<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C., 20549


                                    FORM 10-Q


    [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

                           COMMISSION FILE NO: 0-17411


                         PARKVALE FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                PENNSYLVANIA                             25-1556590
         ------------------------                     ----------------
         (State of incorporation)                     (I.R.S. Employer
                                                   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 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  X    Non-accelerated filer
                        ---                     ---                         ---

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 October 25, 2006 was
$31.89 per share.

Number of shares of Common Stock outstanding as of October 25, 2006 was
5,679,742.


<PAGE>



PARKVALE FINANCIAL CORPORATION

INDEX

Part I.     Financial Information                                         Page
---------------------------------                                         ----

Item 1.
Consolidated Statements of Financial Condition as of September 30,
  2006 and June 30, 2006                                                     3

Consolidated Statements of Operations for the three months ended
  September 30, 2006 and 2005                                                4

Consolidated Statements of Cash Flows for the three months ended
  September 30, 2006 and 2005                                              5-6

Consolidated Statements of Shareholders' Equity for the three months
  ended September 30, 2006                                                   6

Notes to Unaudited Interim Consolidated Financial Statements              7-10

Item 2.
Management's Discussion and Analysis of Financial Condition and
  Results of Operations                                                  11-16

Item 3.
Quantitative and Qualitative Disclosures about Market Risk                  16

Item 4.
Controls and Procedures                                                     16

Part II - Other Information                                              17-18

Signatures                                                                  18

Exhibits                                                                 19-21



                                       2
<PAGE>



Item 1.
                         PARKVALE FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                (Dollar amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                                   SEPTEMBER 30,            June 30,
                               ASSETS                                   2006                  2006
                                                                    -----------           -----------
<S>                                                                <C>                   <C>
Cash and noninterest-earning deposits                               $    27,664           $    25,676
Federal funds sold                                                      180,000               104,000
                                                                    -----------           -----------
Cash and cash equivalents                                               207,664               129,676
Interest-earning deposits in other banks                                  8,004                 8,307
Investment securities available for sale (cost of
  $27,361 at September 30 and $27,755 at June 30)                        27,664                27,917
Investment securities held to maturity (fair value
  of $384,476 at September 30 and $389,964 at June 30)                  387,800               397,266
Loans, net of allowance of $14,957 at September 30
  and $14,907 at June 30                                              1,214,310             1,217,328
Foreclosed real estate, net                                               1,707                   975
Office properties and equipment, net                                     17,361                17,592
Goodwill                                                                 25,634                25,634
Intangible assets and deferred charges                                    6,293                 6,532
Prepaid expenses and other assets                                        27,149                27,488
                                                                    -----------           -----------
      Total Assets                                                  $ 1,923,586           $ 1,858,715
                                                                    ===========           ===========

                 LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Deposits                                                            $ 1,519,881           $ 1,451,764
Advances from Federal Home Loan Bank                                    216,827               221,885
Trust preferred securities                                               32,200                32,200
Other debt                                                               20,413                17,528
Advance payments from borrowers for taxes and insurance                   3,973                 7,292
Other liabilities                                                         5,074                 5,342
                                                                    -----------           -----------
      Total Liabilities                                               1,798,368             1,736,011
                                                                    -----------           -----------

SHAREHOLDERS' EQUITY
Preferred stock ($1.00 par value; 5,000,000
  shares authorized; 0 shares issued)                                      --                    --
Common stock ($1.00 par value; 10,000,000 shares
  authorized; 6,734,894 shares issued)                                    6,735                 6,735
Additional paid in capital                                                3,481                 3,517
Treasury stock at cost (1,055,152 shares at September 30
   and 1,065,830 at June 30)                                            (20,491)              (20,620)
Accumulated other comprehensive income                                      192                   116
Retained earnings                                                       135,301               132,956
                                                                    -----------           -----------
      Total Shareholders' Equity                                        125,218               122,704
                                                                    -----------           -----------
      Total Liabilities and Shareholders' Equity                    $ 1,923,586           $ 1,858,715
                                                                    ===========           ===========

</TABLE>

                                       3
<PAGE>


                         PARKVALE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                             SEPTEMBER 30,
                                                        2006               2005
                                                      --------           --------
<S>                                                  <C>                <C>
Interest Income:
      Loans                                           $ 17,676           $ 16,341
      Investments                                        4,694              4,536
      Federal funds sold                                 1,559                775
                                                      --------           --------
Total interest income                                   23,929             21,652
                                                      --------           --------

Interest Expense:
      Deposits                                          10,675              8,725
      Borrowings                                         2,910              2,899
      Trust preferred securities                           753                592
                                                      --------           --------
Total interest expense                                  14,338             12,216
                                                      --------           --------

Net interest income                                      9,591              9,436
Provision for loan losses                                  204                136
                                                      --------           --------
Net interest income after
      provision for loan losses                          9,387              9,300
                                                      --------           --------

Noninterest Income:
      Service charges on deposit accounts                1,815              1,589
      Other service charges and fees                       330                339
      Gain (loss) on sale of assets                         (9)              --
      Other                                                492                355
                                                      --------           --------
Total noninterest income                                 2,628              2,283
                                                      --------           --------

Noninterest Expense:
      Compensation and employee benefits                 3,763              3,698
      Office occupancy                                   1,185              1,262
      Marketing                                            122                139
      Office supplies, telephone and postage               479                451
      Other                                              1,298              1,290
                                                      --------           --------
Total noninterest expense                                6,847              6,840
                                                      --------           --------

Income before income taxes                               5,168              4,743
Income tax expense                                       1,687              1,515
                                                      --------           --------

Net income                                            $  3,481           $  3,228
                                                      ========           ========
Net income per share:
      Basic                                           $   0.61           $   0.57
      Diluted                                         $   0.61           $   0.57

</TABLE>

                                       4
<PAGE>



PARKVALE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                          SEPTEMBER 30,
                                                                     2006                2005
                                                                  ---------           ---------
<S>                                                              <C>                 <C>
Cash flows from operating activities:
Interest received                                                 $  24,702           $  23,113
Loan fees (paid) received                                               (62)                (82)
Other fees and commissions received                                   2,512               2,167
Interest paid                                                       (14,435)            (12,247)
Cash paid to suppliers and others                                    (6,350)             (6,870)
Income taxes paid                                                    (2,091)             (1,395)
                                                                  ---------           ---------

Net cash provided by operating activities                             4,276               4,686

Cash flows from investing activities:
Proceeds from maturities of investment securities                    30,307              22,247
Purchase of investment securities available for sale                   --                (1,906)
Purchase of investment securities held to maturity                  (20,501)            (16,285)
Maturity of deposits in other banks                                     302               3,337
Purchase of loans                                                   (33,858)            (37,709)
Proceeds from sales of loans                                            153                 982
Principal collected on loans                                         80,881              75,982
Loans made to customers, net of loans in process                    (45,071)            (37,210)
Other                                                                  (177)               (232)
                                                                  ---------           ---------

Net cash provided by investing activities                            12,036               9,206

Cash flows from financing activities:
Net increase (decrease) in checking and savings accounts             48,269             (11,796)
Net increase (decrease) in certificates of deposit                   19,890             (18,916)
Proceeds from FHLB advances                                            --                10,000
Repayment of FHLB advances                                           (5,006)                 (6)
Net increase (decrease) in other borrowings                           2,885              (5,423)
Decrease in borrowers' advances for taxes and insurance              (3,319)             (2,997)
Cash dividends paid                                                  (1,136)             (1,124)
Proceeds from exercise of stock options                                  93                 138
Payment for treasury stock                                             --                   (92)
                                                                  ---------           ---------

Net cash provided by (used in) financing activities                  61,676             (30,216)
                                                                  ---------           ---------
Net increase (decrease) in cash and cash equivalents                 77,988             (16,324)

Cash and cash equivalents at beginning of period                    129,676             107,040
                                                                  ---------           ---------
Cash and cash equivalents at end of period                        $ 207,664           $  90,716
                                                                  =========           =========

</TABLE>

                                       5
<PAGE>



<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED SEPTEMBER 30,
                                                                                     2006              2005
                                                                                    -------           -------
<S>                                                                                <C>               <C>
Reconciliation of net income to net cash provided by operating activities:
Net income                                                                          $ 3,481           $ 3,228
                                                                                    -------           -------
Adjustments to reconcile net income to net cash provided
    by operating activities:
     Depreciation and amortization                                                      638               637
     Accretion and amortization of loan fees and discounts                               91               349
     Loan fees collected and deferred (premiums paid)                                  (100)             (150)
     Provision for loan losses                                                          204               136
     Loss (gain) on sale of assets                                                        9              --
     Decrease in accrued interest receivable                                            632             1,041
     (Increase) in other assets                                                        (281)             (420)
     (Decrease) increase in accrued interest payable                                    (58)                6
     (Decrease) in other liabilities                                                   (340)             (141)
                                                                                    -------           -------
     Total adjustments                                                                  795             1,458
                                                                                    -------           -------
Net cash provided by operating activities                                           $ 4,276           $ 4,686
                                                                                    =======           =======
</TABLE>

For purposes of reporting cash flows, cash and cash equivalents include cash and
noninterest earning deposits, and federal funds sold. Generally, federal funds
are purchased and sold for one-day periods. Loans transferred to foreclosed
assets aggregated $1.2 million for the three months ended September 30, 2006 and
$160,000 for the three months ended September 30, 2005.


                         PARKVALE FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                           Accumulated
                                                                   Additional                Other                       Total
                                                         Common     Paid-in   Treasury    Comprehensive    Retained   Shareholders'
                                                          Stock     Capital    Stock         Income        Earnings       Equity
                                                        --------------------------------------------------------------------------
<S>                                                     <C>        <C>       <C>             <C>          <C>            <C>
Balance, June 30, 2006                                   $6,735     $3,517    ($20,620)       $116         $132,956       $122,704
Net income, three months ended September 30, 2006                                                             3,481          3,481
Accumulated other comprehensive income:
  Change in unrealized gain on securities,
  net of deferred tax benefit of $53                                                            76                              76
      Comprehensive income                                                                                                   3,557
Dividends declared on common stock at $0.20 per share                                                        (1,136)        (1,136)
Exercise of stock options                                              (36)        129                                          93
                                                        --------------------------------------------------------------------------

Balance, September 30, 2006                              $6,735     $3,481    ($20,491)       $192         $135,301       $125,218
                                                        ==========================================================================

</TABLE>


                                       6
<PAGE>



NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except share data)

Statements of Operations
The statements of operations for the three months ended September 30, 2006 and
2005 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 three months ended September 30, 2006 are not necessarily indicative of the
results that may be expected for fiscal 2007. The Annual Report on Form 10-K for
the year ended June 30, 2006 contains additional information and should be read
in conjunction with this report.

Loans

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30, 2006      June 30, 2006
                                                                  ------------------      -------------
<S>                                                                  <C>                   <C>
Loans are summarized as follows:
Mortgage loans:
     Residential:
       1-4 Family                                                     $  837,210            $  833,262
       Multifamily                                                        27,363                28,911
     Commercial                                                          107,100               108,977
     Other                                                                20,155                20,834
                                                                      --------------------------------
                                                                         991,828               991,984
Consumer loans                                                           181,662               182,506
Commercial business loans                                                 47,996                49,875
Loans on savings accounts                                                  5,661                 5,721
                                                                      --------------------------------
                                                                       1,227,147             1,230,086
Less: Loans in process                                                        31                   142
        Allowance for loan losses                                         14,957                14,907
        Unamortized premiums and deferred loan fees                       (2,151)               (2,291)
                                                                      --------------------------------
Loans, net                                                            $1,214,310            $1,217,328
                                                                      ================================
</TABLE>

Included in the $181,662 of consumer loans are $801 of student and unsecured
credit card loans that are classified as held-for-sale. At September 30, 2006,
the market value of these loans approximated $801.

The following summarizes the activity in the allowance for loan losses for the
three-month period ended September 30:
<TABLE>
<CAPTION>
                                                                           2006                  2005
                                                                         -------               -------
<S>                                                                      <C>                   <C>
Beginning balance                                                        $14,907               $15,188
Provision for losses - mortgage loans                                         62                    43
Provision for losses - consumer loans                                        142                    43
Provision for losses - commercial loans                                        -                    50
Loans recovered                                                                9                     9
Loans charged off                                                           (163)                 (183)
                                                                         -------               -------
Ending balance                                                           $14,957               $15,150
                                                                         =======               =======
</TABLE>

Comprehensive Income
Sources of comprehensive income not included in net income are limited to
unrealized gains and losses on certain investments in equity securities. For the
three months ended September 30, 2006 and 2005, total comprehensive net income
amounted to $3,557 and $3,188, respectively.


                                       7
<PAGE>

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands, except share data)

Earnings Per Share ("EPS")
The following table sets forth the computation of basic and diluted earnings per
share for the three months ended September 30:
<TABLE>
<CAPTION>
                                                                           2006               2005
                                                                         --------           --------
<S>                                                                     <C>                <C>
Numerator for basic and diluted earnings per share:
     Net Income                                                             $3,481             $3,228
Denominator:
     Weighted average shares for basic earnings per share                5,676,240          5,628,141
     Effect of dilutive stock options                                       70,223             69,021
                                                                         ---------          ---------
     Weighted average shares for dilutive earnings per share             5,746,463          5,697,162
                                                                         =========          =========
Net income per share:
     Basic                                                                   $0.61              $0.57
     Diluted                                                                 $0.61              $0.57
Dividends per share                                                          $0.20              $0.20
</TABLE>

Stock Based Compensation
In December 2004, the Financial Accounting Standards Board (FASB) issued No.
123R, a revised Statement, Share-Based Payment Amendment of FASB Statements No.
123 and APB No. 95, previously issued on March 31, 2004, that addressed the
accounting for share-based payment transactions in which an enterprise receives
services in exchange for (a) equity instruments of the enterprise and (b)
liabilities that are based on the fair value of the enterprise's equity
instruments that may be settled by the issuance of such equity instruments.
Under FAS 123R, all forms of share-based payments to employees, including
employee stock options, are treated the same as other forms of compensation by
recognition of the related cost in the income statement. The expense of the
award would generally be measured at fair value at the grant date. Previous
accounting guidance permitted the expense relating to so-called fixed plan
employee stock options only be disclosed in the footnotes to the financial
statements. The revised statement eliminated the ability to account for
share-based compensation transactions using APB Opinion No. 25, Accounting for
Stock Issued to Employees. The revised statement eliminated the alternative to
use the intrinsic value method of accounting. This statement requires the use of
fair value recognition principles. This statement did not have a significant
impact on Parkvale's results of operations, which became effective for Parkvale
on July 1, 2005. At September 30, 2006, Parkvale does not have any unvested
stock options outstanding.

Investments
U.S. Government and Agency Obligations   The unrealized losses on Parkvale's
investments in U.S. Government and Agency obligations were caused by interest
rate increases. The contractual terms of those investments do not permit the
issuer to settle the securities at a price less than the amortized cost of the
investment. Because Parkvale has the ability and intent to hold those
investments until a recovery of fair value, which may be maturity, Parkvale does
not consider those investments to be other-than-temporarily impaired at
September 30, 2006.



                                       8
<PAGE>

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands, except share data)

Corporate Debt   Parkvale's unrealized losses on investments in corporate bonds
relates to seven corporate bonds aggregating $15,000 of investments. The
unrealized losses were primarily caused by interest rate increases. The
contractual terms of those investments do not permit debtors to settle the
security at a price less than the face value of the investment. The investment
ratings for one of the investments, which matures in February 2007, is below
investment grade at B and six of the investments are considered investment grade
at A and BBB. Parkvale currently does not believe it is probable that it will be
unable to collect all amounts due according to the contractual terms of the
investment. Therefore, it is expected that the debentures would not be settled
at a price less than the amortized cost of the investment. Because Parkvale has
the ability and intent to hold these investments until a recovery of fair value,
which may be maturity, it does not consider these debentures to be
other-than-temporarily impaired at September 30, 2006.

Marketable Equity Securities   Parkvale's investments in marketable equity
securities consist primarily of investments in common stock of companies in
various industries. Parkvale's unrealized loss relates to a mutual fund,
Franklin Adjustable US Government, representing, $4,744 of the fair value and
$256 of unrealized loss. Parkvale evaluated the near-term prospects of the
issuer in relation to the severity and duration of the impairment. Based on that
evaluation and Parkvale's ability and intent to hold this investment for a
reasonable period of time sufficient for a forecasted recovery of fair value,
Parkvale does not consider this investment to be other-than-temporarily impaired
at September 30, 2006.

New Accounting Pronouncements
In February 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting ("FAS") No. 155, Accounting for Certain Hybrid
Instruments, as an amendment of FASB No. 133 and 140. FAS No. 155 allows
financial instruments that have embedded derivatives to be accounted for as a
whole (eliminating the need to bifurcate the derivative from its host) if the
holder elects to account for the whole instrument on a fair value basis. This
statement is effective for all financial instruments acquired or issued after
the beginning of an entity's first fiscal year that begins after September 15,
2006. The adoption of this standard is not expected to have a material effect on
the Company's results of operations or financial position.

In March 2006, the FASB issued FAS No. 156, Accounting for Servicing of
Financial Assets. This Statement, which is an amendment to FAS No. 140, will
simplify the accounting for servicing assets and liabilities, such as those
common with mortgage securitization activities. Specifically, FAS No. 156
addresses the recognition and measurement of separately recognized servicing
assets and liabilities and provides an approach to simplify efforts to obtain
hedge-like (offset) accounting. FAS No. 156 also clarifies when an obligation to
service financial assets should be separately recognized as a servicing
initially measured at fair value, if practicable, and permits an entity with a
separately recognized servicing asset or servicing liability to choose either of
the amortization or fair value methods for subsequent measurement. The
provisions of FAS No. 156 are effective as of the beginning of the first fiscal
year that begins after September 15, 2006. The adoption of this standard is not
expected to have a material effect on the Company's results of operations or
financial position.

In June 2006, FASB issued Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes." This pronouncement, which will be effective for the Parkvale in
fiscal 2008, clarifies accounting for income tax positions that are either: (1)
complex, and therefore, subject to varied interpretation, or (2) controversial.


                                       9
<PAGE>


NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Management does not expect this pronouncement to have a significant impact on
the Parkvale's financial position or results of operations in fiscal 2008.

In September 2006, the FASB issued No. 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The adoption of this standard is not
expected to have material effect on the Company's results of operations or
financial position.

In September 2006, the FASB issued No. 158, Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans an amendment of FASB Statements
No. 87, 88, 106 and 132R. This Statement requires an employer to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. The
Statement also requires an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with public traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. The adoption of this standard is not expected to have
an effect on the Company's results of operations or financial position.



                                       10
<PAGE>



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. These are unaudited financial
statements 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 factors including but not
limited to the interest rate environment, economic policy or conditions, federal
and state banking and tax regula-tions 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
placecountry-regionUnited States of America (US GAAP) and general practices
within the financial services industry. All significant inter-company
transactions are eliminated in consolidation and certain reclassifications are
made when necessary to conform the previous year's financial statements to the
current year's presentation. In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the
reported amount of assets and liabilities as of the dates of the balance sheets
and revenues and expenditures for the periods presented. Therefore, actual
results could differ significantly from those estimates. Accounting policies
involving significant judgments and assumptions by management, which have or
could have a material impact on the carrying value of certain assets or
comprehensive income, are considered critical accounting policies. The
Corporation recognizes the following as critical accounting policies: Allowance
for Loan Loss, Carrying Value of Investment Securities, Valuation of Foreclosed
Real Estate and Carrying Value of Goodwill and Other Intangible Assets.



                                       11
<PAGE>

The Corporation's critical accounting policies and judgments disclosures are
contained in the June 30, 2006 Parkvale Financial Corporation's Annual Report
printed in September 2006. Management believes that there have been no material
changes since June 30, 2006. 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.

(Dollar amounts in thousands, except per share data)


BALANCE SHEET DATA:
<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30,
                                                                      2006              2005
                                                                      ----              ----
<S>                                                               <C>               <C>
Total assets                                                       $1,923,586        $1,848,671
Loans, net                                                          1,214,310         1,196,538
Interest-earning deposits and federal funds sold                      188,004            71,137
Total investments                                                     415,464           480,744
Deposits                                                            1,519,881         1,447,590
FHLB advances                                                         216,827           227,084
Shareholders' equity                                                  125,218           115,079
Book value per share                                                   $22.05            $20.43
</TABLE>

<TABLE>
<CAPTION>
Statistical Profile:                                                      THREE MONTHS ENDED
                                                                          SEPTEMBER 30,  (1)
                                                                        2006              2005
------------------------------------------------------------------------------------------------
<S>                                                                  <C>                <C>
Average yield earned on all
   interest-earning assets                                              5.46%            4.90%
Average rate paid on all
   interest-bearing liabilities                                         3.34%            2.81%
Average interest rate spread                                            2.12%            2.09%
Net yield on average
   interest-earning assets                                              2.19%            2.13%
Other expenses to average assets                                        1.48%            1.46%
Taxes to pre-tax income                                                32.64%           31.94%
Return on average assets                                                0.75%            0.69%
Return on average equity                                               11.17%           11.27%
Average equity to average total assets                                  6.72%            6.13%
</TABLE>

<TABLE>
<CAPTION>
                                                                          AT SEPTEMBER 30,
                                                                        2006             2005
-----------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>
One year gap to total assets                                           -2.33%            2.05%
Intangibles to total equity                                            25.50%           28.57%
Ratio of nonperforming assets to total assets                           0.36%            0.36%
Number of full-service offices                                            47               46
</TABLE>

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




                                       12
<PAGE>



NONPERFORMING LOANS AND FORECLOSED REAL ESTATE:
Nonperforming and impaired loans and foreclosed real estate (REO) consisted of
the following:

<TABLE>
<CAPTION>
     (Dollar amounts in 000's)                     SEPTEMBER 30, 2006        June 30, 2006        September 30, 2005
                                                   ------------------        -------------        ------------------
<S>                                                     <C>                     <C>                     <C>
Delinquent single-family mortgage loans                  $2,769                  $1,700                  $2,603
Delinquent other loans                                    2,499                   1,759                   2,983
                                                         ------                  ------                  ------
Total nonperforming loans                                 5,268                   3,459                   5,586
Total impaired loans                                         19                     130                       1
Real estate owned, net                                    1,707                     975                   1,045
                                                         ------                  ------                  ------
Total                                                    $6,994                  $4,564                  $6,632
                                                         ======                  ======                  ======
</TABLE>

Nonperforming (delinquent 90 days or more) and impaired loans and real estate
owned represent 0.36%, 025% and 0.36% of total assets at the respective balance
sheet dates. Delinquent single-family mortgage loans at September 30, 2006
consisted of 39 single-family owner occupied homes. As of September 30, 2006,
$1.0 million or 36.3% of the nonaccrual mortgage loans totaling $2.8 million
were purchased from others. The $1.0 million of the delinquent loans purchased
from others are comprised of three loans which management believes are well
collateralized.

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 $170,000 at September 30, 2006 and $135,000 at
June 30, 2006. 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.

Nonaccrual, substandard and doubtful commercial and other real estate loans are
assessed for impairment. Loans are considered impaired when the fair value is
insufficient as compared to the contractual amount due. Parkvale excludes
single-family loans, credit card and installment consumer loans in the
determination of impaired loans consistent with the exception under paragraph 6
of SFAS 114 of loans measured for impairment. Parkvale Bank had $19,000 and
$130,000 of loans classified as impaired at September 30, 2006 and at June 30,
2006. The average recorded investment in impaired loans is $6,000 at September
30, 2006. Interest income of less than $1,000 has not been recognized for
impaired loans during the September 30, 2006 quarter. Impaired assets include
$1.7 million of foreclosed real estate as of September 30, 2006. Foreclosed real
estate properties are recorded at the lower of the carrying amount or fair value
of the property less the cost to sell. The net book value of foreclosed real
estate normally consists of 1-4 family single-family dwellings. In addition, 7
properties of foreclosed commercial real estate at September 30, 2006 are valued
at $1.2 million.

ALLOWANCE FOR LOAN LOSSES:
The allowance for loan losses was $15.0 million at September 30, 2006, $14.9
million at June 30, 2006 and $15.2 million at September 30, 2005 or 1.22%, 1.21%
and 1.25% of gross loans at September 30, 2006, June 30, 2006 and September 30,
2005. The adequacy of the allowance for loan loss is determined by management
through evaluation of the loss probable on individual nonperforming, delinquent
and high dollar loans, economic and business trends, growth and composition of
the loan portfolio and historical loss experience, as well as other relevant
factors. The loan portfolio includes $196.0 million of initial interest only
mortgage loans at September 30, 2006, which are considered well collateralized.


                                       13
<PAGE>


Management continually monitors the loan portfolio to identify potential
portfolio risks and to detect potential credit deterioration in the early
stages. Management then establishes reserves based upon its evaluation of the
inherent risks in the loan portfolio. Changes to the levels of reserves are made
quarterly based upon perceived changes in risk. Management believes the
allowance for loan losses is adequate to absorb loan losses.

LIQUIDITY AND CAPITAL RESOURCES:
Federal funds sold increased $76.0 million or 73.1% from June 30, 2006 to
September 30, 2006. Investment securities held to maturity decreased $9.5
million or 2.4% and loans decreased $3.0 million or 0.3% from June 30, 2006 to
September 30, 2006 as funds from the maturing investments were primarily
deployed into federal funds sold. Deposits increased $68.1 million or 4.7% from
June 30, 2006 to September 30, 2006. The increases in Federal funds sold and
Deposits include $64.5 million of money market deposits on September 29 that may
be temporary deposits. Federal Home Loan Bank advances decreased $5.1 million or
2.3%. Parkvale Bank's FHLB advance available maximum borrowing capacity is
$835.4 million. If Parkvale were to experience a deposit decrease in excess of
the available cash resources and cash equivalents, the FHLB borrowing capacity
could be utilized to fund a rapid decrease in deposits.

Shareholders' equity was $125.2 million or 6.5% of total assets at September 30,
2006. A stock repurchase program, approved in June 2006, permits the purchase of
5.0% of outstanding stock or 283,400 shares during fiscal 2007 at prevailing
prices in open-market transactions. This program has not been utilized through
September 30, 2006. Banks are required to maintain Tier I (Core) capital equal
to at least 4% of the institution's adjusted total assets, and Tier II
(Supplementary) risk-based capital equal to at least 8% of the risk-weighted
assets. At September 30, 2006, Parkvale Bank was in compliance with all
applicable regulatory requirements, with Tier I and Tier II ratios of 6.80% and
13.34%, respectively.

The regulatory capital ratios for Parkvale Bank at September 30, 2006 are
calculated as follows:

<TABLE>
<CAPTION>
                                                                       Tier I           Tier I            Tier II
                                                                        Core          Risk-Based        Risk-Based
                                                                       Capital          Capital           Capital
                                                                     ----------------------------------------------
<S>                                                                 <C>              <C>               <C>
Equity Capital (1)                                                   $  155,872       $  155,872        $  155,872
Less non-allowable intangible assets                                    (31,927)         (31,927)          (31,927)
Less unrealized securities gains                                           (173)            (173)             (173)
Plus permitted valuation allowances (2)                                       -                -            12,838
Plus allowable unrealized holding gains (3)                                   -                -               123
                                                                     ----------------------------------------------
   Total regulatory capital                                             123,772          123,772           136,733
Minimum required capital                                                 72,794           41,010            82,021
                                                                     ----------------------------------------------
   Excess regulatory capital                                         $   50,978       $   82,762        $   54,712
   Adjusted total assets                                             $1,819,849       $1,025,259        $1,025,259

Regulatory capital as a percentage                                         6.80%           12.07%            13.34%
Minimum capital required as a percentage                                   4.00%            4.00%             8.00%
                                                                     ----------------------------------------------
Excess regulatory capital as a percentage                                  2.80%            8.07%             5.34%
                                                                     ==============================================
Well capitalized requirement                                               5.00%            6.00%            10.00%
                                                                     ==============================================
</TABLE>

(1) Represents equity capital of the consolidated Bank as reported to the
    Pennsylvania Department of Banking and FDIC on Form 041 for the quarter
    ended September 30, 2006.

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

(3) Limited to 45% of pretax net unrealized holding gains.


                                       14
<PAGE>

Management is not aware of any trends, events, uncertainties or current
recommendations by any regulatory authority that will have, or that are
reasonably likely to have, material effects on Parkvale's liquidity, capital
resources or operations.

RESULTS OF OPERATIONS - COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2006
AND 2005
For the three months ended September 30, 2006, net income was $3.5 million or
$0.61 per diluted share, up 7.8% on a per share basis, compared to net income of
$3.2 million or $0.57 per diluted share for the quarter ended September 30,
2005. The $253,000 increase in net income for the September 2006 quarter
reflects an increase in net interest income of $155,000 and higher noninterest
income of $345,000, offset by an increase in related income tax expense. Net
interest income increased to $9.6 million from $9.4 million for the prior
period. Return on average equity was 11.17% for the September 2006 quarter
compared to 11.27% for the September 2005 quarter.

INTEREST INCOME:
Parkvale had interest income of $23.9 million during the three months ended
September 30, 2006 versus $21.7 million during the comparable period in 2005.
The $2.2 million increase is the result of a 56 basis point increase in the
average yield from 4.90% in 2005 to 5.46% in 2006, mitigated by a $15.4 million
or 0.9% decrease in the average balance of interest-earning assets due to a
decrease in average investments. Interest income from loans increased $1.3
million or 8.2% resulting from a 36 basis point increase in the average yield
from 5.48% in 2005 to 5.84% in 2006 and by an increase in the average
outstanding loan balances of $17.3 million or 1.5%. Investment interest income
increased by $158,000 or 3.5% due to an increase of 67 basis points in the
average yield from 3.73% in 2005 to 4.40% in 2006, offset by a $60.7 million or
12.5% decrease in average investments. Interest income earned on federal funds
sold increased $784,000 or 101.2% from the 2005 quarter due to a 184 basis point
increase in the average yield from 3.52% in 2005 to 5.36% in 2006 and by an
increase in the average balance of $28.1 million or 31.9%. The weighted average
yield on all interest-earning assets was 5.45% at September 30, 2006 and 4.95%
at September 30, 2005.

INTEREST EXPENSE:
Interest expense increased $2.1 million or 17.4% from the 2005 quarter to the
2006 quarter. The increase was due to a 53 basis point increase in the average
rate paid on deposits and borrowings from 2.81% in 2005 to 3.34% and mitigated
by a $25.4 million decrease in the average deposits and borrowings in 2006. At
September 30, 2006, the average rate payable on liabilities was 2.97% for
deposits, 4.80% for borrowings, 9.07% for trust-preferred securities and 3.32%
for combined deposits and borrowings.

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
September 2006 increased by $68,000 from the 2005 quarter to provide for losses
on consumer and commercial real estate loans. Aggregate valuation allowances
were 1.22% and 1.21% of gross loans at September 30, 2006 and June 30, 2006,
respectively.

Nonperforming loans, impaired loans and real estate owned aggregated $7.0
million, $4.6 million and $6.6 million at September 30, 2006, June 30, 2006 and
September 30, 2005, representing 0.36%, 0.25% and 0.36% of total assets at the
respective balance sheet dates. Total loan loss reserves at September 30, 2006
were $15.0 million. Management considers loan loss reserves sufficient when
compared to the value of underlying collateral. Collateral is considered and
evaluated when establishing provision for loan losses and


                                       15
<PAGE>


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 increased by $345,000 or 15.1% in 2006 due to a
$226,000 or 14.2% increase in 2006 for service charges on deposit accounts,
offset by a $9,000 or 2.7% decrease in 2006 for loan fees and service charges
for all types of products and services. Deposit account revenue increases were
earned on NSF and overdraft fees along with interchange income from debit cards
as more deposit account holders were assessed usage fees, including accounts at
offices in the Ohio Valley. The loss on sale of assets was $9,000 due to sale of
real estate formerly used as a branch office. Other income increased $137,000 or
38.6% primarily due to recoveries of $105,000 in the 2006 quarter as compared to
$63,000 in the 2005 quarter from previous write-downs of assets acquired from
Advance and due to an increase in annuity fee and commission income of $77,000.
Annuity fee and commission income was $229,000 in the 2006 quarter compared to
$152,000 in the 2005 quarter.

NONINTEREST EXPENSE:
Total noninterest expense increased by $7,000 or 0.1% for the three months ended
September 30, 2006 compared to the September 2005 quarter. This increase is due
principally to increases of $65,000 or 1.8% in compensation and employee
benefits and of $28,000 or 6.2% in office supplies, telephone, and postage,
offset by decreases in office occupancy of $77,000 or 6.1% and marketing of
$17,000 or 12.2%. Office occupancy expense decreased primarily due to the
purchase of the headquarters building in January 2006 reducing overall occupancy
costs. Annualized noninterest expense as a percentage of average assets was
1.48% for the quarter ended September 30, 2006 and 1.46% for the quarter ended
September 30, 2005.

IMPACT OF INFLATION AND CHANGING PRICES:
The financial statements and related data presented herein have been prepared in
accordance with US GAAP, which require 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, 2006 in Item 7A of Parkvale Financial
        Corporation's Form 10-K, filed with the SEC on September 11, 2006.
        Management believes that there have been no material changes in
        Parkvale's market risk since June 30, 2006.

Item 4. Controls and Procedures
        Disclosure controls and procedures are monitored and supervised by
        Parkvale's management, including the CEO and CFO, regarding the
        effectiveness of the design and operation of Parkvale's disclosure
        controls and procedures. Parkvale's management, including the CEO and
        CFO, concluded that Parkvale's disclosure controls and procedures were
        effective as of September 30, 2006. There have been no changes in
        Parkvale's internal controls or in other factors that materially
        affected, or that are reasonable likely to materially affect,
        Parkvale's internal controls.


                                       16
<PAGE>


PART II - OTHER INFORMATION

Item 1.    Legal Proceedings                                             None

Item 1A. Risk Factors
         Risk Factor disclosures are presented at June 30, 2006 in Item 1A of
         Parkvale Financial Corporation's Form 10-K, filed with the SEC on
         September 11, 2006. Management believes that there have been no
         material changes in Parkvale's risk factors since June 30, 2006.

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

(a) No equity securities were sold by PFC during the period covered by this
    report that were not registered under the Securities Act of 1933.

(b) Not Applicable

(c) During the quarter ended September 30, 2006, Parkvale did not purchase
    shares.

The following table sets forth information with respect to any purchase made by
or on behalf of Parkvale or any "affiliated purchaser", as defined in Section
240. 10b-18(a)(3) under the Exchange Act, of shares of Parkvale common stock
during the indicated periods.

<TABLE>
<CAPTION>
                                                               Total Number of
                                                             Shares Purchased as          Maximum Number of
                             Total Number         Average      Part of Publicly         Shares that May Yet Be
                              of Shares         Price Paid      Announced Plans           Purchased Under the
Period                        Purchased          Per Share        or Programs            Plans or Programs (1)
------                        ---------          ---------        -----------            ---------------------
<S>                           <C>                <C>              <C>                        <C>
July 1-31, 2006                   -                  -                 -                        283,400
August 1-31, 2006                 -                  -                 -                        283,400
September 1-30, 2006              -                  -                 -                        283,400
</TABLE>


(1) The repurchase program approved on June 21, 2006 is scheduled to expire on
    June 30, 2007.

Item 3.  Defaults Upon Senior Securities                               None

Item 4.  Submission of Matters to a Vote of Security Holders

    (a)  The 2006 Annual Meeting of Shareholders of Parkvale Financial
         Corporation was held on October 26, 2006. Of 5,677,178 shares eligible
         to vote, 92.5% or 5,253,970 were voted by proxy.

    (b)  The shareholders voted to re-elect the nominees for director, as
         described in the Proxy Statement for the Annual Meeting. The results
         for the re-election of Andrea F. Fitting as director were 5,221,615
         shares in favor and 32,355 shares withheld. The results for the
         re-election of Robert D. Pfischner as director were 5,054,365 shares in
         favor and 199,605 shares withheld. The results for the re-election of
         Stephen M. Gagliardi as director were 4,995,736 shares in favor and
         258,234 shares withheld.

    (c)  The recommendation by the Board of Directors to ratify the appointment
         of Parente Randolph, LLC as the Corporation's independent auditors, as
         described in the Proxy Statement for the


                                       17
<PAGE>

         Annual Meeting, was approved with 5,237,282 shares in favor, 11,000
         shares against and 5,688 shares abstaining.

Item 5.  Other Information                                            None

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.


                                   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: October 27, 2006                           By: /s/ Robert J. McCarthy, Jr.
      ----------------                              ----------------------------
                                                 Robert J. McCarthy, Jr.
                                                 President and
                                                 Chief Executive Officer


DATE: October 27, 2006                           By: /s/ Timothy G. Rubritz
      ----------------                              ----------------------------
                                                 Timothy G. Rubritz
                                                 Vice President, Treasurer and
                                                 Chief Financial Officer


                                       18