------------ |  | -- | ----------------------- |  |  | ----------------------------------------------- | - |  | ------------------------------------------------------ | ---- | - |  |  | ---- | - |  |  | ---- | -
|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) |     
|Pooled Investments                      |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|P1                                      |  | C1         |        |           | 5,000  |  |               |  | 350    |            |        |  | 450                   |  |        |                     | 100    |             |  | C    |                    |  | 80 |                         |  |  | 20.4                                            | % |  |                                                        | 15.2 | % |  |  | 9.7  | % |  |  | 0.0  | %
|P2                                      |  | A2A        |        |           | 5,000  |  |               |  | 2,012  |            |        |  | 2,250                 |  |        |                     | 238    |             |  | CCC- |                    |  | 76 |                         |  |  | 16.0                                            | % |  |                                                        | 18.0 | % |  |  | 10.5 | % |  |  | 7.9  | %
|P3                                      |  | C1         |        |           | 4,592  |  |               |  | 735    |            |        |  | 1,240                 |  |        |                     | 505    |             |  | C    |                    |  | 85 |                         |  |  | 11.2                                            | % |  |                                                        | 11.3 | % |  |  | 14.5 | % |  |  | 0.0  | %
|P4                                      |  | C1         |        |           | 5,058  |  |               |  | 354    |            |        |  | 809                   |  |        |                     | 455    |             |  | C    |                    |  | 72 |                         |  |  | 15.3                                            | % |  |                                                        | 8.7  | % |  |  | 11.7 | % |  |  | 0.0  | %
|P5                                      |  | C1         |        |           | 5,023  |  |               |  | 151    |            |        |  | 151                   |  |        |                     |       |             |  | C    |                    |  | 93 |                         |  |  | 13.3                                            | % |  |                                                        | 15.1 | % |  |  | 13.5 | % |  |  | 0.0  | %
|P6                                      |  | C1         |        |           | 3,075  |  |               |  | 30     |            |        |  | 30                    |  |        |                     |       |             |  | C    |                    |  | 68 |                         |  |  | 19.1                                            | % |  |                                                        | 16.3 | % |  |  | 13.3 | % |  |  | 0.0  | %
|P8                                      |  | C          |        |           | 3,219  |  |               |  | 129    |            |        |  | 225                   |  |        |                     | 96     |             |  | C    |                    |  | 56 |                         |  |  | 14.7                                            | % |  |                                                        | 15.3 | % |  |  | 10.3 | % |  |  | 0.0  | %
|P9                                      |  | B          |        |           | 2,008  |  |               |  | 80     |            |        |  | 141                   |  |        |                     | 61     |             |  | C    |                    |  | 54 |                         |  |  | 12.2                                            | % |  |                                                        | 26.4 | % |  |  | 11.0 | % |  |  | 0.0  | %
|P10                                     |  | B1         |        |           | 5,000  |  |               |  | 4,884  |            |        |  | 4,100                 |  |        |                     | (784   | )           |  | CCC  |                    |  | 24 |                         |  |  | 0.0                                             | % |  |                                                        | 5.8  | % |  |  | 16.7 | % |  |  | 12.1 | %
|P11                                     |  | Mezz       |        |           | 1,500  |  |               |  | 555    |            |        |  | 585                   |  |        |                     | 30     |             |  | C    |                    |  | 23 |                         |  |  | 18.3                                            | % |  |                                                        | 19.5 | % |  |  | 7.8  | % |  |  | 0.0  | %
|P12                                     |  | B2         |        |           | 1,000  |  |               |  | 288    |            |        |  | 440                   |  |        |                     | 152    |             |  | C    |                    |  | 34 |                         |  |  | 14.4                                            | % |  |                                                        | 15.9 | % |  |  | 11.2 | % |  |  | 0.0  | %
|P13                                     |  | B          |        |           | 3,909  |  |               |  | 3,759  |            |        |  | 547                   |  |        |                     | (3,212 | )           |  | C    |                    |  | 45 |                         |  |  | 14.4                                            | % |  |                                                        | 16.2 | % |  |  | 10.3 | % |  |  | 0.0  | %
|P14                                     |  | A1         |        |           | 4,648  |  |               |  | 4,327  |            |        |  | 3,858                 |  |        |                     | (469   | )           |  | CCC  |                    |  | 50 |                         |  |  | 18.3                                            | % |  |                                                        | 11.9 | % |  |  | 10.2 | % |  |  | 34.4 | %
|P15                                     |  | B          |        |           | 5,000  |  |               |  | 1,700  |            |        |  | 2,000                 |  |        |                     | 300    |             |  | C    |                    |  | 34 |                         |  |  | 24.0                                            | % |  |                                                        | 12.2 | % |  |  | 12.3 | % |  |  | 0.0  | %
|P16                                     |  | C1         |        |           | 5,000  |  |               |  | 1,100  |            |        |  | 1,350                 |  |        |                     | 250    |             |  | C    |                    |  | 46 |                         |  |  | 19.7                                            | % |  |                                                        | 3.4  | % |  |  | 8.1  | % |  |  | 0.0  | %
|P17                                     |  | C1         |        |           | 5,000  |  |               |  | 750    |            |        |  | 850                   |  |        |                     | 100    |             |  | C    |                    |  | 43 |                         |  |  | 21.1                                            | % |  |                                                        | 8.2  | % |  |  | 13.1 | % |  |  | 0.0  | %
|                                        |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Subtotal                                |  | 16         |        |           | 64,032 |  |               |  | 21,204 |            |        |  | 19,026                |  |        |                     | (2,178 | )           |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Single Issuer Investments               |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|S1                                      |  | N/A        |        |           | 1,000  |  |               |  | 930    |            |        |  | 711                   |  |        |                     | (219   | )           |  | BB+  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S2                                      |  | N/A        |        |           | 2,000  |  |               |  | 1,969  |            |        |  | 1,356                 |  |        |                     | (613   | )           |  | BB+  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S3                                      |  | N/A        |        |           | 3,000  |  |               |  | 2,778  |            |        |  | 2,337                 |  |        |                     | (441   | )           |  | A-   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S4                                      |  | N/A        |        |           | 500    |  |               |  | 447    |            |        |  | 285                   |  |        |                     | (162   | )           |  | BB-  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S5                                      |  | N/A        |        |           | 1,000  |  |               |  | 1,005  |            |        |  | 1,096                 |  |        |                     | 91     |             |  | NR   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S6                                      |  | N/A        |        |           | 700    |  |               |  | 711    |            |        |  | 731                   |  |        |                     | 20     |             |  | NR   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S7                                      |  | N/A        |        |           | 529    |  |               |  | 494    |            |        |  | 508                   |  |        |                     | 14     |             |  | B+   |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|S8                                      |  | N/A        |        |           | 1,000  |  |               |  | 1,000  |            |        |  | 1,021                 |  |        |                     | 21     |             |  | BB+  |                    |  | 1  |                         |  |  | 0.0                                             | % |  |                                                        | 0.0  | % |  |  | 0.0  | % |  |  |      |  
|                                        |  |            |        |           |        |  |               |  |        |            |        |  |                       |  |        |                     |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Subtotal                                |  | 8          |        |           | 9,729  |  |               |  | 9,334  |            |        |  | 8,045                 |  |        |                     | (1,289 | )           |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  |  |      |  
|Grand total of Trust Preferred holdings |  |            | 73,761 |           |        |  | 30,538        |  |        |            | 27,071 |  |                       |  | (3,467 | )                   |        |             |  |      |                    |  |    |                         |  |  |                                                 |   |  |                                                        |      |   |  |  |      |   |  | 

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



---

##### 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 $63,078 at December 31, 2010 are supported
by underlying collateral that was originated as follows:



|                |  |                |        |  |            |   |        | 
|--------------- |  | -------------- | ------ |  | ---------- | - | ------ | 
|Year originated |  | Amortized Cost |        |  | Fair Value |  
|2003            |  | $              | 20,185 |  |            | $ | 21,627 | 
|2004            |  |                | 28,518 |  |            |   | 26,873 | 
|2005            |  |                | 4,290  |  |            |   | 4,524  | 
|2007            |  |                | 6,341  |  |            |   | 4,892  | 
|2008            |  |                | 3,744  |  |            |   | 3,739  | 
|                |  |                |        |  |            |   |        | 
|                |  | $              | 63,078 |  |            | $ | 61,655 | 
|                |  |                |        |  |            |   |        | 

The non agency CMO portfolio at December 31, 2010 contains investments that were all rated AAA at the time of
purchase. The amortized cost and fair value by their latest investment rating at December 31, 2010 is as follows:



|                              |  |               |        |  |           |   |        | 
|----------------------------- |  | ------------- | ------ |  | --------- | - | ------ | 
|                              |  | AmortizedCost |        |  | FairValue |  
|AAA by Moodys, S&P, or Fitch |  | $             | 24,039 |  |           | $ | 24,990 | 
|AA by Moodys or S&P          |  |               | 6,162  |  |           |   | 6,601  | 
|A by Moodys, S&P, or Fitch   |  |               | 9,080  |  |           |   | 7,937  | 
|Baa by Moodys                |  |               | 10,568 |  |           |   | 10,461 | 
|BB by S&P                     |  |               | 6,722  |  |           |   | 6,628  | 
|B by Finch                    |  |               | 3,482  |  |           |   | 2,939  | 
|CCC by Fitch                  |  |               | 2,859  |  |           |   | 1,953  | 
|D by S&P                      |  |               | 166    |  |           |   | 146    | 
|                              |  |               |        |  |           |   |        | 
|                              |  | $             | 63,078 |  |           | $ | 61,655 | 
|                              |  |               |        |  |           |   |        | 

To date, with the exception of one security with an amortized cost of $166, 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 December 31, 2010, Parkvale has unrealized losses that are greater than one year
aggregating $9,356 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 December 31, 2010 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 3 pooled trust preferred securities aggregating $12,970, representing $8,505 of fair value with $4,465 of unrealized losses. Individual trust preferred securities with unrealized
losses for more than 12 months relate to 4 individual securities aggregating $6,124, representing $4,689 of fair value with $1,435 of unrealized losses.



32



---

##### 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 December 31, 2010 that have incurred OTTI charges are summarized as follows:



|                                |  |                         |        |  |                       |   |        |                  |  |   |                       |  |  |                   |       |  |  |   |        | 
|------------------------------- |  | ----------------------- | ------ |  | --------------------- | - | ------ | ---------------- |  | - | --------------------- |  |  | ----------------- | ----- |  |  | - | ------ | 
|Security                        |  | UnadjustedCarryingValue |        |  | OTTICharge toearnings |   |        | OTTICharge toOCI |  |   | 12/31/10CarryingValue |  |  | 12/31/10FairValue |      
|Pooled trust preferred security |  | $                       | 48,844 |  |                       | $ | 19,649 |                  |  | $ | 20,961                |  |  | $                 | 8,234 |  |  | $ | 10,521 | 

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   |  |                                  | 3,035  |  
|Included as a charge to earnings     |  |                                  | (1,942 | )
|Change to other comprehensive income |  |                                  |       |  
|                                     |  |                                  |        |  
|Balance at December 31, 2010         |  | $                                | 20,961 |  
|                                     |  |                                  |        |  

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 December 31, 2010:



|                                                                                                 |  |                                  |        | 
|------------------------------------------------------------------------------------------------ |  | -------------------------------- | ------ | 
|                                                                                                 |  | 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 |  |                                  | 1,942  | 
|                                                                                                 |  |                                  |        | 
|Balance at December 31, 2010                                                                     |  | $                                | 19,649 | 
|                                                                                                 |  |                                  |        | 
|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    | 

During the December 31, 2009 quarter, two pooled trust preferred securities and one non agency CMO considered to be
other than temporarily impaired were written down to fair value with a net charge to earnings of $782. During the three months ended December 31, 2010, charges of $946 on OTTI investments were recognized as net impairment losses in earnings.
The current quarter charges were due to OTTI related to five 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 December 31, 2010.



33



---

##### Table of Contents

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 $9.18 per share at December 31, 2010, which is below the book value of $16.02 at such date. The difference between the market value and the book value at December 31, 2010 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 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 financial institutions continue to decline, then a goodwill impairment charge may become
appropriate in a future quarter.



34



---

##### Table of Contents

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 common share for the three and six months ended
December 31:



|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|-------------------------------------------------------------- |  | ------------------------------ | --------- |  | ---------------------------- | - | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                                               |  | Three months endedDecember 31, |           |  | Six months endedDecember 31, |  
|                                                               |  | 2010                           |           |  | 2009                         |   |           | 2010 |  |   | 2009      | 
|Numerator for basic and diluted earnings per share:            |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Net income                                                     |  | $                              | 1,841     |  |                              | $ | 2,277     |      |  | $ | 4,064     |  |  | $ | 3,002     | 
|Less: Preferred stock dividend                                 |  |                                | 397       |  |                              |   | 397       |      |  |   | 794       |  |  |   | 794       | 
|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Net income to common stockholders                              |  | $                              | 1,444     |  |                              | $ | 1,880     |      |  | $ | 3,270     |  |  | $ | 2,208     | 
|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Denominator:                                                   |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Weighted average shares for basic earnings per common share    |  |                                | 5,529,716 |  |                              |   | 5,428,604 |      |  |   | 5,529,464 |  |  |   | 5,428,150 | 
|Effect of dilutive stock options                               |  |                                | 1,300     |  |                              |   |          |      |  |   | 650       |  |  |   |          | 
|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Weighted average shares for dilutive earnings per common share |  |                                | 5,531,016 |  |                              |   | 5,428,604 |      |  |   | 5,530,114 |  |  |   | 5,428,150 | 
|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Net income per common share: Basic                             |  | $                              | 0.26      |  |                              | $ | 0.35      |      |  | $ | 0.59      |  |  | $ | 0.41      | 
|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 
|Diluted                                                        |  | $                              | 0.26      |  |                              | $ | 0.35      |      |  | $ | 0.59      |  |  | $ | 0.41      | 
|                                                               |  |                                |           |  |                              |   |           |      |  |   |           |  |  |   |           | 

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 in the financial statements, results of operations or liquidity of the Corporation.

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



35



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollar amounts in thousands, except share data)



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 in 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 December 31, 2010 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.

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



36



---

##### Table of Contents

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)



|                                                 |  |               |           |  |               |   |           | 
|------------------------------------------------ |  | ------------- | --------- |  | ------------- | - | --------- | 
|                                                 |  | December 31,  |          
|                                                 |  | 2010          |           |  | 2009          |  
|                                                 |  | (As Restated) |           |  | (As Restated) |  
|Total assets                                     |  | $             | 1,790,045 |  |               | $ | 1,914,882 | 
|Loans, net                                       |  |               | 1,017,834 |  |               |   | 1,053,009 | 
|Interest-earning deposits and federal funds sold |  |               | 109,912   |  |               |   | 130,021   | 
|Total investments                                |  |               | 520,737   |  |               |   | 600,156   | 
|Deposits                                         |  |               | 1,458,571 |  |               |   | 1,528,142 | 
|FHLB advances                                    |  |               | 165,875   |  |               |   | 186,087   | 
|Shareholders equity                             |  |               | 121,065   |  |               |   | 150,499   | 
|Book value per common share                      |  | $             | 16.02     |  |               | $ | 21.54     | 

Statistical Profile:



|                                                      |  |                                    |       |   |                                  |   |       |      |  |   |               |   |  |   |       |  
|----------------------------------------------------- |  | ---------------------------------- | ----- | - | -------------------------------- | - | ----- | ---- |  | - | ------------- | - |  | - | ----- | -
|                                                      |  | Three Months EndedDecember 31, (1) |       |   | Six Months EndedDecember 31, (1) |  
|                                                      |  | 2010                               |       |   | 2009                             |   |       | 2010 |  |   | 2009          |  
|                                                      |  |                                    |       |   | (As Restated)                    |   |       |      |  |   | (As Restated) |  
|Average yield earned on all interest-earning assets   |  |                                    | 3.91  | % |                                  |   | 4.30  | %    |  |   | 3.93          | % |  |   | 4.38  | %
|Average rate paid on all interest-bearing liabilities |  |                                    | 1.70  | % |                                  |   | 2.25  | %    |  |   | 1.78          | % |  |   | 2.39  | %
|Average interest rate spread                          |  |                                    | 2.21  | % |                                  |   | 2.05  | %    |  |   | 2.15          | % |  |   | 1.99  | %
|Net yield on average interest-earning assets          |  |                                    | 2.20  | % |                                  |   | 2.03  | %    |  |   | 2.14          | % |  |   | 2.05  | %
|Other expenses to average assets                      |  |                                    | 1.69  | % |                                  |   | 1.58  | %    |  |   | 1.71          | % |  |   | 1.60  | %
|Taxes to pre-tax income                               |  |                                    | 22.02 | % |                                  |   | 22.97 | %    |  |   | 22.18         | % |  |   | 3.04  | %
|Dividend payout ratio                                 |  |                                    | 7.66  | % |                                  |   | 14.44 | %    |  |   | 6.76          | % |  |   | 24.58 | %
|Return on average assets                              |  |                                    | 0.41  | % |                                  |   | 0.48  | %    |  |   | 0.44          | % |  |   | 0.31  | %
|Return on average equity                              |  |                                    | 5.46  | % |                                  |   | 5.98  | %    |  |   | 6.07          | % |  |   | 3.96  | %
|Average equity to average total assets                |  |                                    | 7.42  | % |                                  |   | 7.96  | %    |  |   | 7.30          | % |  |   | 7.93  | %
|Dividends per common share                            |  | $                                  | 0.02  |   |                                  | $ | 0.05  |      |  | $ | 0.04          |   |  | $ | 0.10  |  



37



---

##### Table of Contents

|                                              |  |                 |       |   |               |  |       |  
|--------------------------------------------- |  | --------------- | ----- | - | ------------- |  | ----- | -
|                                              |  | At December 31, |      
|                                              |  | 2010            |       |   | 2009          | 
|                                              |  | (As Restated)   |       |   | (As Restated) | 
|One year gap to total assets                  |  |                 | 9.77  | % |               |  | 4.56  | %
|Intangibles to total equity                   |  |                 | 23.17 | % |               |  | 19.25 | %
|Ratio of nonperforming assets to total assets |  |                 | 1.99  | % |               |  | 1.90  | %
|Number of full-service offices                |  |                 | 47    |   |               |  | 48    |  



|(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 1.99%, 1.91% and 1.90% of total assets at December 31, 2010, June 30, 2010 and December 31, 2009, respectively. Such non-performing assets at December 31, 2010 have increased to $35.6 million from $35.2 million
at June 30, 2010, and includes $26.7 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 December 31, 2010, single-family mortgage loans delinquent 90 days or more include 55 loans aggregating $22.4 million purchased from others
and serviced by national service providers with a cost basis ranging from $40,000 to $775,000 and 53 loans aggregating $4.2 million in Parkvales retail market area. Of these total 108 loans, 7 have a cost basis of $500,000 or greater.
Management believes that all of these delinquent 1-4 family mortgage loans are adequately collateralized with the exception of 45 loans with a remaining net book value of $10.2 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 December 31, 2010, modifications have been performed at market terms on 125 1-4 family mortgage loans totaling $19.5 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 December 31, 2010. 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 $3.1 million at December 31, 2010, includes a $1.2 million relationship
with a now closed medical facility and a $1.5 million relationship to a coal extraction and reclamation entity. Management believes that these commercial relationships are adequately collateralized.

Parkvale has $31.0 million of loans classified as substandard at December 31, 2010. 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 classification of such loans.



38



---

##### Table of Contents

Foreclosed real estate of $8.9 million at December 31, 2010 includes $5.7 million of single-family
dwellings. Real estate owned includes foreclosure of four units in a single-family residential development with a net book value of $1.0 million and commercial real estate properties related to two facilities used as automobile dealerships with a
net book value of $1.1 million at December 31, 2010. At December 31, 2010, foreclosed real estate also includes six commercial real estate properties with an aggregate value of $1.8 million. 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 December 31, 2010 and $1.1 million at December 31, 2009. 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 $19.6 million at December 31, 2010, $19.2 million at June 30, 2010 and $18.9 million at December 31, 2009 or 1.89%, 1.83% and 1.76% of gross loans at
December 31, 2010, June 30, 2010 and December 31, 2009, 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 $647.0 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 $474.3 of amortizing loans and $172.7
million of interest only loans as of December 31, 2010. The initial interest only period for $63.5 million of the aggregate $172.7 million has expired, and the loans are contractually amortizing at December 31, 2010. 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



39



---

##### Table of Contents

circumstances where 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 decreased $29.2 million or 21.5% from June 30, 2010 to December 31, 2010, as Parkvale shifted a portion of such funds into
higher yielding investment securities. Investment securities held to maturity increased $58.4 million or 13.2% from June 30, 2010 to December 31, 2010, primarily due to purchases of agency mortgage-backed securities. Interest-earning
deposits in other institutions increased $2.6 million or 319.7%. Loans, net of allowance, decreased $14.5 million or 1.4% from June 30, 2010 to December 31, 2010. The decrease in the loan portfolio was primarily due to a $13.7 million or
2.1% decline in one-to-four family residential loans. Deposits decreased $29.5 million or 2.0% from June 30, 2010 to December 31, 2010, FHLB advances decreased $20.1 million or 10.8% due to the maturity of three advances aggregating $20
million at costs of 4.12% to 6.05%, escrow for taxes and insurance decreased $561,000 or 7.5%, other debt decreased $2.6 million or 18.5% and other liabilities decreased $474,000 or 11.2%. Parkvale Banks FHLB advance available maximum
borrowing capacity is $579.8 million at December 31, 2010. 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



40



---

##### Table of Contents

provisions, such as upon stock splits or distributions of securities or other assets to holders of Common 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 December 31, 2010.

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 $334,000 at December 31, 2010, 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 December 31, 2010 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 will be repaid quarterly, with a final principal payment of $15.6



41



---

##### Table of Contents

million due on December 31, 2013, and the dividend rate on the Series A Preferred Stock will increase 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 $121.1 million or 6.76% of total assets at December 31, 2010. During the six months ended December 31, 2010,
shareholders equity increased by $3.2 million due primarily to net income of $4.1 million, offset by declaration of common and preferred stock dividends of $1.0 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 December 31, 2010, Parkvale Bank was in compliance with all applicable regulatory requirements, with Tier 1 Core, Tier 1
Risk-Based and Total Risk-Based ratios of 6.43%, 9.96% and 11.10%, respectively. The regulatory capital ratios for Parkvale Bank at December 31, 2010 are calculated as follows:



|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|------------------------------------------- |  | ----------------- | --------- | - | ----------------------- | - | --------- | ---------------------- |  | - | --------- | -
|(Dollars in 000s)                          |  | Tier 1CoreCapital |           |   | Tier 1Risk-BasedCapital |   |           | TotalRisk-BasedCapital | 
|Equity capital (1)                          |  | $                 | 139,735   |   |                         | $ | 139,735   |                        |  | $ | 139,735   |  
|Less non-allowable intangible assets        |  |                   | (28,057   | ) |                         |   | (28,057   | )                      |  |   | (28,057   | )
|Less non-allowable deferred tax asset       |  |                   | (9,746    | ) |                         |   | (9,746    | )                      |  |   | (9,746    | )
|Plus permitted valuation allowances (2)     |  |                   |          |   |                         |   |          |                        |  |   | 13,247    |  
|Plus accumulated other comprehensive income |  |                   | 13,243    |   |                         |   | 13,243    |                        |  |   | 13,243    |  
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Total regulatory capital                    |  |                   | 115,175   |   |                         |   | 115,175   |                        |  |   | 128,422   |  
|Minimum required capital                    |  |                   | 71,605    |   |                         |   | 46,267    |                        |  |   | 92,533    |  
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Excess regulatory capital                   |  | $                 | 43,570    |   |                         | $ | 68,908    |                        |  | $ | 35,889    |  
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Adjusted total assets (1)                   |  | $                 | 1,790,127 |   |                         | $ | 1,156,663 |                        |  | $ | 1,156,663 |  
|Regulatory capital as a percentage          |  |                   | 6.43      | % |                         |   | 9.96      | %                      |  |   | 11.10     | %
|Minimum capital required as a percentage    |  |                   | 4.00      | % |                         |   | 4.00      | %                      |  |   | 8.00      | %
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|Excess regulatory capital as a percentage   |  |                   | 2.43      | % |                         |   | 5.96      | %                      |  |   | 3.10      | %
|                                            |  |                   |           |   |                         |   |           |                        |  |   |           |  
|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 December 31, 2010.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Results of Operations - Comparison of Three Months Ended December 31, 2010 and 2009:

For the three months ended December 31, 2010, net income available to common shareholders was $1.4 million compared to $1.9 million for the quarter ended December 31, 2009. Net income per common
diluted share was $0.26 for the quarter ended December 31, 2010 and $0.35 for the quarter ended December 31, 2009. Excluding the preferred stock dividend, net income was $1.8 million for the three months ended December 31, 2010,
compared to $2.3 million for the three months ended December 31, 2009. The $436,000 decrease in net income for the December 31, 2010 quarter is primarily due to a $909,000 decrease in gain on sale of assets, a $110,000 increase in
non-interest expense and a $164,000



42



---

##### Table of Contents

increase in non-cash debt security impairment charges. These factors were partially offset by a $383,000 decrease in the provision for loan losses and a $159,000 decrease in income tax expense,
reflecting a lower level of pre-tax income. The increase in non-interest expense for the quarter was primarily due to a $125,000 increase in costs associated with maintaining other real estate owned properties.

Interest Income:

Parkvale had interest
income of $16.4 million during the three months ended December 31, 2010 versus $19.3 million during the comparable period in 2009. The $2.9 million or 15.2% decrease is the result of a 39 basis point decrease in the average yield from 4.30% in
the December 2009 quarter to 3.91% in the current quarter and a $123.1 million or 6.9% decrease in the average balance of interest-earning assets. Interest income from loans decreased $1.4 million or 10.0%, resulting from a decrease in the average
outstanding loan balances of $41.1 million or 3.9% and a 34 basis point decrease in the average yield from 5.35% in 2009 to 5.01% in 2010. The decrease in the loan portfolio was primarily due to a decline in single-family residential mortgage loans.
Investment interest income decreased by $1.5 million or 30.2% due to a decrease of 81 basis points in the average yield from 3.51% in 2009 to 2.70% in 2010 and a decrease of $52.1 million or 9.2% in the average balance. The decrease in the average
balance of investment securities was primarily due to the sale of $49.0 million of investment securities available for sale during the quarter ended September 30, 2010. Interest income earned on federal funds sold decreased by $20,000 or 19.0%
from the 2009 quarter due to a decrease of $29.9 million or 18.1% in the average balance. The current Federal Reserve target rate is .25%. The weighted average yield on all interest-earning assets was 3.96% at December 31, 2010 and 4.28% at
December 31, 2009.

Interest Expense:

Interest expense decreased $3.1 million or 30.0% from the 2009 to the 2010 quarter. The decrease was due to a 55 basis point decrease in the average rate paid on deposits and borrowings from 2.25% in 2009
to 1.70% in 2010 and a decrease in the average deposits and borrowings of $63.5 million or 3.6%. At December 31, 2010, the average rate payable on liabilities was 1.27% for deposits, 4.71% for borrowings, 5.09% for term debt and 1.69% for
combined deposits, borrowings and debt.

Net Interest Income:

Net interest income was $9.2 million for the quarter ended December 31, 2010 compared to $9.1 million for the quarter ended December 31, 2009. The $122,000 or 1.3% increase is attributable to a
16 basis point increase in the average interest rate spread from 2.05% in 2009 to 2.21% in 2010 partially offset by a decrease of $59.6 million in net average interest-earning assets.

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 December 31, 2010 decreased by $383,000 or 27.4% from the 2009 quarter based upon an analysis of credit factors, which include the internal
loan classifications and past due analysis related to the Banks portfolio and related reserve levels as of December 31, 2010. The level of nonperforming loans decreased by $3.7 million or 12.3% at December 31, 2010 compared to
December 31, 2009. Aggregate valuation allowances were 1.89%, 1.83% and 1.76% of gross loans at December 31, 2010, June 30, 2010 and December 31, 2009, respectively.

Nonperforming loans and real estate owned aggregated $35.6 million, $35.2 million and $36.3 million at December 31, 2010, June 30, 2010 and December 31, 2009, representing 1.99%, 1.91%
and 1.90% of total assets at the respective balance sheet dates. Total loan loss reserves at December 31, 2010 were $19.6 million, compared to $19.2 million at June 30, 2010 and $18.9 million at December 31, 2009. Management



43



---

##### Table of Contents

considers loan loss reserves sufficient when compared to the value of 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 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 December 31, 2010 quarter decreased by $990,000 or 35.3% due to net gains on sale of assets totaling $194,000 during the current quarter compared to a $1.1 million
recovery on the sale of a previously written-down preferred stock during the December 31, 2009 quarter. Non-cash debt security impairment charges recognized in earnings increased by $164,000 during the December 31, 2010 quarter compared to
the prior year period. The December 31, 2010 quarter writedowns were due to the other than temporary impairment of five 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 December 31, 2009 quarter was the result of issuers going into default status on two pooled trust preferred securities and credit deterioration related to one non agency
CMO security. Noninterest income included increases of $50,000 or 3.1% of service charges on deposit accounts, $22,000 or 6.1% of service charges and other fees, and $11,000 or 2.2% of other income. Annuity fee and commission income was $238,000 in
the 2010 quarter compared to $194,000 in the 2009 quarter.

Noninterest Expense:

Total noninterest expense increased by $110,000 or 1.5% for the three months ended December 31, 2010 compared to the December 31, 2009 quarter.
This increase is primarily due to a $204,000 or 14.6% increase in other expense related to increased costs associated with foreclosed real estate. Compensation and employee benefits expense decreased by $153,000 or 4.2% during the quarter ended
December 31, 2010 from the comparable 2009 quarter, primarily due to a reduction in the amount of incentive compensation being accrued. Annualized noninterest expense as a percentage of average assets was 1.69% for the quarter ended
December 31, 2010 and 1.58% for the quarter ended December 31, 2009.

Income Tax Expense:

Income tax expense for the three months ended December 31, 2010 was $520,000 compared to $679,000 for the December 31, 2009 quarter. The income
tax expense in the December 31, 2010 quarter is lower primarily due to lower taxable income. The overall effective tax rate was 22.0% and 23.0% for the three months ended December 31, 2010 and 2009, respectively. The effective tax rate in
2010 is lower than the federal statutory rate of 35% due to a reversal of a previously provided tax valuation allowance on equity securities, a tax refund from a tax rate differential due to NOL carrybacks, and the tax benefits resulting from
tax-exempt instruments. The effective tax rate in 2009 was lower than the federal statutory rate of 35% primarily due to a $243,000 reversal of a previously provided tax valuation allowance from the partial recovery of a sale of preferred stock.

Results of Operations - Comparison of Six Months Ended December 31, 2010 and 2009:

For the six months ended December 31, 2010, net income available to common shareholders was $3.3 million compared to $2.2 million for the six months
ended December 31, 2009. Net income per common diluted share was $0.59 for the six months ended December 31, 2010 and $0.41 for the six months ended December 31, 2009. Excluding the preferred stock dividend, net income was $4.1
million for the six months ended December 31, 2010, compared to $3.0 million for the six months ended December 31, 2009. The $1.1 million increase in net income for the six months ended December 31, 2010 reflects a $1.6 million



44



---

##### Table of Contents

decrease in the provision for loan losses and a $1.6 million decrease in non-cash debt security impairment charges. These factors were partially offset by an $839,000 decrease in gain on sale of
assets, a $368,000 increase in noninterest expense, and a $1.1 million increase in income tax expense, reflecting a higher level of pre-tax income and the effect related to the reversal of a tax valuation allowance during the six months ended
December 31, 2009. The increase in noninterest expense includes a $157,000 increase in FDIC insurance premiums.

Interest Income:

Parkvale had interest income of $33.2 million during the six months ended December 31, 2010 versus $39.3 million during the
comparable period in 2009. The decrease of $6.1 million or 15.6% is attributable to a 45 basis point decrease in the average yield from 4.38% in 2009 to 3.93% in 2010 and a $107.5 million or 6.0% decrease in the average interest-earning asset
portfolio. Interest income from loans decreased $3.2 million or 10.9% due to a decrease in the average loan balance of $55.5 million or 5.2% and a 32 basis point decrease in the average yield from 5.38% in 2009 to 5.06% in 2010. Income from
investments decreased by $3.0 million or 29.3% from 2009 due to a 77 basis point decrease in the average yield from 3.61% in 2009 to 2.84% in 2010 and a decrease in the average investment balance of $56.2 million or 10.1%. Interest income earned on
federal funds sold increased by $4,000 or 2.0% from the six months ended December 31, 2009 due to an increase of $4.2 million or 2.7% in the average federal fund balance.

Interest Expense:

Interest expense decreased by $5.8 million or 27.7% from the 2009
six-month period to the 2010 six-month period. The decrease was due to a 61 basis point decrease in the average rate paid from 2.39% in 2009 to 1.78% in 2010 and a decrease in average deposits and borrowings of $46.0 million or 2.6%.

Net Interest Income:

Net interest
income was $18.1 million for the six months ended December 31, 2010 compared to $18.4 million for the six months ended December 31, 2009. The $337,000 or 1.8% decrease is attributable to a decrease of $61.4 million or 127.3% in net average
interest-earning assets, offset by a 16 basis point increase in the average interest rate spread from 1.99% in 2009 to 2.15% in 2010.

Provision for Loan Losses:

Provision
for loan losses decreased by $1.6 million or 44.4% from the six-month period ended December 31, 2009 to the six months ended December 31, 2010 based upon an analysis of credit factors, which include the internal loan classifications and
past due analysis related to the Banks portfolio and related reserve levels as of December 31, 2010. Aggregate valuation allowances were 1.89% of gross loans at December 31, 2010, 1.83% of gross loans at June 30, 2010 and 1.76%
of gross loans at December 31, 2009. Total loan loss reserves at December 31, 2010 were $19.6 million.

Noninterest Income:

Noninterest income increased by $1.2 million or 32.2% for the six months ended December 31, 2010 from the six months ended
December 31, 2009 primarily due to lower levels of writedowns of investment securities. The net impairment loss recognized in earnings during the current six month period was $1.9 million compared to $3.5 million for the six months ended
December 31, 2009, which related to continuing deterioration, deferrals and defaults by issuers in our pooled trust preferred securities in both periods. The gain on sale of assets decreased by $839,000 or 38% during the six months ended
December 31, 2010 compared to the prior year period. Service charges on deposits increased by $157,000 or 4.8%. Other fees and service charges increased by $36,000 or 5.0% for all types of products. Other income increased by $238,000 or 22.6%.
Annuity fee and commission income was



45



---

##### Table of Contents

$551,000 for the six months ended December 31, 2010 compared to $421,000 for the six months ended December 31, 2009.

Noninterest Expense:

Noninterest expenses increased by $368,000 or 2.4% for the six month
period ended December 31, 2010 from the comparable period in 2009. The increase in noninterest expense is primarily attributable to a $240,000 or 8.1% increase in other expense due to increased costs associated with maintaining foreclosed real
estate. FDIC insurance expense increased $157,000 or 9.6% compared to the 2009 period. Annualized noninterest expenses as a percentage of average assets were 1.71% for the six months ended December 31, 2010 compared to 1.60% for the six months
ended December 31, 2009.

Income Tax Expense:

Income tax expense increased by $1.1 million in the six months ended December 31, 2010 compared to the six months ended December 2009, due to an increase in taxable income in the current six months,
compounded by a higher level of tax valuation allowance reversals in fiscal 2010. The lower level of taxable income in the six months ended December 31, 2009 was primarily due to writedowns of securities. The effective tax rates were 22.2% and
3.0% for the six months ended December 31, 2010 and 2009, respectively. The effective tax rate in the first half 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 first half of fiscal 2010 was lower than the statutory rate of 35% primarily due to the reversal of a $734,000 tax valuation allowance upon
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



46



---

##### Table of Contents

2009. As a result, Parkvales management, including the CEO and Chief Financial Officer, concluded that Parkvales disclosure controls and procedures were not effective as of
December 31, 2010. 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) | On December 31, 2010, Parkvale Financial Corporation (the Corporation) sold 46,468 shares of its common stock, par value $1.00 per share, out of
treasury to the Parkvale Financial Corporation Employee Stock Ownership Plan (the ESOP) at the December 30, 2010 closing price of $9.08 per share. No underwriting discounts or brokerage commissions were paid. The gross sales
proceeds aggregated $421,929.40 and will be used by the Corporation for general business purposes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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

Item 3. Defaults Upon
Senior Securities

None

Item 4. Reserved

N/A

Item 5. Other Information

None



47



---

##### Table of Contents

Item 6. Exhibits. The following exhibits are filed here within:



|     |  |                                                                                                                                                                                                        
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                         



48



---

##### Table of Contents

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     



49