___________________

¹ The securities “beneficially owned” by an individual are determined in accordance with the definitions of “beneficial ownership” set forth in the General Rules and Regulations of the SEC and may include securities owned by or for the individual’s spouse and minor children and any other relative who has the same home, as well as securities to which the individual has or shares voting or investment power or has the right to acquire beneficial ownership within 60 days after March 1, 2012.2013. Beneficial ownership may be disclaimed as to certain of the securities.

² Nominee registration for the common stock held by the Trust Department of the Bank (“Berbank”) on behalf of various trusts, estates and other accounts for which the bank acts as fiduciary with sole voting and dispositive power over 212,857210,134 shares and as fiduciary with shared voting and dispositive power over 62,86563,025 shares. Total does not include 255,296233,879 shares held by the Trust Department of the Bank for which the Bank does not have sole or shared voting or dispositive power. The Trust Department intends to cast all shares under its voting power in accordance withfor the Board’s recommendations with respect to Proposal Nos. 1, 2, 3, 4election of the nominees for director named below and 5.for the ratification of J. H. Williams & Co., LLP, independent accountants of the Corporation.

Beneficial Ownership by Officers, Directors and Nominees

The following table sets forth, as of March 1, 2012,2013, the amount and percentage of the outstanding common stock beneficially owned by each director, nominee for director, and other named executive officers of the Corporation. The table also indicates the total number of shares owned by all directors, nominees for director, and named executive officers of the Corporation and the Bank as a group. A person owns his or her shares directly as an individual unless otherwise indicated.

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¹The securities “beneficially owned” by an individual are determined in accordance with the definitions of “beneficial ownership” set forth in the General Rules and Regulations of the SEC and may include securities owned by or for the individual’s spouse and minor children and any other relative who has the same home, as well as securities to which the individual has or shares voting or investment power or has the right to acquire beneficial ownership within 60 days after March 1, 2012.2013. Beneficial ownership may be disclaimed as to certain of the securities.

²Information furnished by the directors and the Corporation.

³Less than 1% unless otherwise indicated. Based on 5,446,0375,480,217 shares outstanding as of March 1, 2012.2013.

⁴Includes 8,79914,852 shares held individually by Mr. Fabian, 16,912 shares by the Jerome F. Fabian Trust Under Agreement for which Mr. Fabian exercises dispositive power, and 20,088Arndt, 2,016 shares held jointly withindividually by his spouse.spouse, and 848 shares held as custodian for his children.

⁵Includes 1,250 shares held individually by Mr. Gerlach and 8,227 shares held jointly with his spouse.

⁶Includes 8,825 shares held individually by Mr. Saracino.

⁷Includes 8,809 shares held individually by Mr. Arndt, 1,500 shares held individually by his spouse, and 764 shares held as custodian for his children.

⁸Includes 26,44126,593 shares held individually by Mr. Bazewicz, 6,559 shares held jointly with his spouse and 510532 shares held individually by his spouse.

⁹⁶Includes 80,09571,995 shares held individually by Mr. R.E. Bull, 5,2395,462 shares held by Bull, Bull & Knecht,McDonald, LLP, a law firm of which Mr. Bull is a partner, and 83,670 shares held by the Sara E. Bull Decedent Estate Trust of which Mr. Bull is the trustee.

¹⁰⁷Includes 41,449 shares held individually by Dr. Conahan and 19,99220,192 shares held jointly with his spouse.

¹¹⁸Includes 81,67285,503 shares held individually by Mr. Bower, 755787 shares held jointly with his spouse, and 836874 shares held as custodian for his grandchildren. Includes 20,139 pledged shares.

¹²⁹Includes 31,40533,192 shares held individually by Mr. R.A. Bull, 5,2395,462 shares held by Bull, Bull & Knecht,McDonald, LLP, a law firm of which Mr. Bull is a partner, 38,17840,704 shares held jointly with his spouse, and 8,6909,060 shares held individually by his spouse.

¹³¹⁰Includes 4,2295,545 shares held individually by Mr. Prosseda 1,930and 2,114 shares held in his Bank 401(k) plan.

¹¹Includes 9,173 shares held individually by Mr. Fabian, 17,632 shares by the Jerome F. Fabian Trust Under Agreement for which Mr. Fabian exercises dispositive power, and 20,944 shares held jointly with his spouse.

¹²Includes 1,250 shares held individually by Mr. Gerlach and 8,227 shares held jointly with his spouse.

¹³Includes 8,825 shares held individually by Mr. Saracino.

¹⁴Includes 1,054 shares held individually by Mr. Miller, 980 shares held in his Bank 401(k) plan and 1,275 shares which may be purchased upon the exercise of stock options.

¹⁴Includes 626 shares held individually by Mr. Miller, 951 shares held in his Bank 401(k) plan and 1,6801,287 shares which may be purchased upon the exercise of stock options.

¹⁵Includes 1,199 shares held individually by Ms. Rosler, 800824 shares held in her Bank 401(k) plan and 787 shares which may be purchased upon the exercise of stock options.

¹⁶Includes 606632 shares held individually by Ms. Woodland, 96101 shares held jointly with her spouse, 9441,040 shares held in her Bank 401(k) plan and 500 shares which may be purchased upon the exercise of stock options.

¹⁷Includes 8261,613 shares held individually by Ms. Robbins, 390 shares held jointly with her spouse, 1,9442,003 shares held in her Bank 401(k) plan and 2,0741,287 shares which may be purchased upon the exercise of stock options.

DIRECTORS’ COMPENSATION TABLE

¹Represents deferred compensation payments made under a salary continuation agreement.

Compensation of Directors

During 2011,2012, each member of the Corporation’s Board received $700$800 for his attendance at the Annual Meeting. Other corporate Board meetings met concurrently with the Bank’s Board, and directors received no additional compensation. The Bank’s directors received $700$800 for each directors’ meeting attended. Non-employee directors received a $5,000 retainer and $350$400 for each committee meeting attended. Chairman Bull received an annual stipend of $1,000$1,500 and Secretary Arndt received an annual stipend of $750.$1,000. Each director is entitled to reimbursement for out-of-pocket expenses to attend meetings. In addition, each director received a $1,000 bonus. In the aggregate, the Board received $295,550$339,100 for all Board meetings and committee meetings attended in 2011,2012, including all fees and stipends paid to all directors in 2011.2012.

Messrs. Bazewicz and Saracino are parties to salary continuation agreements which were entered into when each respective individual was a key employee of the Bank. Both agreements vested upon the executive’s retirement after age 60. Both individuals receive benefits for a total of twenty years in the amount disclosed above.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the Corporation’s financial reporting process on behalf of the Board. In that connection, the committee, along with the Board, has formally adopted an audit committee charter setting forth its responsibilities.

Management has the primary responsibility for the financial statements and the reporting process including the systems of internal control. In fulfilling its oversight responsibilities, the committee reviewed the audited financial statements in the Annual Report on Form 10-K with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.

The committee reviewed with the Independent Accountants, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Corporation’s accounting principles and such other matters as are required to be discussed with the committee under generally accepted auditing standards. In addition, the committee has discussed with the Independent Accountants, their independence from management and the Corporation including the matters in written disclosures required by the statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T and considered the compatibility of non-audit services with the accountants’ independence.

The committee discussed the overall scope and plans for their audits with the Corporation’s internal auditors and Independent Accountants. The committee meets with the internal auditors and Independent Accountants, with and without management present, to discuss the results of their examinations, their evaluations of the Corporation’s internal controls and the overall quality of the Corporation’s financial reporting. The Corporation believes that it has established appropriate policies and procedures to comply with requirements of the Sarbanes-Oxley Act of 2002. The committee held 7 meetings during fiscal year 2011.2012.

With respect to the Corporation’s Independent Accountants, the committee, among other things, discussed with J.H. Williams & Co., LLP matters relating to its independence, including the written disclosures made to the committee by the Independent Accountants and the letter from the Independent Accountants as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent public accounting firm’sIndependent Accountant’s communications with the Audit Committee concerning independence.

In reliance on the reviews and discussions referred to above, the committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 20112012 for filing with the SEC. The committee and the Board have also approved the selection of the Corporation’s independent public accounting firmIndependent Accountants for 2012.2013.

Aggregate fees billed to the Corporation and the Bank by J. H. Williams & Co., LLP for services rendered during the years ended December 31, 20112012 and 20102011 were as follows:

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¹Audit Fees include fees billed for professional services rendered for the audit of annual financial statement and fees billed for the review of financial statements included in the Corporation’s Forms 10-Q or services that are normally provided by J. H. Williams & Co., LLP in connection with statutory and regulatory filings or engagements.

²Tax Fees include fees billed for professional services rendered by J. H. Williams & Co., LLP for tax compliance. These services include preparation of Federal and State Annual Tax Returns for the Corporation.Corporation and the Bank.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Accountants

The Audit Committee pre-approves all audit and permissible non-audit services provided by the Independent Accountants. These services may include audit services, audit related services, tax services, and other services. The Audit Committee has adopted a policy for the pre-approval of services provided by the Independent Accountants. Under the policy, pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific Board approved budget. In addition, the Audit Committee may also pre-approve particular services on a case by case basis. For each proposed service, the Independent Accountant is required to provide a detailed engagement letter.

The committee is comprised of three directors, all of whom are considered “independent” as defined by SEC Rules and NASDAQ listing standards. The Board has determined that no member of the committee has a relationship with the Corporation that should interfere with his independence from the Corporation or its management.

The foregoing report has been furnished by the current members of the committee.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The Board serves as the Compensation Committee for the Bank and develops the Bank’s and the Corporation’s executive compensation policy. The Board also determines the named executive officers’ individual compensation. For 2011,2012, the named executive officers were Matthew P. Prosseda, Kevin L. Miller, Diane C.A. Rosler, Elaine A. Woodland and Barbara J. Robbins.

Compensation Objectives and Program Design

For the fiscal year 2011,2012, executive compensation included base salary, the opportunity for cash bonuses and the ability to participate in the Bank’s health and welfare plans and the Bank’s retirement plan.

The compensation program is designed to reward the named executive officers based on their level of assigned management responsibilities and individual performance levels.

The basic mission onof the Corporation’s executive compensation policy is to provide executives with a competitive compensation package that attracts and retains qualified executives while placing a portion of total pay at risk. The at risk element of compensation, the Management Incentive Compensation Plan, may have no value or may be worth less than the target value if goals are not met.

Executive Officers’ Role in Determining Compensation

The Board, acting as the Compensation Committee, considers information provided by the Chief Executive Officer in determining the appropriate level of compensation for other named executive officers. Individual performance objectives are set by the Chief Executive Officer and a year-end appraisal on each named executive officer prepared by the Chief Executive Officer is reviewed by the Board. No named executive officer other than the Chief Executive Officer attends those portions of the Board meetings during which the performance of the other named executive officers is evaluated or their compensation is being determined.

The Chief Executive Officer is not present during the Compensation Committee’s discussion of his performance and compensation.

Compensation Consultant

In 2011,2012, a compensation consultant did not play a role in setting compensation or advising on specific compensation. The Compensation Committee reviewed the L. R. Webber Associates, Inc.’s 20112012 Salary/Benefits for Financial Institutions Survey (“the Survey”) to acquaint itself with current trends and practices in compensation.

Benchmarking

The Compensation Committee reviewed the data contained in the L. R. Webber Associates, Inc.’s 2011 Salary/Benefits for Financial InstitutionsSurvey. The Survey (“the Survey”).provides information in ranges by job position. The peer group of financial institutions chosen by the Board for purposes of making a comparative analysis of executive compensation does include some of the same financial institutions incorporated in the peer group established to compare shareholder returns as indicated in the performance graph included in the Annual Report on Form 10-K.

The financial institutions chosen for the Survey included nine banks with assets generally between $500 million and $1 billion with headquarters located in Northeastern and Central Pennsylvania. They included:

After reviewing the base salaries and benefits provided in the Survey, no adjustments to compensation were made in 2011,2012, other than the normal annual salary increases. The goal of the Corporation is to compensate at approximately the average range mid-point for each job classification with the at risk portion of compensation to reward favorable overall bank earnings performance. The named executive officer positions were reviewed and three of the five fall below the mid-point range.

Shareholder Vote

The Compensation Committee reviewed and considered the shareholder response to the Say-On-Pay Vote at the 20112012 Annual Meeting. Based upon the results of the shareholder Say-On-Pay Vote, the Compensation Committee acknowledged the shareholders’ approval of the Corporation’s and Bank’s compensation policies and did not make any adjustments thereto.

Base Salary

The executive compensation established by the Compensation Committee is based upon its overall subjective assessment of the value of the services provided by each named executive officer with consideration given to performance factors and peer group compensation information.

For the base salary paid to named executive officers other than the Chief Executive Officer, the Compensation Committee considers information provided by the Chief Executive Officer as to each executive officer’s level of individual performance, contribution to the organization, scope of responsibilities, salary history and general market levels gathered from the compensation survey.Survey.

For the base salary paid to the Chief Executive Officer, the Compensation Committee, with the Chief Executive Officer not being present, considers his performance level, the results of management decisions made by him and the earnings of the organization. The Compensation Committee reviews the return on assets and return on equity when making the subjective determination of whether or not the Chief Executive Officer’s base pay should be at the median, below the median, or above the median provided in the compensation survey. No particular weight is assigned to any of the foregoing individual performance factors and no specific performance targets are used in determining whether an increase in base salary is warranted.

Decisions regarding base salary are made without consideration of other forms of compensation provided. Bonuses are intended to provide additional incentive to the named executive officers to achieve a higher level of success. Adjusting the base salary to correspond with the amount of the bonuses would defeat the purpose of having at risk compensation.

Cash Bonuses

The purpose of the Management Incentive Compensation Plan (the “Plan”) is to provide incentives and awards to top management employees who, through high levels of performance, contribute to the success and profitability of the bank. Participation in the Plan is limited to the executive management team. This management team includes the following functional job titles: Chief Executive Officer, Chief Operating Officer, Senior Vice President and Chief Financial Officer, Senior Vice President and Deposit Operations Manager, and Executive Vice President and Director of Lending. The management incentive pool created after the achievement of a required budget net income is distributed to the executive management team as follows:

The Plan serves as a short termshort-term incentive that aligns executive pay with the annual performance of the Corporation and is earned through the achievement of overall annual earnings objectives. It aligns management’s interestinterests with those of the shareholders because, generally, the higher the net income for the year, the larger the bonuses paid to management. The Plan is also designed to support organizational objectives and financial goals, as defined by the Bank’s Strategic and Financial Plans, by making available additional, variable and contingent incentive compensation.

The Plan is also established to augment regular salary and benefits programs already in existence. It is not meant to be a substitute for salary increases, but as a supplement to salary, and, as stated earlier, as an incentive for performance that contributes to outstanding levels of achievement.

Supplemental Employee Retirement Plan

The Supplemental Employee Retirement Plan (the “SERP”) rewards certain named executive officers for their long-term contributions to the bank. To encourage Mr. Prosseda and Ms. Woodland to continue their employment with the Corporation until retirement, the Compensation Committee believed it to be in the best interests of the Corporation and Bank to enter into salary continuation agreements with them. The agreements were also established to reward certain executivesthem for past and future services to the Corporation. The Compensation Committee believes the income benefit amounts are reasonable and consistent with the compensation standards of Section 39 of the Federal Deposit Insurance Company Improvement Act of 1991 and the related implementing regulations. Another benefit to the Bank from having the SERP is that it contains a restrictive covenant prohibiting the executive from competing with the Bank while receiving benefits under the SERP, except after a change of control.

Employee Benefits Provided to Eligible Employees

All named executive officers participate in the Bank’s retirement plan and health and welfare plans that are offered to other eligible employees of the Bank. Retirement and health and welfare benefits are not tied to Corporation, Bank, or individual performance. The cost of providing such benefits is not taken into account when determining specific salaries of the named executive officers and is seen as a cost of doing business.

Retirement Plan

The Compensation Committee believes that it is essential for employees to save for retirement and as such has provided all employees a vehicle through which to do so by maintaining a 401(k) plan, which has a combined tax qualified savings feature and profit sharing feature.

Health and Welfare Plans

Group life insurance, group disability, vision benefits and health insurance are available to all employees, as well isas an IRS Section 125 plan. Such plans are standard in the industry and in the geographic area for all industries and necessary to compete for talented employees at all levels of the Corporation. Named executive officers participate in these plans under the same terms and conditions as other employees.

Health insurance premiums are partially paid by employees through payroll deductions for the employee share of the health care cost.

Triggering Events In Contracts

Presently, there are no named executive officers who are parties to employment or consulting agreements with the Corporation.

Under the SERP to which both Mr. Prosseda and Ms. Woodland are parties, the triggering events are change of control, retirement, disability, involuntary termination and death.

The Compensation Committee believes that the triggering events in these agreements are appropriate in that they encourage executives to act in the best interests of the shareholders in evaluating any change of control opportunities and it keeps the executives focused on running the Corporation in the face of real or rumored corporate transactions. The Compensation Committee also believes that it is appropriate to provide the named executive officers a benefit under the SERP in the event the executive becomes disabled and a benefit to his or her beneficiaries in the event of his or her death as consideration for the executive’s past employment with the Bank. Additionally, as the SERP is a benefit upon which the executive will rely upon for retirement income, the Compensation Committee understands that it is important to provide the executive with a reduced benefit under the SE RPSERP if the executive is terminated without cause before retirement age.

Accounting and Tax Treatments

Sections 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation paid in one year to highly compensated employees to $1 million. Given the current level of compensation, the Compensation Committee does not feel that it is necessary to have a formal policy with regard to Section 162(m). There were no accounting treatments which were considered in establishing the Compensation Policy.

Material Differences in Named Executive Officers’ Compensation

The named executive officers are compensated based upon their respective position and longevity with the Bank. All named executive officers participate in the retirement and health insurance benefits provided to all employees on the same terms as all other employees. The difference in the named executive officers’ base salary is premised upon their position, experience, and individual performance. Only Mr. Prosseda and Ms. Woodland are provided SERP agreements as a result of Mr. Prosseda’s role as Chief Executive Officer and as a result of Ms. Woodland’s role as Director of Lending of the Bank.

Conclusion

The Compensation Committee believes the amount and types of compensation provided to the named executive officers are competitive and appropriate for the Corporation to attain its short and long-term objectives and goals. The compensation programs are designed to provide an incentive to the named executive officers on both a short-term and long-term basis. The programs have been tailored by the Corporation so that the various elements of compensation align the interests of our shareholders and those of the named executive officers to maximize shareholder value.

Compensation Committee Report

The Board, acting as the Compensation Committee, has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, the Board concluded that the Compensation Discussion and Analysis be included in the Corporation’s Proxy Statement.

Board of Directors

Compensation Committee Interlocks and Insider Participation

The Board, which includes J. Gerald Bazewicz,Matthew P. Prosseda, President and Chief Executive Officer, functions as the Compensation Committee. For compensation paid to executive officers other than the Chief Executive Officer, the Board of Directors considers information provided by the Chief Executive Officer. For compensation paid to the Chief Executive Officer, the Board of Directors, with Mr. Prosseda not being present, determines his compensation, as outlined above under “Base Salary”.

Executive Compensation

During the beginning of 2011,2012, the Board conducted a risk assessment of the Bank’s compensation program. The Board concluded that the program is balanced, does not motivate imprudent risk taking, and is not reasonably likely to have a material adverse effect on the Bank.

The table below shows information concerning the annual and long-term compensation for services rendered in all capacities to the Corporation and the Bank for the fiscal year ended

December 31, 20112012 of those persons who were:

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

¹Bonus earned in 2012 paid in 2013, bonus earned in 2011 paid in 2012 and bonus earned in 2010 paid in 2011.

²Amounts shown for Mr. Prosseda in 2012 include $13,800 in director fees, $7,313 401(k) matching and $17,062 401(k) profit sharing award, in 2011 include $6,629 401(k) matching contribution and $16,020 401(k) profit sharing award and in 2010 $5,086 401(k) matching contribution and $11,868 401(k) profit sharing award, and in 2009 $5,307 401(k) matching contribution and $12,384 401(k) profit sharing award.

³Amounts shown for Ms. Rosler in 2012 include $3,465 401(k) matching and $8,085 401(k) profit sharing award, in 2011 include $3,225 401(k) matching contribution and $7,794 401 (k)401(k) profit sharing award and in 2010 $2,570 401(k) matching contribution and $5,996 401(k) profit sharing award, and in 2009 $2,638 401(k) matching contribution and $6,155 401(k) profit sharing award.

⁴Amounts shown for Mr. Miller in 2012 include $4,602 401(k) matching and $10,737 401(k) profit sharing award, in 2011 include $3,908 401(k) matching contribution and $9,443 401(k) profit sharing award and in 2010 $2,971 401(k) matching contribution and $6,933 401(k) profit sharing award, and in 2009 $3,108 401(k) matching contribution and $7,251 401(k) profit sharing award.

⁵Amounts shown for Ms. Woodland in 2012 include $4,506 401(k) matching and $10,514 profit sharing award, in 2011 include $4,054 401(k) matching contribution and $9,797 401(k) profit sharing award and in 2010 $3,975 401(k) matching contribution and $9,275 401(k) profit sharing award, and in 2009 $3,953 401(k) matching contribution and $9,223 401(k) profit sharing award.

⁶ Amounts shown for Ms. Robbins in 2012 include $2,979 401(k) matching and $6,951 401(k) profit sharing award, in 2011 include $2,775 401(k) marchingmatching contribution and $6,706 401(k) profit sharing award and in 2010 $2,400 401(k) matching contribution and $5,600 401(k) profit sharing award, and in 2009 $2,640 401(k) matching contribution and $6,161 401(k) profit sharing award.

401(k) Plan

The Bank maintains a 401(k) Plan which has a combined tax qualified savings feature and profit sharing feature. The plan provides benefits to employees who have completed at least one year of service and are at least 21 years of age. The plan agreement provides that the bankBank will match employee deferrals to the plan up to 3% of their respective eligible compensations. Additionally, the bankBank may make a discretionary profit sharing contribution annually to the plan. Contributions made by the bankBank to the plan are allocated to participants in the same portionsportion that each participant’s compensation bears to the aggregate compensation of all participants. Each participant in the plan is 100% vested at all times. Benefits are payable under the plan upon termination of employment, disability, death or retirement.

Of the $634,334$678,000 total expenses during 2011, $70,3512012, $76,214 was credited among the individual accounts of the 5 most highly compensatednamed executive officers of the Bank. Of the $634,334,Bank: Mr. Prosseda with $22,649,$24,375, Ms. Rosler with $11,019,$11,550, Mr. Miller with $13,351,$15,339, Ms. Woodland with $13,851$15,020 and MsMs. Robbins with $9,481.$9,930. Mr. Prosseda has been a member of the plan for 67 years, Ms. Rosler for 2021 years, Mr. Miller for 2627 years, Ms. Woodland for 45 years and Ms. Robbins for 2627 years.

Aggregated Options, Grants or Exercises in 20112012 Year-End Option Values

There were no grants or exercises of stock options by the named executive officer under the 1998 Stock Incentive Plan in 2011.2012.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 20112012

The Corporation’s 1998 Stock Option Plan expired in 2008. Under the terms of the plan, options were granted for shares of the Corporation’s common stock based on the market value at the date of grant and may be exercised six months after date of grant. There are no plan provisions for reload or tax-reimbursement features. The closing price of the stock as of December 31, 20112012 was $20.50.$24.30.

OPTION EXERCISES DURING 20112012

Supplemental Employee Retirement Plan

The Corporation maintains a Supplemental Employee Retirement Plan (“SERP”) covering 2 of the Bank’s named executive officers, Matthew P. Prosseda and Elaine A. Woodland. The SERP, which is a salary continuation agreement, provides that if the executive officer continues to serve as an officer of the Bank until a stated retirement age of 62 years for Mr. Prosseda and 63 years for Ms. Woodland, the Bank will pay 240 guaranteed consecutive monthly payments for Mr. Prosseda and 180 guaranteed consecutive monthly payments for Woodland commencing on the first day of the month following the officer’s 62^nd or 63^rd birthday and the termination of employment in the amounts indicated below. The established retirement benefit under the SERP for Mr. Prosseda and Ms. Woodland will be $4,167 per month, and $2,083 per month, respectively, and is not subject to change.

If the executive officer attains their stated retirement age, but dies before receiving all of the guaranteed monthly payments, then the Bank will make the remaining payments to the officer’s beneficiary. In the event the officer dies while serving as an officer, prior to his or her stated retirement age, the Bank will remit the guaranteed monthly payment to the officer’s beneficiary commencing the month following the executive’s death. In the event of a change of control and the termination of the officer’s employment, the guaranteed monthly payments will commence the month following the executive’s termination of service. Generally, no benefit will be paid if the executive officer voluntarily terminates employment prior to attaining the stated retirement age or is terminated for cause.

The SERP allows the executive officers to achieve a retirement income percentage that is more consistent with their experience and years of service to the Bank. The plan objective is to provide the executive officers with a final wage replacement ratio of approximately 75% of projected final salary including projected benefits from the Bank 401(k), Plan, social security, and salary continuation provided through the agreement.

PENSION BENEFITS

Post Termination Benefits

The below tables and discussion below outlines the payments which would have been made to each named executive officer had a termination event occurred on December 31, 2011.

2012.

Matthew P. Prosseda

The Board may, at its sole discretion, award Mr. Prosseda a pro-rata amount in the event of his retirement, death or disability under the Management Incentive Compensation Plan.

Termination for Cause and Voluntary Termination. If Mr. Prosseda’s employment is terminated for “Cause” as defined in the SERP or he voluntarily terminates his employment, the Corporation shall be obligated to make the following payments.

Termination Without Cause - Before a Change of Control. If Mr. Prosseda’s employment is terminated “Without Cause,” as defined in the SERP, he would be entitled to receive the following payments.

*SERP benefit would be paid in 12 equal monthly payments of $1,609$1,899 for 240 months commencing the month following the executive’s normal retirement age.officer’s 62^nd birthday.

Death or Disability. In the event of a termination of employment as a result of Mr. Prosseda’s death or disability, his dependents, beneficiaries or estate, as the case may be, will receive the following payments.

*SERP benefit under death would be paid to the beneficiary in monthly payments of $4,167 for 240 months commencing the month following the executive’s death. The SERP benefit under disability shall be paid in a lump sum 60 days after the executive’s termination of employment.

Termination Upon or After a Change in Control. If a “Change of Control” as defined in the SERASERP occurs, Mr. Prosseda shall be entitled to the following payments.

*The SERP benefit under a change of control would be paid in monthly payments of $4,167 for 240 months commencing the month following the executive’s termination of service.

Diane C. A. Rosler

The Board of Directors may at its sole discretion award Ms. Rosler a pro-rata amount in the event of her retirement, death or disability under the Management Incentive Compensation Plan.

Termination for Cause and Voluntary Termination. If Ms. Rosler’s employment is terminated for “Cause” or she voluntarily terminates her employment, the Corporation shall be obligated to make the following payments.