UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

þ		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 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, PA		15146
(Address of principal executive office)		(Zip code)

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

Securities registered pursuant to Section 12(b) of the Act:

Common Stock ($1.00 par value)		Name of Exchange on which registered
(Title of Class)		Nasdaq Select

Securities registered pursuant to Section 12(g) of the Act- None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required 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 þ No o

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 o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

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

The closing sales price of the Registrant’s Common stock on November 8, 2010 was $8.33 per share.

Number of shares of Common Stock outstanding as of November 8, 2010 was 5,529,211.

 

 

Explanatory Note

          Parkvale Financial Corporation (the “Company”) originally filed its Form 10-K for the year ended June 30, 2010 on September 13, 2010. It was subsequently determined that the calculation of the disallowed portion of the Company’s deferred tax asset was inadvertently overlooked with respect to the Tier I Capital calculation. The result of the oversight is that the Tier I Capital ratio on page 50 of the original Form 10-K (Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations), and regulatory capital amounts and ratios disclosed in Note G (Regulatory Capital) to the financial statements on page 80 of the original Form 10-K were not correctly disclosed at June 30, 2010. In all instances, the revised regulatory capital amounts and corresponding ratios, as disclosed in this Form 10-K/A filing (pages 43-44), result in the Company continuing to be categorized as well capitalized under regulatory framework.

          Items 7 and 8 of Form 10-K are being re-filed in their entirety to provide the corrected information, and certain exhibits are being re-filed pursuant to Item 15.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

          The purpose of this discussion is to summarize the financial condition and results of operations of Parkvale Financial Corporation (“PFC”) and provide other information which is not readily apparent from the consolidated financial statements included in this report. Reference should be made to those statements, the notes thereto and the selected financial data presented elsewhere in this report for a complete understanding of the following discussion and analysis.

INTRODUCTION

          PFC is a unitary savings and loan holding company incorporated under the laws of the Commonwealth of Pennsylvania. Its main operating subsidiary is Parkvale Savings Bank (the “Bank”), which is a Pennsylvania chartered permanent reserve fund stock savings bank headquartered in Monroeville, Pennsylvania. PFC and its subsidiaries are collectively referred to herein as “Parkvale”. Parkvale is also involved in lending in the Columbus, Ohio area through its wholly owned subsidiary, Parkvale Mortgage Corporation (“PMC”).

THE BANK

General

     The Bank conducts business in the greater tri-state area through 47 full-service offices using the trade name Parkvale Bank with 40 offices in Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland Counties of Pennsylvania, two branches in West Virginia and five branches in Ohio. With total assets of $1.8 billion at June 30, 2010, Parkvale was the tenth largest financial institution headquartered in the Pittsburgh metropolitan area and twelfth largest financial institution with a significant presence in western Pennsylvania.

     The primary business of Parkvale consists of attracting deposits from the general public in the communities that it serves and investing such deposits, together with other funds, in residential real estate loans, consumer loans, commercial loans, and investment securities. Parkvale focuses on providing a wide range of consumer and commercial services to individuals, partnerships and corporations in the greater Pittsburgh metropolitan area, which comprises its primary market area. In addition to the loans described above, these services include various types of deposit and checking accounts, including commercial checking accounts and automated teller machines (“ATMs”) as part of the STAR network.

     Parkvale derives its income primarily from interest charged on loans, interest on investments, and, to a lesser extent, service charges and fees. Parkvale’s principal expenses are interest on deposits and borrowings and operating expenses. Lending activities are funded principally by deposits, loan repayments, and operating earnings.

     Lower housing demand in Parkvale’s primary lending areas, relative to its deposit growth, has spurred the Bank to purchase residential mortgage loans from other financial institutions in the secondary market. This purchase strategy

also achieves geographic asset diversification. Parkvale purchases adjustable rate residential mortgage loans subject to its normal underwriting standards. Parkvale purchased $6.3 million of fixed mortgage loans during fiscal 2010 and did not purchase loans during fiscal 2009 as a result of uncertainties related to the secondary mortgage market.

Financial Condition

Parkvale’s average interest-earning assets increased $13.2 million or 0.7% for the year ended June 30, 2010 over fiscal year 2009. Average balances decreased by $109.4 million in loans, while average federal funds sold increased $58.0 million and average investments increased by $64.5 million during the fiscal 2010 period. Average deposit liabilities rose $18.1 million in fiscal year 2010, and average borrowings increased by $5.0 million in fiscal 2010, resulting in a $9.9 million decline in net interest-earning assets. In addition, our average interest rate spread declined from 2.29% in fiscal 2009 to 2.06% in fiscal 2010. The decreases in net interest-earning assets and in the average interest rate spread resulted in a $4.3 million or 10.3% decrease in net interest income in fiscal 2010 compared to fiscal 2009.

Asset and Liability Management

     Parkvale functions as a financial intermediary, and as such, its financial condition should be examined in terms of its ability to manage interest rate risk (“IRR”) and diversify credit risk.

     Parkvale’s asset and liability management (“ALM”) is driven by the ability to manage the exposure of current and future earnings and capital to fluctuating interest rates. This exposure occurs because the present value of future cash flows, and in many cases the cash flows themselves, change when interest rates change. One of Parkvale’s ALM goals is to minimize this exposure.

     IRR is measured and analyzed using static interest rate sensitivity gap indicators, net interest income simulations and net present value sensitivity measures. These combined methods enable Parkvale’s management to regularly monitor both the direction and magnitude of potential changes in the pricing relationship between interest-earning assets and interest-bearing liabilities.

     Interest rate sensitivity gap analysis provides one indicator of potential interest rate risk by comparing interest-earning assets and interest-bearing liabilities maturing or repricing at similar intervals. The gap ratio is defined as rate-sensitive assets minus rate-sensitive liabilities for a given time period divided by total assets. Parkvale continually monitors gap ratios, and within the IRR framework and in conjunction with net interest income simulations, implements actions to reduce exposure to fluctuating interest rates. Such actions have included maintaining high liquidity, increasing the repricing frequency of the loan portfolio, purchasing adjustable-rate investment securities and lengthening the overall maturities of interest-bearing liabilities. Management believes these ongoing actions minimize Parkvale’s vulnerability to fluctuations in interest rates. The one-year gap ratio increased from 9.46% at June 30, 2009 to 12.45% as of June 30, 2010, the three-year gap ratio went from 1.49% at June 30, 2009 to 1.38% at June 30, 2010 and the five-year gap ratio was 9.14% at June 30, 2009 versus 5.91% at June 30, 2010. The increase in the asset sensitivity in the one-year GAP ratio is due to an increase in federal funds sold, investments and ARM loans scheduled to reprice or mature within one-year and projected calls on agency step-up securities.

     Gap indicators of IRR are not necessarily consistent with IRR simulation estimates. Parkvale utilizes net interest income simulation estimates under various assumed interest rate environments to more fully capture the details of IRR. Assumptions included in the simulation process include measurement over a probable range of potential interest rate changes, prepayment speeds on amortizing financial instruments, other imbedded options, loan and deposit volumes and rates, non-maturity deposit assumptions and management’s capital requirements. The estimated impact on projected net interest income in fiscal 2011 assuming an immediate parallel and instantaneous shift in current interest rates, would result in the following percentage changes over fiscal 2010 net interest income: +100 basis points (“bp”), +10.66%; +200 bp, +7.62%; -100 bp, +4.21%; -200 bp, +9.04%. This compares to projected net interest income for fiscal 2010 made at June 30, 2009 of: +100 bp, +0.9%; +200 bp, +0.1%; -100 bp, +0.9%; -200 bp, -8.0%. The fluctuation in projected net interest income between fiscal 2011 and 2010 relates to lower yields on shorter-term liquid assets and is reflective of Parkvale’s investment and interest rate risk management strategy of shortening the duration of its investment portfolio by purchasing short-term agency callable and multi-step securities in anticipation of rising interest rates.

     Interest-Sensitivity Analysis. The following table reflects the maturity and repricing characteristics of Parkvale’s assets and liabilities at June 30, 2010:

(Dollars in thousands):

Interest sensitive assets		<3 months				4-12 Months				1-5 Years				5+Years				Total
ARM and other variable rate loans		$	193,639			$	237,506			$	167,470			$	14,969			$	613,584
Fixed-rate loans, net (1)			12,030				36,604				173,866				214,671				437,171
Variable rate mortgage-backed securities and CMO’s			38,271				76,953				91,131				—				206,355
Fixed rate mortgage-backed securities and CMO’s (1)			576				531				10,996				8,246				20,349
Investments and federal funds sold			253,008				44,223				87,223				46,408				430,862
Equities, primarily FHLB			1				4,760				14,357				1,205				20,323
Total interest-sensitive assets		$	497,525			$	400,577			$	545,043			$	285,499			$	1,728,644
Ratio of interest-sensitive assets to total assets			27.0	%			21.7	%			29.6	%			15.5	%			93.8	%
Interest-sensitive liabilities
Passbook deposits and club accounts (2)		$	11,559			$	39,022			$	46,242			$	127,443			$	224,266
Checking accounts (3)			26,659				20,184				40,372				220,368				307,583
Money market deposit accounts			70,032				44,000				44,000				—				158,032
Certificates of deposit			158,618				245,581				352,500				34,710				791,408
FHLB advances and other borrowings			27,695				25,000				182,566				20,089				255,350
Total interest-sensitive liabilities		$	294,563			$	373,787			$	665,680			$	402,610			$	1,736,640
Ratio of interest-sensitive liabilities to total liabilities and equity			16.0	%			20.3	%			36.1	%			21.9	%			94.3	%
Ratio of interest-sensitive assets to interest-sensitive liabilities			168.9	%			107.2	%			81.9	%			70.9	%			99.5	%
Periodic Gap to total assets			11.0	%			1.5	%			-6.6	%			-6.4				-0.4	%
Cumulative Gap to total assets			11.0	%			12.5	%			5.9	%			-0.4	%

     Asset Management. A primary goal of Parkvale’s asset management is to maintain a high level of liquid assets. Parkvale defines the following as liquid assets: cash, federal funds sold, certain corporate debt maturing in less than one year, U.S. Government and agency obligations maturing in less than one year and short-term bank deposits. The average daily liquidity was 29.1% for the quarter ended June 30, 2010. During fiscal 2010, in addition to maintaining high liquidity, Parkvale’s investment strategy was to purchase primarily lower risk investment grade securities rated AA or higher to enhance yields and reduce the risk associated with rate volatility.

     Parkvale’s lending strategy has been designed to shorten the average maturity of its assets and increase the rate sensitivity of the loan portfolio. In fiscal 2010, 2009 and 2008, 40.5%, 48.3% and 66.4%, respectively, of mortgage loans originated or purchased were adjustable-rate loans. Parkvale has continually emphasized the origination and purchase of ARM loans. ARMs totaled $511.8 million or 62.7% of total mortgage loans at June 30, 2010 versus $577.0 million or 65.2% of total mortgage loans at June 30, 2009. To supplement local mortgage originations, Parkvale purchased loans aggregating $6.3 million in fiscal 2010 from mortgage bankers and other financial institutions. There were no loan purchases during fiscal 2009. The loan packages purchased were fixed-rate residential loans. All of the fiscal 2010 purchases were residential loans. The loans purchased from others are reviewed for underwriting standards

that include appraisals, creditworthiness and acceptable ratios of loan to value and debt to income calculated at fully indexed rates. The practice of purchasing loans or ARM securities in the secondary market was temporarily discontinued in fiscal 2009 due to the lack of acceptable product availability. At June 30, 2010, Parkvale had commitments to originate mortgage loans totaling $3.9 million and commercial loans of $3.0 million. Commitments to fund construction loans in process at June 30, 2010 were $7.2 million, which were funded from current liquidity.

     Parkvale continues to focus on its consumer loan portfolio through new originations. Home equity lines of credit are granted up to 90% of collateral value at competitive rates. In general, these loans have shorter maturities and greater interest rate sensitivity and margins than residential real estate loans. At June 30, 2010 and 2009, consumer loans were $184.2 million and $185.8 million, which represented a 0.9% decrease and a 5.0% increase over the balances at June 30, 2009 and 2008, respectively, with fixed-rate second mortgage loans totaling $80.6 million, $89.7 million and $100.8 million of the total outstanding balances at June 30, 2010, 2009 and 2008, respectively.

     Investments in mortgage-backed securities and other securities, such as U.S. Government and agency obligations and corporate debt, are primarily purchased to enhance Parkvale’s liquidity position and to diversify asset concentration. During fiscal 2010, Parkvale purchased an aggregate of $431.8 million of investment securities classified as held to maturity, compared to $284.6 million of such purchases in fiscal 2009 and $361.7 million in fiscal 2008. The fiscal 2010 purchases consist of government and agency securities, with the exception of $5.0 million of taxable municipal securities. Substantially all of the 2010 purchases were either adjustable or expected to be shorter term due to step up features. At June 30, 2010, the combined weighted average yield on adjustable corporate securities, agency and collateralized mortgage obligations was 3.58%. If the interest rate indices were to fall further, net interest income may decrease if the yield, after discount amortization, on these securities, as well as other liquid assets and ARM loans were to fall faster than liabilities would reprice. All debt securities, with the exception of $59.8 million of non-agency CMOs, are classified as held to maturity and are not available for sale or held for trading.

     The credit quality of non-agency CMO securities rated below investment grade at June 30, 2010 as a result of downgrades by the national rating agencies was evaluated. Based upon recent and future credit deterioration projections and results of the evaluation, the Bank intends to sell fifteen non-agency CMO securities in the near term. The debt securities were reclassified from held to maturity to available for sale at June 30, 2010, and other than temporary impairment charges of $13.1 million were recognized in earnings during fiscal 2010 as the difference between the respective investment’s amortized cost basis and fair value at June 30, 2010. The remaining carrying value of the available for sale non-agency CMO securities is $59.8 million at June 30, 2010. Of the $59.8 million, all but three securities aggregating $8.5 million have been sold subsequent to June 30, 2010. It is projected that the level of adversely classified investment securities will decrease by over 60% compared to March 31, 2010 upon the sale of the respective non-agency CMO securities along with the non-cash other than temporary impairment charges recognized during the fourth quarter of fiscal 2010 related to the non-agency CMO and pooled trust preferred securities.

     Liability Management. Deposits are priced according to management’s asset/liability objectives, alternate funding sources and competitive factors. Certificates of deposits maturing after one year as a percent of total deposits were 26.0% at June 30, 2010 and 20.1% at June 30, 2009. The increased percentage of longer-term certificates is reflective of consumer preference for longer-terms. Over the past 5 years, Parkvale has made a concentrated effort to increase low cost deposits by attracting new checking customers to our community branch offices. During fiscal 2010, checking accounts increased by 12.4% compared to a 2.1% increase during fiscal 2009. Parkvale’s primary sources of funds are deposits received through its branch network and advances from the Federal Home Loan Bank (“FHLB”). FHLB advances can be used on a short-term basis for liquidity purposes or on a long-term basis to support lending activities.

     Contractual Obligations

     Information concerning our future contractual obligations by payment due dates at June 30, 2010 is summarized as follows. Contractual obligations for deposit accounts do not include accrued interest. Payments for deposits other than time, which consist of non-interest bearing deposits and money market, NOW and savings accounts, are based on our historical experience, judgment and statistical analysis, as applicable, concerning their most likely withdrawal behaviors.

(Dollars in thousands)		Due < one year				1-3 years				3-5 years				5+ years				Total
Deposits other than time		$	211,456			$	110,428			$	20,186			$	347,811			$	689,881
Time deposits			404,199				288,512				63,988				34,710				791,409
Advances from FHLB			35,097				40,156				40,149				70,571				185,973
Term debt			2,500				5,000				16,250				—				23,750
Other debt			13,865				—				—				—				13,865
Mortgage loan commitments			3,907				—				—				—				3,907
Operating leases			1,104				1,496				851				2,317				5,768
Total		$	672,128			$	445,592			$	141,424			$	455,409			$	1,714,553

     Concentration of Credit Risk

     Financial institutions, such as Parkvale, generate income primarily through lending and investing activities. The risk of loss from lending and investing activities includes the possibility that losses may occur from the failure of another party to perform according to the terms of the loan or investment agreement. This possibility of loss is known as credit risk.

     Credit risk is increased when lending and investing activities concentrate a financial institution’s earning assets in a way that exposes the institution to a material loss from any single occurrence or group of related occurrences. Diversifying loans and investments to prevent concentrations of risks is one manner a financial institution can reduce potential losses due to credit risk. Examples of asset concentrations would include, but not be limited to, geographic concentrations, loans or investments of a single type, multiple loans to a single borrower, loans made to a single type of industry and loans of an imprudent size relative to the total capitalization of the institution. For loans originated, Parkvale has taken steps to reduce exposure to credit risk by emphasizing lower risk single-family mortgage loans, which comprise 62.8% of the gross loan portfolio as of June 30, 2010. The next largest component of the loan portfolio is consumer loans at 17.5%, which generally consists of lower balance second mortgages and home equity loans originated in the greater Pittsburgh area and Ohio Valley region and an auto loan portfolio.

     Nonperforming Loans and Foreclosed Real Estate

     Nonperforming loans and foreclosed real estate (“REO”) consisted of the following at June 30:

(Dollars in thousands)		2010				2009				2008				2007				2006
Nonaccrual Loans:
Mortgage		$	20,674			$	21,046			$	6,004			$	2,746			$	1,700
Consumer			651				623				582				416				567
Commercial			5,195				6,266				5,943				1,177				1,321
Total nonaccrual loans			26,520				27,935				12,529				4,339				3,588
Total foreclosed real estate, net			8,637				5,706				3,279				1,857				976
Total amount of nonaccrual loans and foreclosed real estate		$	35,157			$	33,641			$	15,808			$	6,196			$	4,564
Total nonaccrual loans as a % of total loans			2.52	%			2.48	%			1.02	%			0.35	%			0.29	%
Total nonaccrual loans and foreclosed real estate as a percent of total assets			1.91	%			1.76	%			0.85	%			0.34	%			0.25	%

     A weak national economy and to a lesser extent local housing sector and credit markets have contributed towards an increased level of non-performing assets. Nonperforming (delinquent 90 days or more) and impaired loans and real estate owned in the aggregate represented 1.91%, 1.76% and 0.85% of total assets at June 30, 2010, 2009 and 2008 respectively. Such non-performing assets at June 30, 2010 have increased to $35.2 million from $33.6 million at June 30, 2009, which includes $26.5 million of non-accrual loans.

     As of June 30, 2010, single-family mortgage loans delinquent 90 days or more include 54 loans aggregating $17.1 million purchased from others and serviced by national service providers with a cost basis ranging from $55,000

to $661,000 and 41 loans aggregating $3.5 million in Parkvale’s retail market area. Management believes that these 95 delinquent single-family mortgage loans are adequately collateralized with the exception of 38 loans with a remaining net book value of $8.2 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.

     Commercial loans and commercial real estate loans delinquent 90 days or more of $5.2 million at June 30, 2010 includes a $1.3 million relationship with a now closed medical facility, a $1.5 million relationship to an entity for coal extraction and reclamation, and a $1.1 million commercial office facility. The relationships are considered to be impaired at June 30, 2010 and the necessary related allowances for losses have been provided.

     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 has not been recognized in interest income was $1.2 million for fiscal 2010, $825,000 for fiscal 2009 and $426,000 for fiscal 2008. Parkvale provides an allowance for the loss of accrued but uncollected interest on mortgage, consumer and commercial business loans, which are 90 days or more contractually past due.

     In addition, loans totaling $4.4 million were classified as special mention and $4.4 million were classified as substandard for regulatory purposes at June 30, 2010. The special mention loans consist of $4.4 million performing single-family mortgage loans. The substandard loans consist of commercial relationships exhibiting 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, while current or less than 90 days past due, have previously 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 while continuing with the performing status classification of such loans.

     Loans that are 30 to 89 days past due at June 30, 2010 aggregated $16.4 million, including $14.6 million of single-family loans, compared to $18.3 million at June 30, 2009 and $9.8 million at June 30, 2008.

     Foreclosed real estate was $8.6 million at June 30, 2010 compared to $5.7 million at June 30, 2009. The 2010 real estate owned includes $5.2 million in 24 single-family dwellings. The single-family units include two unrelated foreclosures of seven and four single-family units in residential developments with a net book value of $2.0 million. Foreclosed commercial real estate aggregates $3.4 million, which includes two facilities used as automobile dealerships with a net book value of $2.1 million. The properties are valued at the lower of cost or market less estimated selling and holding costs with reserves established when deemed necessary.

     Allowance for Loan Losses

     The allowance for loan loss was $19.2 million at June 30, 2010 and $18.0 million at June 30, 2009 or 1.8% and 1.6% of gross loans at June 30, 2010 and June 30, 2009, respectively. The level of non-accrual loans and foreclosed real estate peaked during the fiscal year to $40.9 million at September 30, 2009 and was $35.2 million at June 30, 2010. Management determines the adequacy of the allowance for loan loss after a thorough evaluation of 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 is monitored by management on a regular basis for potential risks to detect potential credit deterioration in the early stages. Management then establishes reserves in the allowance for loan loss based upon evaluation of the inherent risks in the loan portfolio. Management believes the allowance for loan loss is adequate to absorb probable loan losses.

     The following table sets forth the allowance for loan loss allocation at June 30:

(Dollars in thousands)		2010								2009								2008								2007								2006
General Allowances:
Residential 1-4 mortgages		$	5,343				27.8	%		$	4,769				26.6	%		$	3,788				24.8	%		$	2,716				19.1	%		$	2,855				19.2	%
Commercial & multi-family mortgage			3,392				17.7	%			4,393				24.5	%			4,739				31.1	%			3,964				27.9	%			3,802				25.5	%
Consumer Loans			2,745				14.3	%			3,193				17.8	%			3,510				23.0	%			4,154				29.3	%			4,568				30.6	%
Commercial Loans			2,534				13.2	%			3,038				16.9	%			2,741				18.0	%			2,848				20.1	%			3,368				22.6	%
Total General			14,014				73.0	%			15,393				85.8	%			14,778				96.9	%			13,682				96.4	%			14,593				97.9	%
Specific Allowances:
Residential 1-4 mortgage			4,316				22.5	%			1,697				9.4	%			105				0.7	%			31				0.2	%			32				0.2	%
Consumer			383				2.0	%			324				1.8	%			288				1.9	%			426				3.0	%			256				1.7	%
Commercial			496				2.5	%			546				3.0	%			78				0.5	%			50				0.4	%			26				0.2	%
Total Specific			5,195				27.0	%			2,567				14.2	%			471				3.1	%			507				3.6	%			314				2.1	%
Total Allowances for loan losses		$	19,209				100.0	%		$	17,960				100.0	%		$	15,249				100.0	%		$	14,189				100.0	%		$	14,907				100.0	%

     The general allowance on residential 1-4 family loans is $5.3 million or 0.8% of the residential 1-4 family loan portfolio at June 30, 2010, on commercial and multi-family loans the general allowance is $3.4 million or 2.1% of the commercial and multi-family loan portfolio, on consumer loans the general allowance is $2.7 million or 1.5% of the consumer loan portfolio and on the commercial loan portfolio the general allowance is $2.5 million or 6.3%.

Results of Operations

     Parkvale Financial Corporation reported a net loss to common shareholders for the fiscal year ended June 30, 2010 of $18.1 million or $3.30 per diluted common share, compared to a net loss of $10.4 million or $1.90 per diluted common share for the fiscal year ended June 30, 2009. The $7.7 million increase in the fiscal 2010 net loss reflects higher non-cash debt security impairment charges of $39.0 million compared to $30.4 million for the fiscal year ended June 30, 2009, partially offset by a $7.9 million increase in the income tax benefit. The impairment charges are the result of credit deterioration related to pooled trust preferred and non-agency CMO securities. The loan loss provision increased from $6.8 million for fiscal 2009 to $7.5 million for fiscal 2010 to address continued weakness in housing prices and high levels of unemployment. Noninterest expense increased by $1.0 million during fiscal 2010 due primarily to a $1.7 million or 148% increase in FDIC insurance premiums, which was partially offset by an $880,000 or 5.5% decrease in compensation and employee benefit expense.

Interest Income

     Interest income on loans decreased by $10.5 million or 15.7% in fiscal 2010 from fiscal 2009. Average loans outstanding in fiscal 2010 were $1.1 billion, representing a decrease of $109 million or 9.4% compared to fiscal 2009. Single-family residential loans declined by $66 million or 9.1% from June 30, 2009 to June 30, 2010, and multi-family residential loans decreased by $2.1 million or 6.2% over the same period. The lower interest income also reflected a lower average loan yield, which was 5.72% in fiscal 2009 and 5.33% in fiscal 2010, due to the lower prevailing rates on new loans along with ARM loans repricing down due to lower indices for periodic rate adjustments. Interest income on loans decreased by $5.0 million or 6.9% from fiscal 2009 to 2008. The average yield on loans decreased from 5.94% in fiscal 2008 to 5.72% in fiscal 2009, and the average loan balance decreased by $41 million or 3.4% in fiscal 2009 compared to fiscal 2008.

     Interest income on investments decreased by $3.8 million or 16.6% in fiscal 2010. This was the result of a decrease in the average yield on investments to 3.38% in fiscal 2010 from 4.57% in fiscal 2009, partially offset by an increase in the average balance of $64.5 million or 12.7% to $572 million. The higher level of investment securities was primarily related to purchases of lower risk short-term government and agency securities, which have lower yields than other investment securities. Interest income on investments increased by $1.2 million or 5.3% from fiscal 2008 to fiscal 2009 as a result of a $97.1 million or 23.7% increase in the average balance, partially offset by a decrease in the average yield on investments to 4.57% in fiscal 2009 from 5.36% in fiscal 2008.

     Interest income on federal funds sold decreased by $307,000 or 44.7% from fiscal 2009 to fiscal 2010. The decrease was attributable primarily to a decrease in the average yield from 0.74% in fiscal 2009 to 0.25% in fiscal 2010 as a result of the federal reserve setting the current Federal Fund target rate at 0.25%, offset by an increase in the average federal funds sold balance from $92.6 million in fiscal 2009 to $150.6 million in fiscal 2010. The average balance of federal funds sold decreased from $114.8 million in fiscal 2008 to $92.6 million in fiscal 2009, with interest income decreasing $3.6 million from fiscal 2008 to 2009. The average yield decreased from 3.75% in fiscal 2008 to 0.74% in fiscal 2009.

Interest Expense

     Interest expense on deposits decreased by $11.0 million or 28.6% from fiscal 2009 to fiscal 2010. The average deposit balance increased $18.1 million or 1.2% in fiscal 2010, while the average cost decreased from 2.57% in fiscal 2009 to 1.81% in fiscal 2010. The lower rates paid in fiscal 2010 were reflective primarily of lower prevailing market rates on certificate accounts. Interest expense on deposits decreased $8.2 million or 17.6% between fiscal 2008 and 2009. The average cost decreased from 3.19% in fiscal 2008 to 2.57% in fiscal 2009, which was partially offset by an increase in the average deposit balance of $31.6 million or 2.2% from fiscal 2008 to 2009.

     Interest expense on borrowed money increased by $692,000 or 6.3% in fiscal 2010. This was due to an increase of $5.0 million or 2.3% in the average balance due to $25 million of term debt borrowings on December 30, 2008 and an increase in the average cost of borrowings from 4.68% in fiscal 2009 to 4.88% in fiscal 2010. The increase in average cost of borrowings during fiscal 2010 is due primarily to a higher interest rate on PNC Bank, National Association term debt as a result of not meeting a financial reporting covenant beginning in the second quarter of fiscal 2010. In fiscal 2009, interest expense on borrowed money decreased by $576,000 or 5.3%, primarily due to a $2.8 million decrease in average borrowings resulting from FHLB advance maturities and a decrease in the average cost of borrowings from 4.88% in fiscal 2008 to 4.68% in fiscal 2009.

Yields Earned and Rates Paid

     The results of operations of Parkvale depend substantially on its net interest income, which is generally the largest component of Parkvale’s operating results. Net interest income is affected by the difference or spread between yields earned by Parkvale on its loan and investment portfolios and the rates of interest paid by Parkvale for deposits and borrowings, as well as the relative amounts of its interest-earning assets and interest-bearing liabilities.

     The following table sets forth certain information regarding changes in interest income and interest expense for the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to (1) changes in rates (change in rate multiplied by old volume), (2) changes in volume (changes in volume multiplied by old rate), and (3) changes in rate-volume (change in rate multiplied by the change in volume).

Year ended June 30
		2010 vs. 2009																2009 vs. 2008
(Dollars in thousands)		Rate				Volume				Rate/ Volume				Total				Rate				Volume				Rate/ Volume				Total
Interest-earning assets
Loans			($4,540	)			($6,256	)		$	325				($10,471	)			($2,651	)			($2,433	)		$	131				($4,953	)
Investments			(6,033	)			2,950				(761	)			(3,844	)			(3,238	)			5,207				(796	)			1,173
Federal funds sold			(454	)			429				(282	)			(307	)			(3,455	)			(830	)			666				(3,619	)
Total			(11,027	)			(2,877	)			(718	)			(14,622	)			(9,344	)			1,944				1				(7,399	)
Interest-bearing liabilities
Deposits			(11,680	)			464				193				(11,023	)			(9,052	)			1,007				(194	)			(8,239	)
FHLB advances and debt			443				233				16				692				(438	)			(134	)			(4	)			(576	)
Trust preferred securities			—				—				—				—				(317	)			(317	)			317				(317	)
Total			(11,237	)			697				209				(10,331	)			(9,807	)			556				119				(9,132	)
Net change in net interest income (expense)		$	210				($3,574	)			($927	)			($4,291	)		$	463			$	1,388				($118	)		$	1,733

     The following table sets forth the average yields earned on Parkvale’s interest-earning assets and the average rates paid on its interest-bearing liabilities for the periods indicated, the resulting average interest rate spreads, the net yield on interest-earning assets and the weighted average yields and rates at June 30, 2010:

		Year Ended June 30,												At June 30,
		2010				2009				2008				2010
Average yields on (1)
Loans			5.33	%			5.72	%			5.94	%			5.16	%
Investments (2)			3.38	%			4.57	%			5.36	%			2.90	%
Federal funds sold			0.25	%			0.74	%			3.75	%			0.25	%
All interest-earning assets			4.27	%			5.13	%			5.66	%			4.08	%
Average rates paid on (1)
Deposits			1.81	%			2.57	%			3.19	%			1.42	%
FHLB advances and other borrowings			4.88	%			4.68	%			4.88	%			4.85	%
Trust preferred securities			0.00	%			0.00	%			9.10	%			0.00	%
All interest-bearing liabilities			2.21	%			2.84	%			3.42	%			1.87	%
Average interest rate spread			2.06	%			2.29	%			2.24	%			2.21	%
Net yield on interest-earning assets (3)			2.10	%			2.36	%			2.31	%

     The following table presents the average balances of each category of interest-earning assets and interest-bearing liabilities for the periods indicated.

		Year Ended June 30
(Dollars in thousands)		2010				2009				2008
Interest-earning assets
Loans		$	1,054,840			$	1,164,206			$	1,205,165
Investments, including FHLB stock			571,545				506,996				409,856
Federal funds sold			150,610				92,633				114,770
Total interest-earning assets			1,776,995				1,763,835				1,729,791
Noninterest-earning assets			128,609				113,387				109,878
Total assets		$	1,905,604			$	1,877,222			$	1,839,669
Interest-bearing liabilities
Deposits		$	1,515,540			$	1,497,467			$	1,465,883
FHLB advances and other borrowings			226,607				221,619				224,376
Trust preferred securities			—				—				3,484
Total interest-bearing liabilities			1,742,147				1,719,086				1,693,743
Noninterest-bearing liabilities			12,101				9,559				14,340
Total Liabilities			1,754,248				1,728,645				1,708,083
Shareholders equity			151,356				148,577				131,586
Total liabilities and equity		$	1,905,604			$	1,877,222			$	1,839,669
Net interest-earning assets		$	34,848			$	44,749			$	36,048
Interest-earning assets as a % of interest-bearing liabilities			102.0	%			102.6	%			102.1	%

An excess of interest-earning assets over interest-bearing liabilities enhances a positive interest rate spread.

Net Interest Income

     Net interest income is the difference between interest earned on loans, investments and federal funds sold and interest paid for deposits and borrowings. A positive interest rate spread is enhanced when interest-earning assets exceed interest-bearing liabilities, which results in increased net interest income.

     Net interest income decreased by $4.3 million or 10.3% from fiscal 2009 to fiscal 2010. The average interest rate spread decreased to 2.06% in fiscal 2010 from 2.29% in fiscal 2009, and the average net interest-earning assets decreased $9.9 million. In fiscal 2009, net interest income increased by $1.7 million or 4.3%. The average interest rate spread increased from 2.24% in fiscal 2008 to 2.29% in fiscal 2009, and average net interest-earning assets increased $8.7 million between the two years.

     At June 30, 2010, the weighted average yield on loans, investments and federal funds sold was 4.08%. The average rate payable on liabilities was 1.42% for deposits, 4.85% for borrowings and 1.87% for combined deposits and borrowings.

Provision for Loan Losses

     The provision for loan losses is the amount added to the allowance against which loan losses are charged. The provision for loan losses was $7.4 million in fiscal 2010, $6.8 million in fiscal 2009, and $2.3 million in fiscal 2008. The provision increased by $694,000 or 10.3% in fiscal 2010 compared to fiscal 2009. Aggregate allowances were 1.83% of gross loans as of June 30, 2010 compared to 1.60% at June 30, 2009. Management believes the allowance for loan losses is adequate to cover the amount of probable credit losses in the loan portfolio as of June 30, 2010. Parkvale’s nonperforming assets and allowance for loan losses are discussed earlier in this section. In addition, see “Critical Accounting Policies and Judgments — Allowance for Loan Losses.”

Noninterest Income

     Total noninterest income decreased by $8.8 million or 49.9% in fiscal 2010 due primarily to an $8.6 million increase in non-cash debt security impairment charges of $39.0 million compared to $30.4 million in fiscal 2009. Fee income derived from deposit accounts decreased $10,000 and other fees and service charges on loan accounts decreased $7,000 or less than 1%. The net gain on sale of securities increased by $126,000 or 5.6% in fiscal 2010. The fiscal 2010 writedowns were attributable to pooled trust preferred and non-agency CMO securities. See Note J of “Notes to the Consolidated Financial Statements” for additional details. Total noninterest income decreased by $26.2 million or 309.4% in fiscal 2009. Fee income derived from deposit accounts decreased $523,000, while other fees and service charges on loan accounts increased $103,000. The net loss on sale and writedown of securities increased by $25.5 million. The fiscal 2009 net loss on writedowns of securities of $28.1 million was partially offset by $186,000 of gains on held for sale mortgage loans.

     Other income decreased by $328,000 or 13.4% in fiscal 2010, and decreased $190,000 or 7.2% in fiscal 2009. The income on bank owned life insurance decreased by $2,000 in fiscal 2010 compared to a $24,000 increase in fiscal 2009. Investment service fee income earned by Parkvale Financial Services investment representatives decreased to $892,000 in fiscal 2010 from $921,000 in fiscal 2009 and was $1.0 million fiscal 2008.

Noninterest Expense

     Total noninterest expense increased by $1.0 million or 3.4% in fiscal 2010 and by $797,000 or 2.8% in fiscal 2009 over fiscal 2008.

     Compensation and employee benefits decreased by $880,000 or 5.5% during fiscal 2010 and by $507,000 or 3.1% during fiscal 2009 over the respective prior periods. Stock compensation expense recognized for stock option grants was

$27,000 in fiscal 2010 compared to $89,000 in fiscal 2009. The decrease in compensation expense during fiscal 2010 and fiscal 2009 is due primarily to a reduction in the amount of incentive compensation being accrued. Parkvale is not able to pay or accrue any cash bonuses to its five most highly compensated employees until the Series A Preferred Stock is redeemed, and other benefits have been reduced.

     Office occupancy expense decreased by $91,000 or 2.0% in fiscal 2010 and increased by $59,000 or 1.3% in fiscal 2009 over the respective prior periods. The 2010 decrease relates to lower levels of depreciation. The 2009 increase relates to higher utility rates and repair costs to maintain the main office building.

     Marketing expenses decreased by $121,000 or 26.2% in fiscal 2010 and by $116,000 or 20.1% in fiscal 2009 over the respective periods.

     Deposits at the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) through the Deposit Insurance Fund (“DIF”). FDIC insurance expense was $2.9 million, $1.2 million and $167,000 during fiscal years 2010, 2009 and 2008, respectively. The Bank received a credit of $1.5 million in June 2007 that was utilized throughout fiscal 2009 and fiscal 2008 to offset FDIC premiums by $746,000 and $758,000, respectively. The credit balance was fully utilized by June 30, 2009. As a result of increased FDIC insurance premium rates and full utilization of the credit, FDIC insurance expense increased to $2.9 million for fiscal 2010 compared to $1.2 million during fiscal 2009. On May 22, 2009, the FDIC announced a five basis point special assessment on each insured depository institution’s assets minus its Tier 1 capital as of June 30, 2009. The amount of the special assessment for any institution was not to exceed ten basis points times the institution’s domestic deposit assessment base for the second quarter 2009 risk-based assessment. The FDIC special assessment of $880,000 was expensed at June 30, 2009, accounting for most of the $988,000 increase in expense for fiscal 2009 compared to fiscal 2008. See “Regulation —Regulation of the Bank — Insurance of Accounts” section in Item 1 of this report.

     Other expense increased by $386,000 or 7.2% in fiscal 2010 primarily due to higher levels of legal expense related to the collection of past due loans. The amortization expense of core deposit intangibles was $909,000 in fiscal years 2010, 2009 and 2008. Other expense increased by $384,000 or 7.7% in fiscal 2009 compared to fiscal 2008 due to data processing expense related to enhancements to products and services, primarily for image processing of check deposits.

Income Taxes

     Federal and state income tax benefit increased by $7.9 million in fiscal 2010 due to an increase in pre-tax loss compared to fiscal year 2009. In fiscal 2009, federal and state tax expense decreased by $7.3 million due to a pre-tax loss in fiscal 2009, offset by an additional valuation allowance on equity security writedowns of $2.4 million. In fiscal 2010, $734,000 of the valuation allowance was reversed due to the subsequent recovery on the sale of preferred stock. This additional benefit resulted in an overall effective tax rate of (39.2%) for fiscal 2010. The effective tax benefit rate in fiscal 2009 is lower at (22.0%) than the federal statutory tax rate due to the reversal of tax benefits from the recording of $2.4 million of tax valuation allowance from equity securities writedowns. In fiscal 2008, the effective tax rate is lower at 26.5% as a result of the tax benefits of certain investments made by the Company and its subsidiaries.

Commitments

     At June 30, 2010, Parkvale was committed under various agreements to originate fixed and adjustable-rate mortgage loans aggregating $3.1 million and $838,000, respectively, at rates ranging from 4.344% to 5.217% for fixed rate and 3.729% to 5.00% for adjustable-rate loans, and had $83.5 million of unused consumer lines of credit and $13.4 million in unused commercial lines of credit. Parkvale was committed to fund commercial development loans in process of $3.4 million and residential loans in process of $3.8 million. Parkvale was also committed to originate commercial loans totaling $3.0 million at June 30, 2010. Outstanding letters of credit totaled $7.1 million at June 30, 2010.

Liquidity and Capital Resources

     Liquidity risk represents the inability to generate cash or otherwise obtain funds at reasonable rates to satisfy commitments to borrowers, as well as the obligations to depositors and debt holders. Parkvale uses its asset/liability management policy and contingency funding plan to control and manage liquidity risk.

     Federal funds sold decreased $14.7 million or 9.8% from June 30, 2009 to June 30, 2010. Investment securities held to maturity decreased $60.6 million or 12.0% due primarily to the reclassification of $59.8 million of non-agency CMO securities to available for sale, interest-earning deposits in other institutions decreased $3.1 million or 79.5%, loans decreased $76.6 million or 6.9% from June 30, 2009 to June 30, 2010, and prepaid expenses and other assets increased $30.0 million or 62.9%. Deposits decreased $23.2 million or 1.5% from June 30, 2009 to June 30, 2010, and advances from the Federal Home Loan Bank decreased $229,000 or 0.1%. Parkvale Bank’s FHLB advance available maximum borrowing capacity was $547.1 million at June 30, 2010. 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. During the December 2008 quarter, Parkvale borrowed $25.0 million and issued $31.8 million of preferred stock. See the discussion below.

     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 the adjustment of the exercise price and the number of shares of Common Stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of Common 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. As of June 30, 2010, the Corporation did not meet the terms related to one of the financial covenants contained in the Loan Agreement, which is considered an event of default. This increased the interest rate on the term debt by 2%, which will result in a $125,000 quarterly increase in interest expense.

     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% and an additional $15.0 million matures on December 31, 2013 at a rate of 5.41%.

     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, totaling an $819,000 loss at June 30, 2010, 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 was ($819,000) for fiscal 2010.

     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 counter party 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.

     In light of the significant loss incurred during the 2009 fiscal year, the Board of Directors reduced the dividend from the rate of $0.22 per common share per quarter to $0.05 per common share per quarter on June 18, 2009. In doing so, the Board of Directors considered various factors, including the possibility of non-performing loans continuing to increase, the possibility of additional impairment charges on investment securities and goodwill, the capital needs of the Bank, the Corporation’s liquidity, and the level of dividends being paid by peer companies. If additional investment securities become other than temporarily impaired or if the Corporation’s goodwill is deemed impaired in a future quarter, impairment charges could have a material adverse effect on Parkvale’s capital and results of operations. The quarterly dividend rate during fiscal 2010 was $.05 per common share.

     Shareholders’ equity decreased $31.8 million or 21.1% at June 30, 2010 compared to June 30, 2009. Accumulated other comprehensive (loss) income was ($13.4) million at June 30, 2010. Dividends declared per common share in fiscal 2010 were $1.1 million (equal to $0.20 per common share), representing 6.1% of net loss for the fiscal year ended June 30, 2010. No treasury stock was purchased in fiscal 2010. The book value of Parkvale’s common stock decreased 28.1% to $15.77 per share at June 30, 2010 from $21.92 per share at June 30, 2009, primarily due to the net loss reported in fiscal 2010.

     The Bank is a wholly owned subsidiary of PFC. The Bank’s primary regulators are the FDIC and the Pennsylvania Department of Banking. The Office of Thrift Supervision retains jurisdiction over Parkvale Financial Corporation due to its status as a unitary savings and loan holding company. The Bank continues to maintain a “well capitalized” status, reporting a 6.19% Tier 1 capital level as of June 30, 2010 compared to 7.57% Tier 1 capital level at June 30, 2009. Adequate capitalization allows Parkvale to continue building shareholder value through traditionally conservative operations and potentially profitable growth opportunities. Management is not aware of any trends, events, uncertainties or recommendations by any regulatory authority that will have, or that are reasonably likely to have, material adverse effects on Parkvale’s liquidity, capital resources or operations. However, if additional provisions for loan losses or write-downs of investment securities become material in a weak economy, our net income and capital ratios would be adversely affected.

Critical Accounting Policies and Judgments

     Parkvale’s consolidated financial statements are prepared based upon the application of certain accounting policies, the most significant of which are described in Note A of the “Notes to Consolidated Financial Statements —

Significant Accounting Policies”. Certain policies require numerous estimates and strategic or economic assumptions that may prove to be inaccurate or subject to variations and may significantly affect Parkvale’s reported results and financial position in future periods. Changes in underlying factors, assumptions, or estimates in any of these areas could have a material impact on Parkvale’s future financial condition and results of operations.

     Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

     The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

     The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical charge-off experience and expected loss derived from Parkvale’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

     A loan is considered impaired when, based on current information and events, it is probable that Parkvale 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 and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

     Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, Parkvale does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

     Securities — Held to Maturity, Available for Sale and Other Than Temporarily Impaired. 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.

     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 statement of operations as of June 30, 2010 reflects 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 the entity 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.

     Foreclosed Real Estate. Real estate properties acquired through, or in lieu of, loan foreclosure are recorded at the lower of the carrying amount or fair value of the property less cost to sell. After foreclosure, management periodically performs valuations and a valuation allowance is established for declines in the fair value less cost to sell below the property’s carrying amount. Revenues, expenses and changes in the valuation allowance are included in the statement of operations. Gains and losses upon disposition are reflected in earnings as realized. Foreclosed real estate at June 30, 2010 included nine commercial properties aggregating $3.4 million of commercial property and 33 single-family properties aggregating $5.2.

     Goodwill and Other Intangible Assets. At June 30, 2010, Parkvale has $2.9 million of core deposit intangible assets subject to amortization and $25.6 million in goodwill, which is not subject to periodic amortization. Parkvale determined the amount of identifiable intangible assets based upon independent core deposit analyses.

     Goodwill arising from business acquisitions represents the value attributable to unidentifiable intangible elements in the business acquired. Parkvale’s goodwill relates to value inherent in the banking business, and the value is dependent upon Parkvale’s ability to provide quality, cost effective services in the face of competition from other market participants on a regional basis. This ability relies upon continuing investments in processing systems, the development of value-added service features, and the ease of use of Parkvale’s services. As such, goodwill value is supported ultimately by revenue, which is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill, which could result in a charge and adversely impact earnings in future periods. See Note A of Notes to Consolidated Financial Statements for additional information as of June 30, 2010.

     Income Taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recorded on the consolidated balance sheet for future tax consequences that arise from the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Changes in tax rates are recognized in the financial statements during the period they are enacted. When a deferred tax asset or liability, or a change thereto, is recorded on the consolidated balance sheet, deferred tax (benefit) or expense is recorded for GAAP purposes in the income tax (benefit) expense line of the consolidated statement of operations for purposes of determining the current period’s net income. The principal types of differences between assets and liabilities for financial statement and tax return purposes are net operating losses, allowance for loan and lease losses, deferred loan fees, deferred compensation and unrealized gains or losses on investment securities available for sale.

     Deferred tax assets are recorded on the consolidated statement of financial condition at net realizable value. An assessment is performed each reporting period to evaluate the amount of deferred tax asset it is more likely than not to realize. Realization of deferred tax assets is dependent upon the amount of taxable income expected in future periods, as

tax benefits require taxable income to be realized. If a valuation allowance is required, the deferred tax asset on the consolidated statement of financial condition is reduced via a corresponding income tax expense in the consolidated statement of operations

Impact of Inflation and Changing Prices

     The financial statements and related data presented herein have been prepared in accordance with accounting principles generally accepted in the United States, 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.

Forward Looking Statements

     Certain statements in this report are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995, which statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “target,” “plan,” “project” or “continue” or the negatives thereof or other variations thereon or similar terminology, and are made on the basis of management’s current plans and analyses of the Corporation, its business and the industry as a whole. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. The above factors in some cases could affect the Corporation’s financial performance and could cause actual results to differ materially from those expressed or implied in such forward-looking statements. The Corporation does not undertake to update or revise its forward-looking statements even if experience or future changes make it clear that the Corporation will not realize any projected results expressed or implied therein.

Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
Parkvale Financial Corporation

We have audited the consolidated statements of financial condition of Parkvale Financial Corporation and subsidiaries as of June 30, 2010 and 2009 and the related consolidated statements of operations, cash flows and shareholders’ equity for each of the years in the three-year period ended June 30, 2010. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Parkvale Financial Corporation and subsidiaries as of June 30, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2010 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note G to the consolidated financial statements, the Parkvale Financial Corporation’s regulatory capital amounts for the year ended June 30, 2010 have been restated.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Parkvale Financial Corporation’s internal control over financial reporting as of June 30, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated September 13, 2010 expressed an unqualified opinion.

/s/ ParenteBeard LLC

Pittsburgh, Pennsylvania
September 13, 2010, except for Note G, as to which the date is November 12, 2010

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar amounts in thousands, except share data)		June 30,
Assets		2010				2009
Cash and noninterest-earning deposits		$	17,736			$	15,381
Federal funds sold			135,773				150,510
Cash and cash equivalents			153,509				165,891
Interest-earning deposits in other banks			801				3,899
Investment securities available for sale at fair value (cost of $65,778 in 2010 and $8,215 in 2009) (Note B)			65,770				9,679
Investment securities held to maturity (fair value of $437,931 in 2010 and $438,745 in 2009) (Note B)			443,452				504,029
Federal Home Loan Bank Stock, at cost (Note A)			14,357				13,826
Loans, net of allowance of $19,209 in 2010 and $17,960 in 2009 (Note C)			1,032,363				1,108,936
Foreclosed real estate, net (Note D)			8,637				5,694
Office properties and equipment, net (Note D)			17,374				18,073
Goodwill (Note A)			25,634				25,634
Intangible assets and deferred charges (Note A)			2,877				3,786
Prepaid expenses and other assets (Note L)			77,606				47,659
Total assets		$	1,842,380			$	1,907,106
Liabilities and Shareholders’ Equity
Liabilities
Deposits (Note E)		$	1,488,073			$	1,511,248
Advances from Federal Home Loan Bank (Note F)			185,973				186,202
Other debt (Note F)			13,865				21,261
Term debt (Note F)			23,750				25,000
Advance payments from borrowers for taxes and insurance			7,526				7,359
Other liabilities (Note L)			4,249				5,276
Total liabilities			1,723,436				1,756,346
Shareholders’ Equity (Note G and I)
Preferred stock ($1.00 par value; 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			2,734				4,116
Treasury stock at cost — 1,205,683 shares in 2010 and 1,307,199 shares in 2009			(25,193	)			(27,314	)
Accumulated other comprehensive loss			(13,413	)			(10	)
Retained earnings			116,319				135,471
Total shareholders’ equity			118,944				150,760
Total liabilities and shareholders’ equity		$	1,842,380			$	1,907,106

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

		Years ended June 30,
(Dollar amounts in thousands, except per share data)		2010				2009				2008
Interest Income:
Loans		$	56,178			$	66,649			$	71,602
Investments			19,303				23,147				21,974
Federal funds sold			380				687				4,306
Total interest income			75,861				90,483				97,882
Interest Expense:
Deposits (Note E)			27,460				38,483				46,722
Borrowings			11,055				10,363				10,939
Trust preferred securities			—				—				317
Total interest expense			38,515				48,846				57,978
Net interest income			37,346				41,637				39,904
Provision for loan losses (Note C)			7,448				6,754				2,331
Net interest income after provision for loan losses			29,898				34,883				37,573
Noninterest Income:
Other-than-temporary impairment losses (Note J)			(64,662	)			(31,629	)			(3,155	)
Non-credit related losses recognized in other comprehensive income			25,685				1,266				—
Net impairment losses recognized in earnings			(38,977	)			(30,363	)			(3,155	)
Service charges on deposit accounts			6,448				6,458				6,981
Other service charges and fees			1,506				1,513				1,410
Net gain on sale of assets (Note J)			2,372				2,246				581
Other			2,117				2,445				2,635
Total noninterest income			(26,534	)			(17,701	)			8,452
Noninterest Expense:
Compensation and employee benefits			15,033				15,913				16,420
Office occupancy			4,508				4,599				4,540
Marketing			340				461				577
FDIC insurance			2,864				1,155				167
Office supplies, telephone and postage			1,911				1,902				1,851
Other			5,776				5,390				5,068
Total noninterest expense			30,432				29,420				28,623
(Loss) income before income tax expense			(27,068	)			(12,238	)			17,402
Income tax (benefit) expense (Note H)			(10,603	)			(2,696	)			4,599
Net (loss) income			($16,465	)			($9,542	)		$	12,803
Preferred Stock Dividend			1,588				829				—
(Loss) income to common stockholders			($18,053	)			($10,371	)		$	12,803
Net (loss) income per share:
Basic			($3.30	)			($1.90	)		$	2.33
Diluted			($3.30	)			($1.90	)		$	2.31

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Years ended June 30,
(Dollar amounts in thousands)		2010				2009				2008
Cash flows from operating activities:
Interest received		$	75,279			$	88,425			$	98,392
Loan fees received			545				672				320
Disbursements of student loans			—				(30	)			(1,244	)
Proceeds from sales of student loans			—				365				1,004
Other fees and commissions received			8,971				9,313				9,948
Interest paid			(38,706	)			(49,073	)			(58,346	)
Cash paid to suppliers and employees			(38,154	)			(28,757	)			(22,239	)
Income taxes paid			(1,720	)			(4,300	)			(7,510	)
Net cash provided by operating activities			6,215				16,615				20,325
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale			2,381				3,012				2,284
Proceeds from maturities of investments			376,195				178,175				285,875
Purchase of investment securities available for sale			(532	)			—				(9,018	)
Purchase of investment securities held to maturity			(431,824	)			(284,640	)			(361,665	)
Maturity (purchase) of deposits in other banks			3,098				3,353				(2,449	)
Purchase of loans			(6,270	)			—				(87,667	)
Principal collected on loans			242,077				234,634				307,564
Loan sales			7,527				16,237				—
Loans made to customers, net of loans in process			(177,290	)			(167,949	)			(190,745	)
Capital expenditures, net of proceeds from sales of capital assets			(300	)			(316	)			(2,693	)
Net cash provided by (used in) investing activities			15,062				(17,494	)			(58,514	)
Cash flows from financing activities:
Net increase in checking and savings accounts			67,900				19,799				22,550
Net (decrease) increase in certificates of deposit			(91,076	)			(2,235	)			2,132
Repayment of FHLB advances			(25	)			(5,024	)			(20,024	)
Net (decrease) increase in other borrowings			(7,396	)			(705	)			8,860
Repayment of term debt			(1,250	)			—				—
Proceeds from term debt			—				25,000				—
Redemption of trust preferred securities			—				—				(7,200	)
Net increase (decrease) in borrowers advances for tax and insurance			167				(396	)			89
Proceeds from issuance of preferred stock			—				31,762				—
Dividends paid			(2,682	)			(5,427	)			(4,861	)
Contribution to benefit plans			703				—				864
Payment for treasury stock			—				(717	)			(4,949	)
Proceeds from exercise of stock options			—				21				172
Net cash used in financing activities			(33,659	)			(62,078	)			(2,367	)
Net (decrease) increase in cash and cash equivalents			(12,382	)			61,199				(40,556	)
Cash and cash equivalents at beginning of year			165,891				104,692				145,248
Cash and cash equivalents at end of year		$	153,509			$	165,891			$	104,692

		Years ended June 30,
(Dollar amounts in thousands)		2010				2009				2008
Reconciliation of net (loss) income to net cash provided by operating activities:
Net (loss) income			($16,465	)			($9,542	)		$	12,803
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			1,907				2,004				2,138
Accretion and amortization of fees and discounts			(1,526	)			(2,675	)			(1,358	)
Loan fees collected and deferred			152				105				73
Provision for loan losses			7,448				6,754				2,331
Net loss on sale and writedown of securities			36,605				28,117				2,574
Increase in accrued interest receivable			820				634				1,610
Increase in other assets			(30,780	)			(6,997	)			(3,439	)
Increase (Decrease) in accrued interest payable			37				(34	)			(181	)
Increase (decrease) in other liabilities			8,017				(1,751	)			3,774
Total adjustments			22,680				26,157				7,522
Net cash provided by operating activities		$	6,215			$	16,615			$	20,325

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

																		Accumulated
										Additional								Other								Total
		Preferred				Common				Paid-In				Treasury				Comprehensive				Retained				Shareholders’
(Dollar amounts in thousands)		Stock				Stock				Capital				Stock				(Loss) Income				Earnings				Equity
Balance at July 1, 2007		$	—			$	6,735			$	3,717				($22,695	)		$	176			$	141,737			$	129,670
2008 net income																							12,803				12,803
Accumulated other comprehensive income:
Change in unrealized gain (loss) on securities, net of deferred tax expense of $(439)																			(763	)
Reclassification adjustment, net of taxes of $(939)																			(1,635	)							(2,398	)
Comprehensive income																											10,405
Treasury stock purchased															(4,949	)											(4,949	)
Treasury stock contributed to benefit plans															864												864
Recognition of stock option compensation expense											272																272
Exercise of stock options											37				162												199
Cash dividends declared on common stock at $0.88 per share																							(4,830	)			(4,830	)
Balance at June 30, 2008		$	—			$	6,735			$	4,026				($26,618	)		$	(2,222	)		$	149,710			$	131,631
2009 net (loss)																							(9,542	)			(9,542	)
Accumulated other comprehensive income:
Change in swap liability																			326
Change in unrealized gain (loss) on securities, net of deferred tax expense of $(1,976)																			(3,437	)
Reclassification adjustment, net of taxes of $3,060																			5,323								2,212

																		Accumulated
										Additional								Other								Total
		Preferred				Common				Paid-In				Treasury				Comprehensive				Retained				Shareholders’
(Dollar amounts in thousands)		Stock				Stock				Capital				Stock				(Loss) Income				Earnings				Equity
Comprehensive income																											(7,330	)
Issuance of Preferred Stock		$	31,762																								31,762
Treasury stock purchased															(717	)											(717	)
Recognition of stock option compensation expense											90																90
Exercise of stock options											—				21												21
Cash dividends declared on 5% preferred stock																							(829	)			(829	)
Cash dividends declared on common stock at $0.71 per share																							(3,868	)			(3,868	)
Balance at June 30, 2009		$	31,762			$	6,735			$	4,116				($27,314	)			($10	)		$	135,471			$	150,760
2010 net (loss)																							(16,465	)			(16,465	)
Change in Swap Liability																			(819	)
Change in unrealized gain on securities, net of deferred tax expense $6,769																			10,660
Reclassification adjustment, net of taxes of $(13,361)																			(23,244	)							(13,403	)
Comprehensive income																											(29,868	)
Recognition of stock option compensation expense											27																27
Allocation of treasury stock to retirement plans											(1,409	)			2,121												712
Cash dividends declared on 5% preferred stock																							(1,588	)			(1,588	)
Cash dividends declared on common stock at $0.20 per share																							(1,099	)			(1,099	)
Balance at June 30, 2010		$	31,762			$	6,735			$	2,734				($25,193	)			($13,413	)		$	116,319			$	118,944

See Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

Note A – Significant Accounting Policies
(Dollar amounts in thousands, except per share data)

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of Parkvale Financial Corporation (“PFC“or the “Corporation”), its wholly owned subsidiary, Parkvale Savings Bank (the “Bank”) and its wholly owned subsidiaries. PFC and the Bank are collectively referred to as “Parkvale”. All significant intercompany transactions and balances have been eliminated in consolidation.

Business

     The primary business of Parkvale consists of attracting deposits from the general public in the communities that it serves and investing such deposits, together with other funds, in residential real estate loans, consumer loans, commercial loans and investment securities. Parkvale focuses on providing a wide range of consumer and commercial services to individuals, partnerships and corporations in the tri-state area, which comprises its primary market area. Parkvale is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by certain regulatory authorities.

Revenue Recognition

     Income on loans and investments is recognized as earned on the accrual method. Service charges and fees on loans and deposit accounts are recognized at the time the customer account is charged.

Operating Segments

     An operating segment is defined as a component of an enterprise that engages in business activities, which generates revenue and incurs expense, and with the operating results reviewed by management. Parkvale’s business activities are currently confined to one operating segment, which is community banking.

Use of Estimates

     The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reported period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, securities (held to maturity, available for sale and other than temporarily impaired), foreclosed real estate, goodwill and intangible assets and income taxes, including valuation of deferred tax assets.

Reclassification

     Certain amounts in the 2009 and 2008 consolidated financial statements have been reclassified to conform to the 2010 presentation.

Subsequent Events

     The Corporation evaluated and disclosed all material subsequent events that provide evidence about conditions that existed as of June 30, 2010.

Cash and Noninterest-Earning Deposits

     The Bank is required to maintain cash and reserve balances with the Federal Reserve Bank. The reserve calculation is currently 0% of the first $10,700 of checking deposits, 3% of the next $44,500 of checking deposits and 10% of total checking deposits over $55,200. These required reserves, net of allowable credits, amounted to $5,374 at June 30, 2010. Such reserves are generally maintained with vault cash and to a lesser extent balances with the Federal Reserve.

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.

     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 statement of operations as of June 30, 2010 reflects 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 the entity 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.

     At June 30, 2010 and June 30, 2009, the Bank’s FHLB stock totaled $14,357 and $13,826, respectively. The Bank accounts for the stock based on U.S. GAAP, which requires the investment to be carried at cost and evaluated for impairment based on the ultimate recoverability of the par value.

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

	•		the member’s ability to access liquidity from the FHLB;
	•		the member’s funding cost advantage with the FHLB compared to alternative sources of funds;
	•		a decline in the market value of FHLB’s net assets relative to book value which may or may not affect future financial performance or cash flow;
	•		the FHLB’s ability to obtain credit and source liquidity, for which one indicator is the credit rating of the FHLB;
	•		the FHLB’s commitment to make payments taking into account its ability to meet statutory and regulatory payment obligations and the level of such payments in relation to the FHLB’s operating performance; and
	•		the prospects of amendments to laws that affect the rights and obligations of the FHLB.

     The Bank believes its holdings in the stock are ultimately recoverable at par value at June 30, 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.

Loans

     Parkvale grants mortgage, commercial and consumer loans to customers. The ability of Parkvale’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in the tri-state area.

     Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for unearned income, the allowance for loan losses, and any unamortized deferred fees or costs on originated loans, and premiums or discounts on purchased loans.

     For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

     The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Credit card loans and other personal loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

     All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

     The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

     The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay and estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

     The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical charge-off experience and expected loss derived from Parkvale’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

     A loan is considered impaired when, based on current information and events, it is probable that Parkvale 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 and construction loans by either the present value of

expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

     Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, Parkvale does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the three years ended June 30:

		2010				2009				2008
Numerator for basic and diluted earnings per share:
Net (loss) income			($16,465	)			($9,542	)		$	12,803
Less: Preferred stock dividend			1,588				829				—
Net (loss) income to common shareholders			($18,053	)			($10,371	)		$	12,803
Denominator
Weighted average shares for basic earnings per share			5,478,332				5,451,295				5,506,550
Effect of dilutive employee stock options			—				1,058				39,556
Weighted average shares for dilutive earnings per share			5,478,332				5,452,353				5,546,106
Net (loss) income per common share
Basic			($3.30	)			($1.90	)		$	2.33
Diluted			($3.30	)			($1.90	)		$	2.31

Office Property and Equipment

     Land is carried at cost. Office property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the useful lives of the various classes of assets. Amortization of leasehold improvements is computed using the straight-line method over the useful lives of the leasehold. Land has an indefinite useful life, office buildings and leasehold improvements have a useful life ranging from 5-40 years and the useful life for furniture, fixtures and equipment ranges from 3-10 years. Office property and equipment have been evaluated for impairment in accordance with US GAAP and management has determined that office property and equipment are not impaired at June 30, 2010.

Foreclosed Real Estate

     Real estate properties acquired through, or in lieu of, loan foreclosure are held for sale and initially recorded at fair value of the property less cost to sell. After foreclosure, management periodically performs valuations, and a valuation allowance is established for any declines in the fair value less cost to sell below the property’s carrying amount. Revenues, expenses and changes in the valuation allowance are included in the statement of operations. Gains and losses upon disposition are reflected in earnings as realized. Loans transferred to foreclosed real estate, which is a non-cash activity, were $8,858 during fiscal 2010, $8,836 in 2009 and $3,005 in 2008. The foreclosures in the last three years were primarily due to loans on single-family dwellings foreclosed throughout the year.

Stock Compensation Plans

     Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. At June 30, 2010, Parkvale’s option shares are vested.

     The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Sholes model is used to estimate the fair value of stock options, while the market price of Parkvale’s common stock at the date of grant is used for restricted stock awards.

Statement of Cash Flows

     For the purposes of reporting cash flows, cash and cash equivalents include cash and noninterest-earning deposits and federal funds sold. Additionally, allocation of treasury stock to retirement plans includes exercise of stock options and allocation to the employee stock ownership plan.

Treasury Stock

     The purchase of PFC common stock is recorded at cost. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on the average cost basis, with any excess proceeds being credited to additional paid-in capital.

     The repurchase program approved on June 19, 2008 expired on June 30, 2009. During fiscal 2010, Parkvale did not approve a repurchase program.

Goodwill and Other Intangible Assets

     Goodwill is the excess of the purchase price over the fair value of assets acquired in connection with a business acquisition accounted for as a purchase, and intangible assets with indefinite lives are not amortized but are reviewed annually, requiring a two-step process, or more frequently if impairment indicators arise, for impairment. Separable intangible assets that are not deemed to have an indefinite life continue to be amortized over their useful lives. Parkvale applied the non-amortization provisions to goodwill recorded on December 31, 2004 as a result of the acquisition of Advance Financial Corporation (“AFB” or “Advance”). AFB core deposit intangibles valued at $4,600 at acquisition represented 4.7% of core deposit accounts, and the premium is being amortized over the average life of 8.94 years. Resulting goodwill of $18,100 is not subject to periodic amortization. Core deposit intangible amortization expense for AFB acquired on December 31, 2004 and for Second National Bank of Masontown (“SNB” or “Masontown”) acquired on January 31, 2002 was $517 and $392 in fiscal 2010, respectively. Amortization over the next four years is expected to aggregate $1,767 and $1,110 for AFB and SNB, respectively. Goodwill and amortizing core deposit intangibles are not deductible for federal income tax purposes.

     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 $8.38 per share at June 30, 2010, which is below the book value of $15.77 at such date. The difference between the market value and the book value at June 30, 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.

     An independent third party was retained for the fiscal year ended June 30, 2010 to assist in determining whether an impairment of goodwill was appropriate. In a report dated July 23, 2010, 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 shown in the strong underlying financial foundations of 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 July 20, 2010. The third party reviewed the premiums paid in 36 acquisitions in the mid-Atlantic states during such period, as well as 325 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 their report, management determined that goodwill was not impaired at 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 comparable banking sector mergers and acquisitions decline, then a goodwill impairment charge may become appropriate in a future quarter.

Marketing Costs

     Marketing costs are expensed as incurred.

Derivative Financial Instruments

     Derivatives are recognized as assets and liabilities on the consolidated statement of financial condition and measured at fair value. For exchange-traded contracts, fair value is based on quoted market prices. For nonexchange traded contracts, fair value is based on dealer quotes, pricing models, discounted cash flow methodologies, or similar techniques for which the determination of fair value may require significant management judgment or estimation.

     Interest Rate Swap Agreements. For asset/liability management purposes, Parkvale uses interest rate swap agreements to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. Interest rate swaps are contracts in which a series of interest rate flows are exchanged over a prescribed period. The notional amount on which the interest payments are based is not exchanged. These swap agreements are derivative instruments and generally convert a portion of Parkvale’s variable-rate debt to a fixed rate (cash flow hedge), and convert a portion of its fixed-rate loans to a variable rate (fair value hedge).

     The gain or loss on a derivative designated and qualifying as a fair value hedging instrument, as well as the offsetting gain or loss on the hedged item attributable to the risk being hedged, is recognized currently in earnings in the same accounting period. The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings.

     For cash flow hedges, the net settlement (upon close-out or termination) that offsets changes in the value of the hedged debt is deferred and amortized into net interest income over the life of the hedged debt. For fair value hedges, the net settlement (upon close-out or termination) that offsets changes in the value of the loans adjusts the basis of the loans and is deferred and amortized to loan interest income over the life of the loans. The portion, if any, of the net settlement amount that did not offset changes in the value of the hedged asset or liability is recognized immediately in noninterest income.

     Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing Parkvale to risk. Those derivative financial instruments that do not meet specified hedging criteria would be recorded at fair value with changes in fair value recorded in income. If periodic assessment indicates derivatives no longer provide an effective hedge, the derivative contracts would be closed out and settled, or classified as a trading activity.

     Cash flows resulting from the derivative financial instruments that are accounted for as hedges of assets and liabilities are classified in the cash flow statement in the same category as the cash flows of the items being hedged.

Income Taxes

     The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. Parkvale determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax

effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

     Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more-likely-than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more-likely-than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more-likely-than not that some portion or all of a deferred tax asset will not be realized.

     Parkvale recognizes interest and penalties on income taxes as a component of income tax expense.

Comprehensive Income

     Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains on securities available for sale, unrealized losses related to factors other than credit on debt securities, and unrealized gains and losses on cash flow hedges, which are also recognized as separate components of equity.

Recent Accounting Standards

     In February 2010, FASB issued ASU 2010-08, Technical Corrections to Various Topics. This ASU resulted from a review by the FASB of its standards to determine if any provisions are outdated, contain inconsistencies, or need clarifications to reflect the FASB’s original intent. The FASB believes the amendments do not fundamentally change U.S. GAAP. However, certain clarifications on embedded derivatives and hedging reflected in Topic 815, Derivatives and Hedging, may cause a change in the application of the guidance in Subtopic 815-15. Accordingly, the FASB provided special transition provisions for those amendments. The ASU contains various effective dates. The clarifications of the guidance on embedded derivatives and hedging (Subtopic 815-15) are effective for fiscal years beginning after December 15, 2009. The amendments to the guidance on accounting for income taxes in a reorganization (Subtopic 852-740) applies to reorganizations for which the date of the reorganization is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. All other amendments are effective as of the first reporting period (including interim periods) beginning after the date this ASU was issued.

     In April 2010, FASB issued ASU 2010-18, Effect of a Loan Modification When the Loan is Part of a Pool That is Accounted for as a Single Asset. ASU No. 2010-18 provides that modifications of acquired loans with deteriorated credit quality that are accounted for within a pool do not result in removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled asset restructuring. ASU No. 2010-18 is effective for modifications occurring in the first interim or annual reporting period ending on or after July 15, 2010. The adoption of this standard is not anticipated to have a material effect on the financial statements, results of operations or liquidity of the Corporation.

     In July 2010, FASB issued 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. The accounting standards update requires additional disclosure and will have no impact on the Consolidated Financial Statements.

Notes to Consolidated Financial Statements — (Continued)

Note B — Investment Securities

(Dollar amounts in thousands)

     The amortized cost, gross unrecorded gains and losses and fair values for investment securities classified as available for sale or held to maturity at June 30 are as follows:

		2010
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
Available for sale:
CMOs — Non Agency (Residential)		$	59,804			$	—			$	—			$	59,804
Mutual Funds — ARM mortgages			5,500				24				240				5,284
Other common equities (Financial Services)			474				208				—				682
Total equity investments available for sale			65,778				232				240				65,770
Held to maturity:
U.S. Government and agency obligations due:
Within 1 year			10,000				334				—				10,334
Within 5 years			145,084				1,078				6				146,156
Within 10 years			39,164				269				3				39,430
After 10 years			—				—				—				—
Total U.S. Government and agency obligations			194,248				1,681				9				195,920
Municipal obligations:
Within 1 year			7,023				19				—				7,042
Within 5 years			10,719				469				—				11,188
Within 10 years			1,653				42				—				1,695
After 10 years			2,246				174				—				2,420
Total municipal obligations			21,641				704				—				22,345
Individual trust preferred securities — after 10 years			9,322				205				1,550				7,977
Pooled trust preferred securities — after 10 years			24,229				—				7,380				16,849
Corporate debt:
Within 1 year			10,693				161				—				10,854
Within 5 years			16,419				1,079				—				17,498
Total corporate debt			27,112				1,240				—				28,352
Total U.S. Government and agency obligations, municipal obligations, corporate debt and individual and pooled trust preferred securities			276,552				3,830				8,939				271,443
Mortgage-backed securities: (All Residential)
FHLMC			20,549				431				44				20,936
FNMA			31,126				1,052				—				32,178
GNMA			41,569				371				3				41,937
SBA			4				—				—				4
Collateralized mortgage obligations (“CMOs”) — Agency			10,357				273				—				10,630
CMOs — Non Agency			63,295				2,387				4,879				60,803
Total mortgage-backed securities			166,900				4,514				4,926				166,488
Total investments classified as held to maturity			443,452				8,344				13,865				437,931
Total investment portfolio		$	509,230			$	8,576			$	14,105			$	503,701